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Comment by xrd | Hacker News Reader

I worked for Real Networks in 2000. It was my first job out of college. I remember the recruiter probably thought she was clever telling me that "Your salary is low but you've got a lot of options." I had no idea what options really meant. I got 30000.

In six months those options were worth $5M. Wired wrote up a great article by this guy who played a great practical joke on everyone. The greed was so bad, people would check the stock every five minutes. This guy setup a proxy, and when people went to the bathroom he would switch their proxy settings to point to his proxy. His proxy did one thing: take any numeric values and half them when the page had our stock symbol. People would return to their desk and freak out that they just lost half their portfolio value.

I quit on my 1.5 year vesting date, and my options were still worth $150k. I waited a month and they went underwater.

Oh well.

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I took a job as employee #5 of a startup, in 2002. $50k per year and 1% of the company. I thought cool all we need to do is sell for like $100 and something million and I’ll be a millionaire, as we all agree is my birthright as a software developer.

3 years later I’m totally burned out and the company seems to be going nowhere. I agonize over giving up my 1% ticket if I quit. I quit.

They did sell the company. 10 years later. For $28 mil. So I would have made an extra $28k per year on top of the $50k. To be clear, I came out way ahead by leaving.

Assuming a standard vesting schedule of 4 years. Wouldn’t you have left with 0.75% of equity?

I wonder if any money would have been left after dilution and preferred shares.

There was no vesting in this case. The shares were explicitly conditional on current employment when they became eligible to be exercised. Mind you I'm next to clueless about options, but I remember that language being in whatever I signed.

Usually there's a 1-year 25% cliff, then the remaining 75% vests monthly over the remaining 3-years, at least that was commonplace a decade ago. So at 3 years on such a schedule you would have been able to exercise 75% of the initial grant.

Based on what valuation? Sell them to who? It was a privately owned company. I doubt I'd have been able to persuade the founder to buy my stake considering I'd signed a thing that said I get nothing if I quit before they exit.

Nothing remotely resembling a standard 4-year vesting schedule...

But being guaranteed 1% stake on exit in writing is in some ways better. Most folks w/options are getting heavily dilluted with every round of funding, but at least they can exercise and move on for more lotto tickets after 1 year.

Every time I visit the valley I buy lottery tickets.

Seems appropriate to me, and more viable.

I can confirm that the kind of option plans as psyc describes them exist. At least in Germany.

Unless your options grants included some antidillution clause (unlikely) you didn't have anywhere near 1% 10 years later.

It was stated in writing as 1% of shares at exit time, not as a number of shares. Again, I'm clueless about options. But this was way outside of silicon valley and among people who couldn't care less how things are done there. For example, there was no VC involvement.

That's just... very abnormal. I've never heard of "percentage at exit".

I assume it'd work mechanically by setting aside 1% of total shares for you, and keeping that leveled out at 1% after each dilution event or something.

Honestly not that bad, good for them, bad for you I think, for exactly why it ended up not working out.

Oh, also, the guy who did that prank is a billionaire now.

When I was hired at AOL in 1995, I missed a granting period by two weeks. Instead of starting on June 1, I started on June 15, so that I could give two solid weeks worth of documentation work to my then-employer. That also mean that I missed a split. I was pretty peeved about that, but ultimately let it slide. I did get something like 3000 options valued at the next granting period, which I believe was like December 31st.

Fast forward a couple of years, and I got some more stock options as bonuses, as well as saw a couple of splits. In 1996, I did convert all the vested options I had to cash (with taxes taken out), which meant that I finally cleared $80k in options over my annual salary of $60k -- for once, the options actually made me more money that year than my salary did. That has never happened again throughout the rest of my career (so far).

And then things got toxic enough that I could no longer remain at AOL, and I left. Of course, I lost all my unvested options.

A while later, I did the calculations. If I had held on, and sold when the stock was at its peak, I would have cleared over $16m from the sale of the options. I could have retired at 30.

But AOL had become a toxic hellhole and no amount of money would have been worth trying to live through that.

Every time I see Gene Kim at a conference, he and I take up the next chapter in our ongoing series of "So, what was it like before the wall went up between devs and ops?" versus "So, what was it like after the wall went up between the devs and the ops?"

In the end, I had good experiences at AOL, and I learned a lot. And I'm glad I got out when I did.

I was there for a while too... that place and their compensation plans were... special. There were a lot of funny games that happened with their stock price too.

hilarious

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