Stock Options

“I read a study the other day that said somewhere between 70 and 90% of stock options end up worthless.”

“No options, no RSUs, no stock, no, like, any of that BS. I find almost all that to be pretty much BS, unless you're like a really well-established public company.”

“At the moment, around 70% of employees abandon their stock options, and employees tend to own 10 to 15 points of the cap table of a given startup.”

“You know, if you look at most buybacks, they're just covering up stock options.”

“I think stock options should be an expense. And if they're not an expense, I borrow from Buffett and even the chair of the accounting has said things like this, that, that if it's not an expense, then what is it?”

“What I have learned is that most people, you think that giving large populations options in the company's securities, that they would hold on to them. And what you find out is 80, 90%. The first moment that they, quote, vest, they cashed them.”

“In Europe, I think people, again, for good and for better and for worse, right? I think people are, they think less like that, right? As you of course know, like stock options in Europe, people still view it as like, A random lottery ticket, not really as part…”

“Two thirds of employees right now that are working at these companies are working for options that are actually worth zero, and they probably don't even realize it yet, meaning they got a pay package of stock options at a 24 dollar strike price. That stock is …”

“When a startup would get started in early years, you might have as much as, say, 10% dilution from options. You might hire three executives during that year, and it's a big grant, but then as you move towards being public, people would typically, and these are…”

“There's an argument from Black Shoals that a single RSU is worth about two and a half or three options. So if you could switch From these options to an RSU, this investor thought dilution might drop from, say, four percent to 1.2% or something like that, and t…”

“The trend I'm seeing with startups, like early stage startups, seed stage startups, which are really indicative of what startups will do later on, hiring people, cash basis, paying them hourly outside the United States, not having to worry about stock options,…”

“But the fact of the matter is that Silicon Valley had a share of the wealth mentality where the rank and file employees did participate in the ownership of the company and they got equity. And it was highly motivating or it is highly motivating. For not just l…”

“An option is basically an interest free loan.”

“If I saw a company that was using a lot of option stuff, I would just put my pencil down and say, I just don't like that. So it's in the too hard pile, and I'm not going to try to calculate that to the fourth decimal point. I just don't want to be part of it.”

“A lot of folks, you're right, are trapped in companies with high valuations where their options are likely underwater.”

“These switch to a very simple system where everyone gets a number. This is what you make every year. And so everyone agrees what, like, the ground truth is of compensation. And then you can say, we want this in cache. Do you want this in store options?”

“You know, one of the challenges of the whole stock option thing is entrepreneurs and founders think that other people will be as motivated by owning part of the company as they are. They're not, not even close. It's a sort of a prize pool at the end of the gam…”

“I mean, we look at, you know what's the stock shop, stock options or share options and all that, but We just found that as the income comes in and as we're profitable, we wanted to go direct to them. I'm tired of the stories of people that get stock options an…”

“Lastly, bonuses are tough because incentives aren't exactly aligned, are they? Because something about profit sharing that's nice is if the company doesn't turn a profit that year, people don't get the profit sharing. Whereas if the company doesn't turn a prof…”

“You usually have about three months, and if you don't buy the options, they just revert back to the company, and you get nothing. And that's an interesting, I don't really like that. I actually disagree with that. I don't think it's super ethical, and I feel l…”

“The way that I've structured it is real simple. What would I pay this person as a consultant? You know, if I were to meet them at a party and say, Hey, I really have this problem. Can you help me to do this? How much would I pay them? Now, of course, this will…”

“There's really no scenario where RSUs are better than options in that model. And so from a pure upside, from a pure opportunity perspective, from a flexibility perspective, from a tax perspective, from an administrative perspective, there are lots of advantage…”

“And the then accounting laws basically said that if you gave an employee more than, you know, a very short window to exercise, you would potentially create a very large accounting charge, which would make it impossible for the company to ever go public or be a…”

“So they changed the law and the law, the new law kind of made it okay to have a longer exercise period, but nobody changed the practice.”

“If you're rich and you have 90 days to exercise, that's fine because you can buy your stock options. But if you're not rich, then you can't. And so now we've created this class thing.”

“So if you look back in, you know, early 2000, like nobody was really thinking, nobody was negotiating options for a while. No, it was like, I need to be paid cash. I don't really care about options.”

“It's almost like we've taken stock options and we've hyped them up more than we should have, because then you do have this trust problem where if you do have to do something for the survival of the company, Now you're telling a couple thousand people, hey, we …”

“Most companies, In our area don't give equity or stock options, right?”