Anyway, I was an early rank and file employee at a startup that was acquired by WebMD. When WebMD merged with Healtheon in '99 - which I'm counting as an exit, since our office was shut down shortly thereafter - we were able to exercise our options. I cashed out a third of my vested ISOs to the tune of about $50K. Not FU money, but a nice boost to a 25 year old, and enough to put a substantial down payment on a house.
What I learned:
• Some of my coworkers thought I was loony for cashing out when I did - they thought the stock price would keep going up. And it did - for a while. Remember, this was 2000. We were all out of a job in six months. A bird in the hand, etc.
• Some people cashed out 100%, seeing dollar signs, and didn't get counseled on the tax ramifications. That ended poorly. These were young engineering types who chose not to listen to our awesome CFO/office manager/HR person back when we were a tiny startup. It's amazing how someone can grok Python, and not compound interest.
• The house I put 25% down on in 2000 sold in 2006 for more than twice what I paid for it, while the "nostalgia shares" I kept from WebMD aren't worth one-tenth of what they were in 2000. This was a valuable lesson in the benefits of diversification.
Finally, what I learned was that the only difference between gambling in Vegas and gambling with tech startup stock options is that in Vegas, you get free drinks.