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I was aquihired by a FAANG. The headline "startup bought for x million" is almost always a lie, either direct or by omission. First, when a startup is bought,

I was aquihired by a FAANG. The headline "startup bought for x million" is almost always a lie, either direct or by omission. First, when a startup is bought, its generally not bought at the headline rate. So if you see a "bought for $45m" that doesn't mean People who own shares all got a % of 45m. That number is normally bullshit, but also a "total package" which include share offers for joining the new company. This means you will get say 1% of the headline buyout now, and then golden handcuffs to get the rest. Also, it makes no sense to give employees that much money upfront. After all, if I'd been given $1m in one go, I wouldn't be fucking working now.

bagels 1y ago
1m isn't enough to really retire in in silicon valley
- throwawayq3423 1y ago
  Or in any big city tbh.
  - Scoundreller 1y ago
    Cleveland not big enough for you???
    - throwawayq3423 1y ago
      Cities like Cleveland have reasonable pricing built into their appeal. Without it, there isn't much left.
- loire280 1y ago
  Sure, but if you're 10+ years into your career and have been financially conservative (i.e. have a positive net worth), a lump sum of $1m could be enough to retire to a lower-cost location.
  - andrewmcwatters 1y ago
    Hell, roughly $600,000-800,000 is enough to lean FIRE, the last time I checked.
    - usaar333 1y ago
      Sure, if you are single with no family and wiling to live outside California.
    - quickthrowman 1y ago
      If I retired at 40 I don’t think I’d want to remove more than 2% a year from the principal amount, which is.. $12,000-$16,000 a year. How is that possible? Even with a fully paid off house, you still have property taxes, utilities, maintenance. Even 4% a year which is recommended for a 30 year retirement, you’re only taking out $24,000-$36,000 a year.
      - hervature 1y ago
        You are supposed to invest and keep the money working for you. Adjusted for inflation, S&P 500 returns 6.5% a year. That alone gets you above the poverty line. Recall, this is inflation adjusted so your $600,000 is growing with inflation and the poverty line income also grows over time. This does not account for any swings.
        loeg 1y ago
        You can't actually draw down 6.5%/yr, though, because of sequence of returns risk. The number that is actually safe (historically) is something like 3.5%.
        quickthrowman 1y ago
        Keep in mind that almost all of the FIRE advice available online has been written in a bull stock market that is almost 2 decades long (COVID drawdown is a blip on the 2008-2025 chart). Past performance is not indicative of future returns. Do you know anyone still running a risk parity 60% UPRO/40% TMF (3x long S&P 500, 3x long 20-year Treasury Bonds) portfolio? That portfolio composition had massive returns, until the Fed started hiking rates. The annual implied volatility of SPX is around 15-20%, if you want to withdraw 6.5% a year at 40 and have to restart your career at 55, be my guest. A 40% drawdown on 600k is -240k which puts you at 360k, 6.5% of which is $23,400. Starts getting pretty tight if you need to sell assets for cash which reduces your future returns.
- KaiserPro 1y ago
  probably right, but I'm not in SV. So its enough to pay off the mortgage and provide enough monthly income to not care what job I'm doing
- ohdeargodno 1y ago
  Take a million, go live literally anywhere that isn't Silicon Valley, remote work for a company that interests you, or your own project. There's very few currencies in the world in which 1M isn't enough to retire. USD isn't one of them.
  - occz 1y ago
    >There's very few currencies in the world in which 1M isn't enough to retire. USD isn't one of them. Unless you're planning on retiring as cheaply as humanly possible, 1M is not enough to retire for the large majority of the currencies in the world.
    - ryandrake 1y ago
      $1M is enough to "Ramen Retire" in most of the US. If you're willing to eat noodles and make some lifestyle sacrifices, it's kinda sorta doable.
    - ponector 1y ago
      For majority of the world population 1M is amount they will never earn through their entire life. And they live just fine. I'm sure anyone can have a really nice retirement with one 1M, just not in the US.
- baq 1y ago
  Don’t retire in Silicon Valley then
kentonv 1y ago
Yeah, I used to hear all the time that "a startup is worth $1 million per engineer in a pure acquihire", but learned the hard way this is a myth. When we were talking to various companies about acquiring Sandstorm.io (my startup) in 2017, one of the companies told me, essentially: "We aren't interested in your IP, only the employees. We'll give you a set of job offers for them. We will then sum up the salary and equity grants from these offers, and call that the acquisition price. If you want to take some of that money and redirect it to your investors instead, that is up to you." I was a bit taken aback. Obviously I wasn't about to take a cut of my employees' future comp and give it to investors. Instead we ended up going to Cloudflare, but not as an acquisition. Cloudflare told us very honestly that they couldn't justify buying the IP, but they would be willing to acquire the company for $0 to wind it down for us. I decided to just take the job offers but keep the company independent as an open source side project, thinking maybe I'd revive it eventually. Turned out to be a mistake as some guy who was mad we didn't hire him sued Sandstorm six months later, and that was then my problem instead of Cloudflare's, oops. Should have sold for $0. (Once it became clear to the plaintiff('s lawyer) that we weren't going to settle, they stopped pushing the case forward, but didn't drop it, so it just sat in limbo for 5 years before the judge finally threw it out it 2022. Meanwhile I couldn't dissolve the company and had to keep filing taxes for it. Ugh... lessons learned.)
- kingforaday 1y ago
  Whoa, bummer but interesting. It can be hard to let go. Thanks for sharing.
- swyx 1y ago
  sorry that happened to you. what taxes do you have to pay on a company making 0? just delaware franchise tax?
  - kentonv 1y ago
    That and $800 CA franchise tax. But the money wasn't really significant. It was just annoying to have to prepare the returns every year.
sokoloff 1y ago
$1M in one shot leaves you with around $600K after taxes in most states. That’s enough to pay you around $24-30k/yr. Unless you already had several other million saved already, I bet you’d be working again.
- wnc3141 1y ago
  Sure, buts its a solid career break for a year.
- para_parolu 1y ago
  $25k/yr can be decent living in some places.
  - azinman2 1y ago
    In no place where you’re getting a 1M pretax offer.
    - shutupnerd0000 1y ago
      Yeah but what if - hear me out - you move after you get the money?
    - albedoa 1y ago
      Yeah man, I'm sure that's exactly what they meant when talking about a decent living for $25k/year.
  - chollida1 1y ago
    Sure but not in North America, where i assume most readers of this site are from.
    - golergka 1y ago
      Just out of pedantry, all of Mexico is in North America.
  - jahewson 1y ago
_DeadFred_ 1y ago
When I was a kid (early 80s) the receptionist at my mom's company drove a Porsche and didn't need to work anymore because of a past company hitting it big. This woman wasn't a financial genius and didn't hardball negotiate with the previous company for her receptionist job, it was just Silicon Valley didn't used to be so gross and actually paid out to people.
caseysoftware 1y ago
Some of the mechanics on this one.. Generally, when a startup is acquired, people get paid in a number of tranches: - First, debts get cleared in order according to debt types. This could be cloud providers, lawyers, employees who deferred salary, etc, etc. If there's still cash left.. - Then preferred (generally earliest) investors get paid back. Some investors will have liquidation preferences where they get 2-5X their initial investment. If there's still cash left.. - Then execs get their preferred shares cashed out. Depending on how many rounds they'd raised, they may own less than you think. If there's still cash left.. - Finally, general stockholders get paid. This is where most employees may actually get cash. To further complicate things, some people could be in multiple places here. A founding exec may have lent the company money to get started, have preferred shares, and have common shares so they could get paid out in early levels but not at the end. *There are WAY MORE nuances in this but the point is: You don't just say "total price divided by shares times number of shares = the cash you get"
deleted 1y ago
[deleted]

bagels 1y ago

1m isn't enough to really retire in in silicon valley

throwawayq3423 1y ago
Or in any big city tbh.
- Scoundreller 1y ago
  Cleveland not big enough for you???
  - throwawayq3423 1y ago
    Cities like Cleveland have reasonable pricing built into their appeal. Without it, there isn't much left.
loire280 1y ago
Sure, but if you're 10+ years into your career and have been financially conservative (i.e. have a positive net worth), a lump sum of $1m could be enough to retire to a lower-cost location.
- andrewmcwatters 1y ago
  Hell, roughly $600,000-800,000 is enough to lean FIRE, the last time I checked.
  - usaar333 1y ago
    Sure, if you are single with no family and wiling to live outside California.
  - quickthrowman 1y ago
    If I retired at 40 I don’t think I’d want to remove more than 2% a year from the principal amount, which is.. $12,000-$16,000 a year. How is that possible? Even with a fully paid off house, you still have property taxes, utilities, maintenance. Even 4% a year which is recommended for a 30 year retirement, you’re only taking out $24,000-$36,000 a year.
    - hervature 1y ago
      You are supposed to invest and keep the money working for you. Adjusted for inflation, S&P 500 returns 6.5% a year. That alone gets you above the poverty line. Recall, this is inflation adjusted so your $600,000 is growing with inflation and the poverty line income also grows over time. This does not account for any swings.
      - loeg 1y ago
        You can't actually draw down 6.5%/yr, though, because of sequence of returns risk. The number that is actually safe (historically) is something like 3.5%.
      - quickthrowman 1y ago
        Keep in mind that almost all of the FIRE advice available online has been written in a bull stock market that is almost 2 decades long (COVID drawdown is a blip on the 2008-2025 chart). Past performance is not indicative of future returns. Do you know anyone still running a risk parity 60% UPRO/40% TMF (3x long S&P 500, 3x long 20-year Treasury Bonds) portfolio? That portfolio composition had massive returns, until the Fed started hiking rates. The annual implied volatility of SPX is around 15-20%, if you want to withdraw 6.5% a year at 40 and have to restart your career at 55, be my guest. A 40% drawdown on 600k is -240k which puts you at 360k, 6.5% of which is $23,400. Starts getting pretty tight if you need to sell assets for cash which reduces your future returns.
KaiserPro 1y ago
probably right, but I'm not in SV. So its enough to pay off the mortgage and provide enough monthly income to not care what job I'm doing
ohdeargodno 1y ago
Take a million, go live literally anywhere that isn't Silicon Valley, remote work for a company that interests you, or your own project. There's very few currencies in the world in which 1M isn't enough to retire. USD isn't one of them.
- occz 1y ago
  >There's very few currencies in the world in which 1M isn't enough to retire. USD isn't one of them. Unless you're planning on retiring as cheaply as humanly possible, 1M is not enough to retire for the large majority of the currencies in the world.
  - ryandrake 1y ago
    $1M is enough to "Ramen Retire" in most of the US. If you're willing to eat noodles and make some lifestyle sacrifices, it's kinda sorta doable.
  - ponector 1y ago
    For majority of the world population 1M is amount they will never earn through their entire life. And they live just fine. I'm sure anyone can have a really nice retirement with one 1M, just not in the US.
baq 1y ago
Don’t retire in Silicon Valley then

kentonv 1y ago

Yeah, I used to hear all the time that "a startup is worth $1 million per engineer in a pure acquihire", but learned the hard way this is a myth. When we were talking to various companies about acquiring Sandstorm.io (my startup) in 2017, one of the companies told me, essentially: "We aren't interested in your IP, only the employees. We'll give you a set of job offers for them. We will then sum up the salary and equity grants from these offers, and call that the acquisition price. If you want to take some of that money and redirect it to your investors instead, that is up to you." I was a bit taken aback. Obviously I wasn't about to take a cut of my employees' future comp and give it to investors. Instead we ended up going to Cloudflare, but not as an acquisition. Cloudflare told us very honestly that they couldn't justify buying the IP, but they would be willing to acquire the company for $0 to wind it down for us. I decided to just take the job offers but keep the company independent as an open source side project, thinking maybe I'd revive it eventually. Turned out to be a mistake as some guy who was mad we didn't hire him sued Sandstorm six months later, and that was then my problem instead of Cloudflare's, oops. Should have sold for $0. (Once it became clear to the plaintiff('s lawyer) that we weren't going to settle, they stopped pushing the case forward, but didn't drop it, so it just sat in limbo for 5 years before the judge finally threw it out it 2022. Meanwhile I couldn't dissolve the company and had to keep filing taxes for it. Ugh... lessons learned.)

kingforaday 1y ago
Whoa, bummer but interesting. It can be hard to let go. Thanks for sharing.
swyx 1y ago
sorry that happened to you. what taxes do you have to pay on a company making 0? just delaware franchise tax?
- kentonv 1y ago
  That and $800 CA franchise tax. But the money wasn't really significant. It was just annoying to have to prepare the returns every year.

sokoloff 1y ago

$1M in one shot leaves you with around $600K after taxes in most states. That’s enough to pay you around $24-30k/yr. Unless you already had several other million saved already, I bet you’d be working again.

wnc3141 1y ago
Sure, buts its a solid career break for a year.
para_parolu 1y ago
$25k/yr can be decent living in some places.
- azinman2 1y ago
  In no place where you’re getting a 1M pretax offer.
  - shutupnerd0000 1y ago
    Yeah but what if - hear me out - you move after you get the money?
  - albedoa 1y ago
    Yeah man, I'm sure that's exactly what they meant when talking about a decent living for $25k/year.
- chollida1 1y ago
  Sure but not in North America, where i assume most readers of this site are from.
  - golergka 1y ago
    Just out of pedantry, all of Mexico is in North America.
- jahewson 1y ago

_DeadFred_ 1y ago

When I was a kid (early 80s) the receptionist at my mom's company drove a Porsche and didn't need to work anymore because of a past company hitting it big. This woman wasn't a financial genius and didn't hardball negotiate with the previous company for her receptionist job, it was just Silicon Valley didn't used to be so gross and actually paid out to people.

caseysoftware 1y ago

Some of the mechanics on this one.. Generally, when a startup is acquired, people get paid in a number of tranches: - First, debts get cleared in order according to debt types. This could be cloud providers, lawyers, employees who deferred salary, etc, etc. If there's still cash left.. - Then preferred (generally earliest) investors get paid back. Some investors will have liquidation preferences where they get 2-5X their initial investment. If there's still cash left.. - Then execs get their preferred shares cashed out. Depending on how many rounds they'd raised, they may own less than you think. If there's still cash left.. - Finally, general stockholders get paid. This is where most employees may actually get cash. To further complicate things, some people could be in multiple places here. A founding exec may have lent the company money to get started, have preferred shares, and have common shares so they could get paid out in early levels but not at the end. *There are WAY MORE nuances in this but the point is: You don't just say "total price divided by shares times number of shares = the cash you get"

deleted 1y ago

[deleted]