Startup ISOs are totally broken, and VCs and founders would rather write 30 page treatises on all their complexities (of course, glossing over the 99 ways to screw employees), than actually try to improve them.
A small percentage of people got rich off options a handful of times a long times ago, and since then countless people have been screwed.
Public RSUs for stock you can sell immediately on the open market are fantastic.
Common ISOs are toilet paper. At a _minimum_ you should get a 10 year exercise window, and if the CEO tries to say that would make it so early employees can hurt cap tables for future rounds, he's basically saying he doesn't consider your equity grant to be real equity as it deserves to be clawed back for the sin of not wanting to stick around for the 15 years it takes startups to IPO these days.
These exact same people will try to convince you that their ISOs are a valid subsitute to liquid RSUs, THEN say that they don't deserve to be "preferred" instead of "common" because the VCs put in actual money (hint: so did you if you turned down a public company to work at the startup. Biggest difference is only that you're way less diversified).
Am I ranting? Of course, but if VCs and founders are going to continually "educate" engineers on their equity offers, engineers need to stand up and inform each other of the pitfalls. I know countless people, myself included, who have been screwed by ISOs. You can actually lose money because the 30 day window forces you to pay strike price + taxes on gains, then you find out that the CEO sold the company at a bargain so liquidation preference kicked in and he just took a huge retention bonus instead.
The way out of this mess is not Github treatises on how to evaluate your equities. The way out is for engineers to continually tell founders/VCs that they will pick public companies instead of startups until ISOs get fixed. If ISOs screwed over VCs instead of engineers, they would have gone to DC and gotten this fixed 10 years ago. At an absolute minimum you shouldn't have to pay a dime in taxes until you've actually realized some money in your checkings account. VCs/founders don't care because they don't have to care because engineers are still too gullible and accept these bogus deals.
> don't deserve to be "preferred" instead of "common" because the VCs put in actual money
I agree with most of what you said, but a nit: one perspective I've heard on the motivation for preferred stock is this:
Suppose I give you $10M to start a company in exchange for 10% of it. You then easily sell the company for $9M, keeping 90% * $9M = $8.1M for yourself and returning $900k to me. Preferred (non-participating, 1x) shares prevent this problem by making sure you can't just run away with the money: you have to actually use it to build the business.
People investing in the company in non-liquid ways (e.g., the founders or engineers, via opportunity costs) aren't in the same boat, because their opportunity cost can't be immediately liquidated.
Exactly this. As far as I'm concerned the purpose of ISOs at companies more than a year old is to trick junior engineers into accepting a lower salary than they would receive elsewhere. Unless you have at least half a percent of a company you really, truly believe in I'd just ignore this article and put the value somewhere between $0 and a roll of lottery tickets.
It seems that the fairest way to compensate employees at a startup is to pay them in cash, but also allow them to invest at each funding round with the same terms and conditions and liquidation preferences that the VC's are getting.
Some of the reasons VCs get a better class of shares than employees are structural and unlikely to go away no matter how ISOs are structured; for instance, VCs get liquidation preferences for reasons that are sort of intrinsic to the concept of equity investment.
The exercise window thing is a valid point and is a reason to devalue employee options.
83(b) election is one way to make ISOs more on par with RSUs. 83(b) isn’t cheap... But! These days a lot of companies (especially FAANG, but start-ups too) are offering $20k-$100k signing bonuses; those bonuses essentially give the appearance of competitive total comp while in actuality depress base salary growth. It might be productive for employees to push towards having signing bonuses turned into an 83(b) election bonus that covers strike and (some amount of) taxes. Then fewer employees get roped into dumb tax games that only entertain investors, and we’d be moving the notion of competitive compensation towards reducing stock risk for those who can least afford it. (If salaries grow more rapidly as a side-effect, that’d be nice too).
I've never taken a job in 20 years because of money and I don't advise anyone to do that. I choose a company for culture, the people I work with, the kinds of projects, and quality of life. Also a desire to ship things and not spend my days in meetings or dealing with bureaucracy, a desire not to work with jerks, and a desire not to work on lines of business that I find morally repugnant. The latter criteria have made most of my FAANG offers quite unappealing. But I love going to work at a startup with my buddies, building cool tools that help people, and spending plenty of time with my family.
>... you find out that the CEO sold the company at a bargain so liquidation preference kicked in and he just took a huge retention bonus instead.
There's something potentially misaligned between the control of the founders and the final grant value on the other end. There are so many ways to distort this in the final exit deal and these are details that you probably won't learn about unless you happened to exercise stock before the exit happens. In general, the positive outcomes seem "capped" in that a founder is inclined to lock in their gains with an exit if the deal is reasonable for them.
Maybe the option shouldn't be as a share of the company but a share of everything the CEO/founder makes from there on out. :)
For really early stage, I generally assume that a founder is trying to at least 10x their net worth so any hand wavy exit estimate generally gets capped with that in mind.
I agree that the way a lot of companies structure their equity compensation is terrible. How would you structure equity compensation at a mid-stage startup where a share grant would come with a real, substantial tax hit, without any possibility of liquidity in the near future?
I'm asking because we're just starting to think about how to do this ourselves, and I agree that most equity plans are giving engineers a raw deal. The answer might just be large share grants, at least until the share value makes that unattractive. I'd love to hear other peoples' thoughts on this.
IIRC, much of the reason ISOs work the way they do is because of the way the IRS treats them, and companies that offer much longer exercise windows are having to work around these limitations to do so.
Your post captures my feelings and experience perfectly. I will never trade cash compensation for ISOs again. It sucks because I'd rather be working for small companies, but I'll be God Damned if I'm going to get some asshole rich off of my hard work.
This! In addition to all of the above, it is very hard for the candidate to judge what "0.X % of the company" is worth. Like if one gave up, say 50,000 in salary, is the equity worth that much or some good multiple of it.
The "preferred shares" and various other gimmicks played by VCs mean they might let the "current value" appear inflated than it really is. I have seen startups "start" with a valuation of "50 million dollars" out of thin air. No sales, no product, but a combination of confusing paperwork makes it appear as if someone recently "invested at that valuation". It will be too late by the time you find that the investor was nothing other than the founder, who found a creative way to value his/her time or seed money.
Another major mistake made by new candidates is to miss the fact that there is a vesting period - the upfront large amount means nothing if you quit after a year. On top of it one may not even get any new ISOs in future years. Companies always show "current-year salary + total ISO issued" as "total compensation" - that is absurd. Even if you know what you are doing, you will fall for it after 10 repetitions.
> Public RSUs for stock you can sell immediately on the open market are fantastic.
I mostly agree with this statement, but they are not entirely without risk. With the almost universal 6 month lockup these days, through an IPO employees could be left with a large tax burden, including having to make quarterly estimated payments, on a bunch of income that might be worth less than it was taxed at, or even worthless, if the company folded.
Sure, it's unlikely, but look at some of the 2019 IPO flops. If you are taxed on a something like a million dollars of income, but only actually pocket half that, then at the end of the day you effectively have a quarter of what you started with.
Fully agree with you. How would you solve it then - besides engineers being more explicit with founders? (not trying to be smart with you; honest question).
I worked for a startup founder and personally watched him screw advisers out of stock agreements using different tactics, from technicalities in the agreements to outright not honoring the agreements when he knew it was disadvantageous for them to pursue him legally. He gloated about it and would speak very highly of all the ways he could manipulate situations.
In the end, I left and the startup went under, and I told him directly that I didn't trust him (to his surprise). The lesson that I learned was that I'd be a fool to take equity in a startup, given all the ways I could be screwed, and my lack of resources to pursue any legal recourse. Cash only, from now on.
“RSUs are often considered less preferable to grantees since they remove control over when you owe tax.”
Who the fuck cares when you pay tax? A small % of people will have enough value to worry about that. The vast majority of people tho have a bigger worry: the stock is worth less than what they pay to exercise, because when you leave your company you have to exercise em or lose em.
Dual trigger RSUs solve that. I don’t have to pay a freakin’ dime whether I stay or leave. I keep my vested RSUs and ride off into the sunset and if they someday become worth something, the company just withholds some shares to pay the tax. Again no up front cash when I leave the company and no large tax bill.
AND I get to keep the whole value of the share. For ISO you only get delta between exercise price and strike price. If my RSUs are $5 or $15 apiece who cares, it’s all risk-free gravy / upside. If I have ISOs I’m worrying about strike price and whether it’s worth it to exercise.
I don’t know who in their right mind would want ISOs over RSUs.
I have had a number of successful exits but the bottom line is that you're (probably) not getting nearly enough options to offset the risk.
Pasted from a comment I made in an earlier thread:
80% of startups fail and 20% succeed in some fashion. Which means if you normally make $50,000 and take a $5,000 paycut (no rsu) to work there you will lose $20,000 over the 4 year vesting period.
80% of the time when the startup goes bust you make 0 on equity and still lost money due to the paycut. For a total of 8x20 or $160,000 loss.
The two times you are successful you make 2xEquity.
This means your equity has to be at least worth $80,000 each time you succeed.... just to break even.
Factoring in the risk of your equity being 0 you should be getting a LOT more equity.
It's very similar to calculating expected value in poker.
So many of my friends have been screwed over by the technical nuances of equity compensation.
Started Compound (https://withcompound.com) to solve this problem (we generate personalized analyses to help you understand your equity – tax implications, potential value, etc).
ISO + early exercise + 83(b) election + QSBS treatment is a massive win as an employee. Very favorable tax treatment, but you have to early exercise, when the strike price is equal to the FMV. If it were me, and I believed in the company, I would value the equity highly, but make sure I negotiated a signing bonus or similar that allowed me to early exercise. The 90 day window doesn’t matter in that situation, although I will grant you that everyone’s financial situation is different, and that having to pay for the stock at all is a drawback. You also have to trust that the founders are going to have your back and not screw you. This is a judgment and personality call.
Context: sold my company a month ago, all employees with options that had early exercised got full acceleration, and even unexercised optionholders were paid out as if they had exercised and been fully accelerated (though did not get similarly preferable tax treatment, obviously). Treating the employees properly (and well) was a massive part of the negotiation.
I think the biggest gap that this guide and every one I've seen like it that they undersell the positive value for employees of the Restricted Stock Award (RSA). RSAs can be significantly better than ISOs in many situations.
There is no actual reason why companies can only offer RSAs to founders and super early employees. The taxes get trickier once the strike price gets high enough, but employees should have the choice to maximize their equity value!
From the very beginning of founding my company and still 5 years later, we offer our employees the choice to take their stock as RSAs, options, or a combination of the two. We also teach a mandatory "Stock 101" course every quarter for new employees that is a 1.5hr version of this guide. Too many employees' (engineers in particular in my experience), don't actually understand how their equity compensation works and I think it's the responsibility of the company to educate them -- both for their current role and possible future job offers.
The playbook for Equity compensation has changed dramatically in the last 20 years in drastic favor of the founders.
During the dotcom days, the number of shares that were given out was very generous. I know secretaries that made enough from IPOs in the late 90s that they could retire and buy a vineyard. Meanwhile I was a relatively early employee at a YC startup that had a successful exit. The founders made 8 figures and I made about 80k over 4 years. I would have made 10x more at a FANG with a regular comp package.
1. Startups take longer to IPO, if they ever (objectively true);
2. Liquidation preferences for VCs and preferred stock for founders may make a certain amount of sense (other comments have addressed this) but given (1), this is generally a horrible deal for employees.
3. Any employee should outright refuse to join a startup where the agreement has any kind of clawback or any exercise period less than 10 years after the termination of employment. If you're worried about diversity of ownership then put in a right of first refusal into the contract. That's fair.
4. E(TC) for a moderately qualified SWE at Big Tech is >$350k. Given all the above if E(TC) at the startup really needs to be at least twice that (hint: it isn't).
5. For every story of a Google chef becoming a millionaire there's 10 stories of a Mark Pincus type who threatens to fire employees if they don't surrender some of their (unvested) options.
The prevalent advice here is don't invest in individual stocks, even though in general you have a ton of information on a public company from financials to track record of key players to good market and product info. With startups it's suddenly OK to invest often half of your potential money into a stock surrogate with none of the above. There are many reasons to join a startup striking it rich from equity is def not a good one.
Selling private shares / options on the secondary market is near impossible if the company isn’t on something like SecondMarket. Right of First Refusal, Co-sale Agreements, and the challenges of sharing information with a 3rd party make this difficult. That said, has anyone succeeded and written about their experience?
If company is valuable enough smart investors will flock around the shareholders who even have very minor ownership. I was sceptical at first but then saw it happening with a profitable company I was following. I thought people were stuck with their shares, but since the company was profitable it attracted investors looking for better returns than public stocks.
There should be a federal law prohibiting issuing any type of equity compensation (including options) without also routinely reporting relevant details (ownership %, FMV, dilution, preferences, etc) to holders. The single biggest problem with options is that the cap table is completely opaque to employees and the founder is incentivized to operate as a lying sack of shit redlining the reality distortion field.
As always, the best time to join a startup is when it’s raised several rounds and you are at least a staff engineer. You’ll get a million or more over a four year vest and much higher chances of IPO which if it’s good, it may 2-10x your stock.*
Unless your Uber and than a lot of those folks got fucked. Shrug.
Agreed on later stage; disagree on need to be that high level. High growth companies are actually better for lower leveled engineers as they can grow faster.
Send them two copies as well as self addresses stamped envelope and a letter requesting them to date stamp one copy and send it back to you. They will do so.
It's the same source as what you can find on GitHub but at Holloway we're working to make long-form docs like this easier to read on the web. PRs or feedback here on the Holloway reader welcome. :)
This couldn't have been posted at a better time for me. I've been talking with some people more in the know on this and was advised by someone to ask for a revenue share in addition to my equity. This person felt the equity offering was low and I should protect myself with a revenue share. Does anyone have resources or additional insight on rev share agreements?
Equity compensation is like your bonus. The chance you are getting it is low so shouldn't be taken into account. Maybe I have burned too many times by discretionary bonuses :)
Regarding private companies' RSUs, anyone here has heard of a company eligible for and opted-in 83(i) elections? (Which lets the employee defer tax for up to 5 years)
Canadian isn't much different really in practice, but there isn't an 83(b) equivalent iirc. The specific tax detail vary, but from 30,000 feet it looks pretty similar.
Overall it's pretty comparable to the non-SV US. There is less VC & PE money floating around (generally investment is more conservative). Common stock options or grants are going to be a gamble for the same reasons as in the US.
Tax wise, you capital rates rather than normal (i.e. 50% treated as regular income). You may get a gain/loss relative to FMV in year you exercise, same as US.
Most of the advice carries over directly, mutatis mutandis.
Most of those things are pretty international. Finance is a very old domain, and as a famous man once said (albeit specifically about speculation, but it also applies to the structure of the contracts): "There is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again."
[+] [-] ditonal|6 years ago|reply
A small percentage of people got rich off options a handful of times a long times ago, and since then countless people have been screwed.
Public RSUs for stock you can sell immediately on the open market are fantastic.
Common ISOs are toilet paper. At a _minimum_ you should get a 10 year exercise window, and if the CEO tries to say that would make it so early employees can hurt cap tables for future rounds, he's basically saying he doesn't consider your equity grant to be real equity as it deserves to be clawed back for the sin of not wanting to stick around for the 15 years it takes startups to IPO these days.
These exact same people will try to convince you that their ISOs are a valid subsitute to liquid RSUs, THEN say that they don't deserve to be "preferred" instead of "common" because the VCs put in actual money (hint: so did you if you turned down a public company to work at the startup. Biggest difference is only that you're way less diversified).
Am I ranting? Of course, but if VCs and founders are going to continually "educate" engineers on their equity offers, engineers need to stand up and inform each other of the pitfalls. I know countless people, myself included, who have been screwed by ISOs. You can actually lose money because the 30 day window forces you to pay strike price + taxes on gains, then you find out that the CEO sold the company at a bargain so liquidation preference kicked in and he just took a huge retention bonus instead.
The way out of this mess is not Github treatises on how to evaluate your equities. The way out is for engineers to continually tell founders/VCs that they will pick public companies instead of startups until ISOs get fixed. If ISOs screwed over VCs instead of engineers, they would have gone to DC and gotten this fixed 10 years ago. At an absolute minimum you shouldn't have to pay a dime in taxes until you've actually realized some money in your checkings account. VCs/founders don't care because they don't have to care because engineers are still too gullible and accept these bogus deals.
[+] [-] alecbenzer|6 years ago|reply
I agree with most of what you said, but a nit: one perspective I've heard on the motivation for preferred stock is this:
Suppose I give you $10M to start a company in exchange for 10% of it. You then easily sell the company for $9M, keeping 90% * $9M = $8.1M for yourself and returning $900k to me. Preferred (non-participating, 1x) shares prevent this problem by making sure you can't just run away with the money: you have to actually use it to build the business.
People investing in the company in non-liquid ways (e.g., the founders or engineers, via opportunity costs) aren't in the same boat, because their opportunity cost can't be immediately liquidated.
[+] [-] ng12|6 years ago|reply
[+] [-] zyang|6 years ago|reply
[+] [-] RcouF1uZ4gsC|6 years ago|reply
[+] [-] tptacek|6 years ago|reply
The exercise window thing is a valid point and is a reason to devalue employee options.
[+] [-] choppaface|6 years ago|reply
[+] [-] sgustard|6 years ago|reply
[+] [-] entangledqubit|6 years ago|reply
There's something potentially misaligned between the control of the founders and the final grant value on the other end. There are so many ways to distort this in the final exit deal and these are details that you probably won't learn about unless you happened to exercise stock before the exit happens. In general, the positive outcomes seem "capped" in that a founder is inclined to lock in their gains with an exit if the deal is reasonable for them.
Maybe the option shouldn't be as a share of the company but a share of everything the CEO/founder makes from there on out. :)
For really early stage, I generally assume that a founder is trying to at least 10x their net worth so any hand wavy exit estimate generally gets capped with that in mind.
[+] [-] ericd|6 years ago|reply
I'm asking because we're just starting to think about how to do this ourselves, and I agree that most equity plans are giving engineers a raw deal. The answer might just be large share grants, at least until the share value makes that unattractive. I'd love to hear other peoples' thoughts on this.
IIRC, much of the reason ISOs work the way they do is because of the way the IRS treats them, and companies that offer much longer exercise windows are having to work around these limitations to do so.
[+] [-] seattle_spring|6 years ago|reply
[+] [-] harikb|6 years ago|reply
The "preferred shares" and various other gimmicks played by VCs mean they might let the "current value" appear inflated than it really is. I have seen startups "start" with a valuation of "50 million dollars" out of thin air. No sales, no product, but a combination of confusing paperwork makes it appear as if someone recently "invested at that valuation". It will be too late by the time you find that the investor was nothing other than the founder, who found a creative way to value his/her time or seed money.
Another major mistake made by new candidates is to miss the fact that there is a vesting period - the upfront large amount means nothing if you quit after a year. On top of it one may not even get any new ISOs in future years. Companies always show "current-year salary + total ISO issued" as "total compensation" - that is absurd. Even if you know what you are doing, you will fall for it after 10 repetitions.
[+] [-] adrr|6 years ago|reply
[+] [-] xyzzy_plugh|6 years ago|reply
I mostly agree with this statement, but they are not entirely without risk. With the almost universal 6 month lockup these days, through an IPO employees could be left with a large tax burden, including having to make quarterly estimated payments, on a bunch of income that might be worth less than it was taxed at, or even worthless, if the company folded.
Sure, it's unlikely, but look at some of the 2019 IPO flops. If you are taxed on a something like a million dollars of income, but only actually pocket half that, then at the end of the day you effectively have a quarter of what you started with.
[+] [-] jiveturkey|6 years ago|reply
> Public RSUs for stock you can sell immediately on the open market are fantastic.
Both correct statements, but apples and oranges.
[+] [-] simonebrunozzi|6 years ago|reply
[+] [-] andreshb|6 years ago|reply
[+] [-] jagged-chisel|6 years ago|reply
[+] [-] rolltiide|6 years ago|reply
[+] [-] alakin|6 years ago|reply
[+] [-] daenz|6 years ago|reply
In the end, I left and the startup went under, and I told him directly that I didn't trust him (to his surprise). The lesson that I learned was that I'd be a fool to take equity in a startup, given all the ways I could be screwed, and my lack of resources to pursue any legal recourse. Cash only, from now on.
[+] [-] gonehome|6 years ago|reply
Are there risks with ISOs? Yes.
Should you value them 1:1 with cash? Probably not.
Should you value them at $0? Probably not.
People should make decisions based on the company, what they're doing, and how much they trust the board/founders.
It'd be a mistake to categorically dismiss equity since that's the best way to leverage your human capital into wealth.
It's also a mistake to think that equity is valued exactly at what the company is advertising it as when trying to hire you.
There's some risk, but engineers should consider their options.
[+] [-] jldugger|6 years ago|reply
A classic example of an individual who would be 10x richer if they were 10 percent less greedy.
[+] [-] formercoder|6 years ago|reply
[+] [-] sub7|6 years ago|reply
[+] [-] xivzgrev|6 years ago|reply
“RSUs are often considered less preferable to grantees since they remove control over when you owe tax.”
Who the fuck cares when you pay tax? A small % of people will have enough value to worry about that. The vast majority of people tho have a bigger worry: the stock is worth less than what they pay to exercise, because when you leave your company you have to exercise em or lose em.
Dual trigger RSUs solve that. I don’t have to pay a freakin’ dime whether I stay or leave. I keep my vested RSUs and ride off into the sunset and if they someday become worth something, the company just withholds some shares to pay the tax. Again no up front cash when I leave the company and no large tax bill.
AND I get to keep the whole value of the share. For ISO you only get delta between exercise price and strike price. If my RSUs are $5 or $15 apiece who cares, it’s all risk-free gravy / upside. If I have ISOs I’m worrying about strike price and whether it’s worth it to exercise.
I don’t know who in their right mind would want ISOs over RSUs.
[+] [-] auspex|6 years ago|reply
Pasted from a comment I made in an earlier thread:
80% of startups fail and 20% succeed in some fashion. Which means if you normally make $50,000 and take a $5,000 paycut (no rsu) to work there you will lose $20,000 over the 4 year vesting period. 80% of the time when the startup goes bust you make 0 on equity and still lost money due to the paycut. For a total of 8x20 or $160,000 loss.
The two times you are successful you make 2xEquity.
This means your equity has to be at least worth $80,000 each time you succeed.... just to break even.
Factoring in the risk of your equity being 0 you should be getting a LOT more equity.
It's very similar to calculating expected value in poker.
[+] [-] jacobschein|6 years ago|reply
Started Compound (https://withcompound.com) to solve this problem (we generate personalized analyses to help you understand your equity – tax implications, potential value, etc).
If you have any questions/feedback, email me: [email protected].
[+] [-] wtvanhest|6 years ago|reply
[+] [-] borski|6 years ago|reply
Context: sold my company a month ago, all employees with options that had early exercised got full acceleration, and even unexercised optionholders were paid out as if they had exercised and been fully accelerated (though did not get similarly preferable tax treatment, obviously). Treating the employees properly (and well) was a massive part of the negotiation.
[+] [-] jaz46|6 years ago|reply
There is no actual reason why companies can only offer RSAs to founders and super early employees. The taxes get trickier once the strike price gets high enough, but employees should have the choice to maximize their equity value!
From the very beginning of founding my company and still 5 years later, we offer our employees the choice to take their stock as RSAs, options, or a combination of the two. We also teach a mandatory "Stock 101" course every quarter for new employees that is a 1.5hr version of this guide. Too many employees' (engineers in particular in my experience), don't actually understand how their equity compensation works and I think it's the responsibility of the company to educate them -- both for their current role and possible future job offers.
[+] [-] pfarnsworth|6 years ago|reply
During the dotcom days, the number of shares that were given out was very generous. I know secretaries that made enough from IPOs in the late 90s that they could retire and buy a vineyard. Meanwhile I was a relatively early employee at a YC startup that had a successful exit. The founders made 8 figures and I made about 80k over 4 years. I would have made 10x more at a FANG with a regular comp package.
[+] [-] cletus|6 years ago|reply
1. Startups take longer to IPO, if they ever (objectively true);
2. Liquidation preferences for VCs and preferred stock for founders may make a certain amount of sense (other comments have addressed this) but given (1), this is generally a horrible deal for employees.
3. Any employee should outright refuse to join a startup where the agreement has any kind of clawback or any exercise period less than 10 years after the termination of employment. If you're worried about diversity of ownership then put in a right of first refusal into the contract. That's fair.
4. E(TC) for a moderately qualified SWE at Big Tech is >$350k. Given all the above if E(TC) at the startup really needs to be at least twice that (hint: it isn't).
5. For every story of a Google chef becoming a millionaire there's 10 stories of a Mark Pincus type who threatens to fire employees if they don't surrender some of their (unvested) options.
[+] [-] harryh|6 years ago|reply
"Typically, investors get preferred stock, and founders and employees get common stock (or stock options)."
[+] [-] qaq|6 years ago|reply
[+] [-] andrew311|6 years ago|reply
[+] [-] spurdoman77|6 years ago|reply
[+] [-] sp527|6 years ago|reply
[+] [-] sbilstein|6 years ago|reply
Unless your Uber and than a lot of those folks got fucked. Shrug.
[+] [-] usaar333|6 years ago|reply
[+] [-] zyxjih|6 years ago|reply
[+] [-] harryh|6 years ago|reply
[+] [-] zalzal|6 years ago|reply
It's the same source as what you can find on GitHub but at Holloway we're working to make long-form docs like this easier to read on the web. PRs or feedback here on the Holloway reader welcome. :)
[+] [-] burnJS|6 years ago|reply
[+] [-] unknown|6 years ago|reply
[deleted]
[+] [-] wdb|6 years ago|reply
[+] [-] fhrow4484|6 years ago|reply
[+] [-] juliend2|6 years ago|reply
[+] [-] ska|6 years ago|reply
Overall it's pretty comparable to the non-SV US. There is less VC & PE money floating around (generally investment is more conservative). Common stock options or grants are going to be a gamble for the same reasons as in the US.
Tax wise, you capital rates rather than normal (i.e. 50% treated as regular income). You may get a gain/loss relative to FMV in year you exercise, same as US.
Most of the advice carries over directly, mutatis mutandis.
[+] [-] H8crilA|6 years ago|reply