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I don't expect this would be a company, but rather more of an open source project. I have been thinking about this for a while, so I'll throw it up to see if th

I don't expect this would be a company, but rather more of an open source project. I have been thinking about this for a while, so I'll throw it up to see if there is any interest. I would really like someone to create a website full of information and resources for first time startup employees regarding stock options. It would be great if there was a calculator which would allow you to experiment with different liquidity outcomes given your existing/proposed stock options. For example, you would be asked to enter the total number of outstanding shares, the number of shares you have now, the number of shares you are entitled to, your vesting schedule, if you have any acceleration upon change of control or other scenarios and if so how much, whether you have preferred vs common shares, liquidation preferences (if any), etc. Once you enter all of the information that you have, the calculator can estimate how much you stand to make in certain scenarios. You could answer "How much does the company need to be bought for in order for my options to be worth $X?" or "If the company sold for $Y amount, how much would my options be worth?". If certain pieces of information were not entered into the calculator, then it could show error messages and link to additional resources explaining why that particular number is so important. I realize that the calculator would likely not be exact because of missing information and the complexities of each particular company's structure. However, I think in many cases it could be surprisingly accurate. The most important thing is that it be used as a tool to introduce important concepts and terms which new startup employees should research and understand.

hashtag 13y ago
Contrary to your statement about how it could be __surprisingly accurate__, it would in fact be the opposite. There is no accurate way to build a calculator to show different liquidity outcomes because there are way too many unknown variables if you understand how stocks actually work in a given company. Everything would have to be a complete guess in the dark for the employee punching in those numbers making it near impossible to get anything accurate, particularly early stage.
- xerophtye 13y ago
  On the contrary, "How much does the company need to be worth for my options to be worth $X?" can be answered with a surprising amount of accuracy. Because isn't that basic mathematics with the variables "Exercise Price" and "Stock price"? I am talking about value of options for EXERCISE here, not selling them off. The selling part is what gets a little complicated, but we have ways to price them as well so a calculator for that could be built as well.
  - hashtag 13y ago
    Unfortunately no. You are making some bad assumptions here. I won't get into all the details as it can get lengthy to type out but there are numerous factors missing.
yaur 13y ago
As hashtag mentions, a "calculator" is almost impossible... a related problem is that most of the developers that I've worked with don't even know the questions to ask. Don't have the slighted idea what common vs preferred means, what convertible debt is, or what "on a fully diluted basis" does and doesn't mean. A site to that helped people figure out what questions to ask when assessing an equity offer could be useful.
- conorgil145 13y ago
  Perhaps my comment above focused too much on the details of the calculator I was envisioning. However, as I mentioned, I think the most important thing is that the calculator just act as a forcing function to introducing developers to the right questions to ask and providing them resources to explain why those concepts/terms are so important. I suppose even if there was no "calculator", a site which aggregated resources and focused on targeting startup employees would still be very useful.

hashtag 13y ago

Contrary to your statement about how it could be __surprisingly accurate__, it would in fact be the opposite. There is no accurate way to build a calculator to show different liquidity outcomes because there are way too many unknown variables if you understand how stocks actually work in a given company. Everything would have to be a complete guess in the dark for the employee punching in those numbers making it near impossible to get anything accurate, particularly early stage.

xerophtye 13y ago
On the contrary, "How much does the company need to be worth for my options to be worth $X?" can be answered with a surprising amount of accuracy. Because isn't that basic mathematics with the variables "Exercise Price" and "Stock price"? I am talking about value of options for EXERCISE here, not selling them off. The selling part is what gets a little complicated, but we have ways to price them as well so a calculator for that could be built as well.
- hashtag 13y ago
  Unfortunately no. You are making some bad assumptions here. I won't get into all the details as it can get lengthy to type out but there are numerous factors missing.

yaur 13y ago

As hashtag mentions, a "calculator" is almost impossible... a related problem is that most of the developers that I've worked with don't even know the questions to ask. Don't have the slighted idea what common vs preferred means, what convertible debt is, or what "on a fully diluted basis" does and doesn't mean. A site to that helped people figure out what questions to ask when assessing an equity offer could be useful.

conorgil145 13y ago
Perhaps my comment above focused too much on the details of the calculator I was envisioning. However, as I mentioned, I think the most important thing is that the calculator just act as a forcing function to introducing developers to the right questions to ask and providing them resources to explain why those concepts/terms are so important. I suppose even if there was no "calculator", a site which aggregated resources and focused on targeting startup employees would still be very useful.