You see I had some Sun stock left over from working there (about 8,000 shares) which at $60 a share in 1999 was $480,000, but after a reverse 3:1 split and selling them at $6 each in the Oracle merger they only netted me about $16,000. I "could" have sold them when they were $480,000 but I didn't. Not as severe a challenge as some folks in the dot com implosion but its something I think about from time to time.
If you ask what was the most money your options were worth on paper you get another (often higher) number. So if you were a Zynga employee on the day they went public you had some big value that they were worth but you couldn't sell until much later, and much later they were worth much less.
I owned 30,000 shares (common, not preferred) in a startup that I advised which when it was acquired only met the liquidation preference for the preferred (common stock ended up being worthless). At the last round of funding it was 'valued' at about $150,000 though. :-)
The bottom line is you can drive yourself crazy with possibilities if you aren't careful.
In your example, you can say whatever you want about how it was worth more than you actually netted, but at the end of the day all that matters is the fact that you realized 16K
These days it seems that every man and his dog is earning $150k+ if they're a half-decent developer in silicon valley, so I guess the stock options don't really matter. (I earn a lot less than that myself now, because I run my own mildly-profitable business).
It makes you wonder whether stock options are really just like throwing a dog a bone. The only people who really make any money are the investors and founders. At post-IPO places like facebook and google the stock bonus is really just an add-on to your salary. When I look up 'senior software engineer' salaries at google, you typically earn around $250k including stock bonus, so if you're looking for money I guess that's where you should be :)
To date I have made at least as much money with Sun options as I made in salary (I worked there 10 years). At some level, some of my current savings can be traced back to those options so they are in principle (pun intended :-) still earning me money.
Still, for every engineer who lucks out when their startup turns into the next Apple, Sun, Facebook or Google, there are a lot more whose stock options end up either worthless or close to it. Looking at upvotes on the parent article, it seems like $0 outnumbers any other option by almost a factor of 4.
If you follow the strategy that you only exercise and sell when they are worth money and you can sell, then options are always 'additive' to your salary. If you take options in lieu of salary then you're taking a bigger risk than someone who has both. The philosophy a number of people I know use with startups is enough salary to get by and save a bit, and options as an upside kicker.
Also, rich people have access to the same internet. Is there an "interesting shit about programming but only for rich people site" that I don't know about?
There are probably a lot more household tech names on HN than you'd initially expect.
Now, many of the employees of these companies frequently browse HN, and that can sometimes filter upwards if there're relevant or interesting articles there. In general executives rely on people specifically paid to sort through information for them, though. (Though I've heard Larry, Sergey, and many Google executives are big Google Reader users...I guess they'll have to find a new RSS reader now.)
I can assure you - very few tech executives have staff members and assistants filter public information for them.
Yes, you want your internal folks to do executive summaries of internal plans/summaries/designs, etc.
And yes, they'll pay $5k/year (or more) to buy analyst reports that summarize things (e.g. bad example Cook Report on the Internet [that'll date me], or Gartner/etc reports).
But Jim Crowe at Level3 read RFCs, and I believe that people like Larry Ellison, Sergey, Zuckerberg, Marc Andresson, Marissa Meyer are reading the real source stuff. They're just doing it in a discrete manner and not posting.
Executives that ONLY rely on the people that report to them are relics of an age of bankers and dinosaurs.
Real tech leaders remain technical and close to the source.
Personal wealth follows a powerlaw distribution, and there's good reason to believe that income from stock options is somewhat similar. If you look at the numbers above they make reasonably sense except for the "in the hundreds of millions" which is far too high compared to the others. The "in the hundreds" and "in the thousands" should be higher, but I'd wager that that can be explained by people not getting stock options in the hundred or thousand dollar range. The paper work alone would cost more. It's expected that there are a few, since a stock can tank, so stock options initially worth millions can turn into thousands when cashed in.
I've never actually received private company options; it's always been founders shares, even in a post-A company.
I've made maybe 600% on my money trading options (mainly AAPL and some non-tech companies; lost on TSLA but made money on TSLA stock), which is probably not what you meant.
That would offer a view into the percentage of people who stay at a startup long enough to exercise their options.
You may not care about that distinction, but I'd be interested to know what camp those "$0 :(" people are in.
Pre-IPO stock options should be viewed as lottery tickets unless one is a founder. Still, they motivated me.
I still have the check somewhere, I never cashed it, I've always been meaning to frame it.
But what are you going to do, that's super risky. No regrets.
Is there any other scenario, when you get % of revenue constantly, e.g. on a monthly basis for the rest of your life? i.e. even if you leave the company (maybe after some vesting period).
Here, I say "revenue", because in case of "profit" the company can reinvest it, leaving you with nothing.
EDIT: So basically, is there a way to transform your employment into a passive income?
Sometimes it's difficult to get out of the endless loop of 'if only...'
I imagine the two amounts are significantly different for many people.
The ones I got at my company have so far netting nothing yet :)
Founders stock would have been a different story...
I don't want your equity. Pay me.