I haven't seen $0 but I knew a few people who got diluted to a joke. It doesn't take but a factor of 2-4 dilution of your outlook to drastically change your opinion of how you spent that time.
Mark Zuckerberg tried a variation of that game to cut out Eduardo Saverin's shares when they changed the company from a Florida LLC to a Delaware Inc. Well, Saverin sued and Facebook lost that lawsuit; they settled. Saverin got ~4% ownership worth $5+ billion at the time.
https://www.businessinsider.com/exclusive-heres-the-email-zu...
So basically, the board will try to screw you over; if you're not in a strong enough position to do something about it then you're out of luck, if you are strong enough to do something about it, then you might be able to recoup some of what you're entitled to.
Bezos was a 30 year old with a decade of experience in finance, I assume he was quite savvy. But Zuckerberg was a teen.
(Oh holy fucking mother of Baa[l], only now it struck me that the name of the animatronic series by the Wallace-and-Gromit guys is of course a play on Shorn the sheep!)
This seems to be falling apart for him right now, as a bunch of those people have recently left FB. But yeah, I generally agree with your main point, he does seem to be very good at this.
Part of your evaluation should be consulting a tax professional to determine if there are any immediate, negative tax consequences. You're not guaranteed to get hit by AMT just because you exercise some stock options.
Except it's not like any other investment. It's an investment that you are too close to. You can't think 100% objectively about an investment that you're too close to. For many people the solution is unambiguous: If I can't be objective about a decision then the answer is automatically 'no'.
FWIW, I'm speaking from experience. Had I taken GP's advice and "never exercise unless it's early exercise" then I would have missed out on a lot of money.
The other thing to keep in mind is you don't have to exercise 100% of your vested options. If you're too nervous or don't trust your own judgement, maybe go for 10%, or whatever makes you comfortable. There's a lot of room between 0 and 100 here. Go ahead and explore it.
My point is that these hard and fast rules don't leave any room for nuance. Consider, as I mentioned in another comment, you don't have to exercise 100% of your options. Exercise whatever makes you comfortable. Maybe that's one under the number that would push you into AMT.
If zero is your comfort level, then so be it. But get to that conclusion by doing a little thought and evaluation, not applying an arbitrary rule.
The people that can make a reasoned and well considered, as impartial as possible judgement about it don't need to be told to do so. In fact, a statement that one should never buy the options can and mostly will (rightly so) just be ignored by such people.
But, judging by the number of people that have NO CLUE about how it works, need only the tiniest thing to grab onto to make the wrong decision. There is zero need to recommend "well consider your risk". If you have to ask, then my advice is always as I gave it: not to skip it as a rule, but if you re-read you'll notice all I said was, the odds are not in your favor and you "should" just leave the options behind. I think there is a subtle but important difference. Maybe I'm splitting hairs, if so, sorry.
You're actually arguing survivor bias as being some kind of counter argument! You are in the pretty small minority, I do hope you understand that.
Tell me, how do you feel about COVID vaccine? Shouldn't we just be allowed to make up our own mind about it? If masks and vaccines work, well the scientific set can wear masks and vaccine up. The anti-vax crowd can do as they please and die. We don't need the government to TELL US what to do, do we? No one gets out alive anyway, amirite?
What is your recommendation on COVID? Evaluate the risk and decide for yourself? Surely you prefer Florida's or Texas' take on COVID to California's then?
I now come full circle: humans are really bad at assessing risk.
I have yet to hear a single case of an employee purchasing their options when they left and thinking it was the right decision later on.
I know at least a dozen ex-colleagues of mine who fit this criteria. When the company in question exited, it created 400 millionaire employees.
At the end of the day you're really throwing money into a black box which may turn out to contain a trash can. There is more financial transparency in penny stocks.
I've personally had great success with RSUs, but those are ultimately part of your comp even if you discount them to zero - there is no requirement to put in additional money.
I don't contest this point.
> I've worked at companies that raised many millions of $s and seemed very promising and a few years later went out of business.
The only narrative I contest with my anecdata is drawing a universal truth from this experience of yours.
As a sibling comment said:
> Salt of the Earth folk love to share their stories of financial misery, but generally keep quiet about their embarrassment of riches.
Obviously not literally "nobody", someone at some point joins google/microsoft/facebook/amazon/etc at an early stage and exists a millionaire many times over. Just like every week somebody wins the lottery. It's just not as likely to happen to you personally as the people selling you on joining their early startup would like you to believe.
Not here on HN.
I was prompted to post on this thread after reading comment after comment about failures.
Also, I have heard stories of former employees that didn't exercise their options or cashed out early, and I wouldn't say regretted it, but reflected on the fact that the stock did a lot better than they predicted it would.
Salt of the Earth folk love to share their stories of financial misery, but generally keep quiet about their embarrassment of riches.
It's a democracy where the wolves vote that the sheep will be dinner.
> Having a board vote isn't the same has having a veto over every possible decision.
My comment did not imply that a board vote grants veto power. I suggested that the union could "veto deals ... via strike or mass resignation". This means that the union decides on a maximum dilution and agrees to strike or resign if the board makes a deal that dilutes employee positions more than the maximum.
> Unions don't necessarily get board observer status, let alone board seats, AKA a board vote.
My comment did not mention anything about board seats. The board would grant the union permission to attend board meetings, lest the board inadvertently trigger a strike or mass resignation.
Next time, please read the comment carefully before replying.
Board meetings are for board members, so I gave that person the benefit of the doubt.
My mistake.
Your replies go against the guidelines [1]:
> Be kind. Don't be snarky. Have curious conversation; don't cross-examine.
> Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith.
> Please don't post shallow dismissals, especially of other people's work. A good critical comment teaches us something.
Btw. The blog is very informative and have subscribed.
A very good question that I don't have a good answer to. Management likes that there's a steady stream of new people who don't know that there's a bunch of tricks that get used and so everyone learns them the hard way.
In fact, why don't the boards of all companies do this? Devalue everyone else's shares so they become the sole owners?