3 ms·
I find the idea that "less than 5% of employee option grants are exercised" both very sad and unsurprising. From working in this industry I've gotten the overwh
by mcfunley 12y ago
I find the idea that "less than 5% of employee option grants are exercised" both very sad and unsurprising. From working in this industry I've gotten the overwhelming impression that employees don't know how equity works. That leads them to systematically overvalue it, and by doing so they accept lower wages than they would otherwise. And companies that might have the best of intentions don't help at all, because their staffers don't understand it either.
- mikeyouse 12y agoYou can't discount that most companies fail though, you'd expect the majority of options to go unexercised. Edited to expand a bit: Shares are ugly and annoying and cap tables are broken but it so rarely matters. Things should obviously be better and cleaner and more organized but since so few companies return anything to anyone besides the preferred shareholders, I'm not sure the 'cost' of this disorganization is very high. Seems like another case similar to the uncovered call option description of 'technical debt'. By avoiding the time and effort of energy associated with cap table management, companies can focus on things that add value and count on lawyers to sort it out when the work will provide value -- fundraising / M&A. There's a point to be made about the lack of a signal here too, if all companies are bad, then no company looks worse for meeting that expectation.
- mcfunley 12y agoTotally true. It would be great to have some real stats about how often options earn a profit. But keep in mind this is at best an upper bound on that.