🧐.... umm... no. Dislike.
1. 6 years feels exploitative to me
2. Is a little longer explanation. See next tweet(s)
1. 6 years feels exploitative to me
2. Is a little longer explanation. See next tweet(s)
2. Little known fact, even amongst the SV set: if you decide to leave your company before an exit has happened, and you exercise your options (because you believe they will be worth something and there’s a limited time after leave the company to do so)...
...you WILL be lucky enough to pay that strike price from way back, and you will have a TON more equity for being earlier — BUT — Uncle Sam is coming for your ass that tax year you exercise those options.
“Why does this matter? My options were so cheap!” , you say...
“Why does this matter? My options were so cheap!” , you say...
Because you will be taxed at the value of those shares, not the strike price you paid.
SO, if you were at the company for 6 yrs, vested into a ton of equity, it’s valuation has 📈, but you’re ready to move on and exercise your options, you may go broke on a big ass bet.
SO, if you were at the company for 6 yrs, vested into a ton of equity, it’s valuation has 📈, but you’re ready to move on and exercise your options, you may go broke on a big ass bet.
Not the money you spend to exercise the options, but the bill the IRS will hand you the next year.
Ex: Jim is the first engineer at a new startup, he gets a hefty equity package because the company wants to “incentivize” him since he can’t get a big salary...
Ex: Jim is the first engineer at a new startup, he gets a hefty equity package because the company wants to “incentivize” him since he can’t get a big salary...
Jim works at startup for 6 long ass years, busting his ass and manyne even managing a team by the end because...growth 🌱
The company has been killing it - a billion dollar valuation, thanks in part to the hard work of Jim and others.
But Jim is burned out. He needs to leave.
The company has been killing it - a billion dollar valuation, thanks in part to the hard work of Jim and others.
But Jim is burned out. He needs to leave.
Jim is excited to see what lies ahead for the company. He wishes everyone well.
His “thank you” is that equity package he vested into. But Jim ain’t rich yet. He may be able to afford $10K to exercise (he also may not), but cannot afford to pay the $120K in taxes next year!
His “thank you” is that equity package he vested into. But Jim ain’t rich yet. He may be able to afford $10K to exercise (he also may not), but cannot afford to pay the $120K in taxes next year!
So at the end of 6 long ass, hard years, Jim’s choice is actually to stick around s and pray for an exit that will make him “rich” (ha, this is HEAVILY affected by dilution — how many rounds did that startup raise? Series D...? 😬), or walk away with nothing.
The end.
The end.
