
Fuck Your 90 Day Exercise Window - ingve
http://zachholman.com/posts/fuck-your-90-day-exercise-window/
======
mdorazio
Here's an easier fix: assume any options are worthless before you accept a job
offer, then if you want to leave you can decide what the lottery ticket is
worth. I keep seeing ways to "fix" various aspects of startup compensation,
but it doesn't make any sense to me. The market determines what companies will
pay for employees, and options are a form of payment. If no one was willing to
accept 90 day exercise windows, they wouldn't exist. You can make the argument
that startup compensation is predatory toward uninformed or naive employees,
but that's a two-way street.

~~~
kylec
The fact that there is a 90 day window probably is not volunteered when the
job offer is made, and asking about what will happen after you leave the
company isn't something most people are comfortable doing in a job interview.
It's hard for market forces to correct this when the information is not
readily available to prospective employees.

~~~
p4wnc6
It's similar with asking about severance pay. Employers, in fact, often count
on the candidate feeling too nervous that they will look bad to ask about
negotiating a severance benefit. However, in start-ups in particular where
someone being wrong about growth or certain forecasts can mean significant
risk of short term layoffs, almost at any time, getting a severance agreement
is quite important. And if the company won't do it, because they think you're
somehow trying to game the system for your severance benefit, or because they
say something dumb like, "well, no one else has asked for a severance benefit"
\-- then you know it's probably a company to avoid.

------
jobu
In case anyone else needs to look it up:

"What’s the difference between an ISO and an NSO?" \-
[http://www.startupcompanylawyer.com/2008/03/05/whats-the-
dif...](http://www.startupcompanylawyer.com/2008/03/05/whats-the-difference-
between-an-iso-and-an-nso/)

Even reading that, it's still not clear to me whether there would be tax
implications at the time of conversion when converting incentive stock options
(ISOs) to non-qualified stock options (NSOs).

~~~
chrdlu
The difference is when you exercise NSOs, you also have to pay withholding tax
(ordinary income tax rate) to the company who then pays it to the IRS.

For ISOs, you don't have to pay tax at exercise, but you may be subject to
Alternative Minimum Tax (AMT) especially if you have a large spread between
your strike price and the fair market value at the time of exercise.
([http://employeestockoptions.com/amttax/](http://employeestockoptions.com/amttax/)
for more information about AMT)

------
iykwimthrowaway
Another alternative could be what my company did for me: they gave me special
permission to sell some number of my shares to one of their investors, who
were always hungry for more shares. This allowed me to exercise all of my
options, then sell off just enough to cover my tax consequences.

This seemed like an extremely good-faith maneuver on my company's part: they
acknowledged that my options were a reward for past work, and they didn't want
me to miss out on the benefit of those just due to some tax-related time
pressure. They also knew it was really no skin off their nose if the investors
got to acquire more shares at a price they deemed fair.

------
hkmurakami
I have an unpublished blog post on this very subject so I've done a bit of
research into the matter.

I first thought Pinterst was the first one to extend the exercise period to a
great length, but I discovered that it was in fact Quora who was first. They
have a 10 year exercise period. Pinterest was followed by Coinbase.

First time founders will have a hard time rocking he boat because of the great
fear of not being able to raise capital. Thus it's really on the shoulders of
the late stage companies and repeat founders to lead the way.

------
xyzzy4
And I thought this had to do with physical fitness.

------
purpled_haze
"And now, in part because of your success, it’s too expensive to own what you
had worked hard to vest? Ridiculous."

I think people expect too much. Companies don't owe their employees anything.
They are businesses which aim to make money and/or to accomplish some goal,
but that goal is almost always not "make your employees happy and wealthy".

You may work your ass off, but if you do, do it because it is the right thing
to do and you want to do it. If you do that, you'll never be disappointed
unless you let yourself down. Don't do it because of options.

If you do take options, because you have to or just want to, you are gambling.
You might be able to keep the upper-hand if you know what you are doing, but
even owners/partners get screwed sometimes (often).

~~~
p4wnc6
> You may work your ass off, but if you do, do it because it is the right
> thing to do and you want to do it.

 _Lana Kane style noooope._ Do it for a wage/equity/benefits/vacation package
that is satisfactory in helping you achieve your goals. In fact, if you accept
anything less than that, you're not just doing yourself a disservice, but also
all of your peers because you're sending a market signal that you currently
devalue your own labor. If you reached that decision through careful thought
and really determined such lesser forms of compensation were OK for you, given
other trade offs, then fine, so be it, that is your market price. But that's
not usually what happens. Usually it's an inexperienced engineer who had no
way to know any better because she/he had never been exposed to the important
points of stock options, never knew what or how to ask, and followed some
dopey advice like "just work hard because it's the right thing to do" because
someone seemingly older/wiser/with more authority kept telling them to stop
whining for more compensation and just do the work.

It's precisely because a business doesn't have the explicit goal of making
employees any wealthier _than it has to_ that we have to be vigilant to demand
our full market compensation, whether it means negotiating a better exercise
window, or better accelerated vesting terms, or a real wage instead of a but-
we're-a-startup wage, and so on.

~~~
purpled_haze
I thought this way for many years, but don't buy into it anymore. I still want
to get paid as much as I can for the work I do, but I'm not any happier
because of how much I make. Even today, I'm only happy when I've accomplished
something I was trying to do. Sure, I want my family to be happy, but they
would be happier if I were happier. Don't just do it for the money.

~~~
potatolicious
Dare I say there are non-monetary benefits to being paid at top of market.

I've been near the top of band of my particular subfield for the last few
years, after working for years at a bog-standard SDE comp package, and IMO
there are some pretty compelling reasons to demand better compensation beyond,
well, having the money.

For one thing people stop fucking with you when you're getting top of market
comp, for a lot of reasons - many of which are bullshit, but hey. The
perceived quality of your work is _higher_ because you're demanding (and
getting) more for it - and people are more willing to treat your professional
judgment seriously.

In general companies and the people in them want very much to believe that
they're getting what they paid for, so being known for being at the top of
market (quite unjustifiably, of course) raises the default perception of your
work.

It also opens the window for alternative arrangements - work from home, more
vacation, all that is considerably more on the table when you're perceived as
a top-dollar high performer.

Conversely, willingness to accept less than market seems to signal to
management that you can be pushed around on other matters (true or not), and
even if you're well capable of fending off this jerkish behavior, why not just
avoid it _and_ get paid more? I've personally seen founders' dispositions
toward me improve, and just get more professional respect in general, by
naming a high price and sticking with it.

This isn't to say that one should take a horrible job because it pays top
dollar, but in the current state of the industry you can have your cake and
eat it too - you can work with good people on interesting stuff while staying
within the top decile of your niche.

~~~
purpled_haze
"For one thing people stop fucking with you when you're getting top of market
comp"

This may be true for some, but here is what I've seen and experienced
personally + family members and friends I've talked with:

1\. You are a full-time employee who is either very skilled or not as skilled
but getting paid in the top 5-10% as a senior or principal software engineer.
For a while you get to work on whatever you want to as long as it makes the
company better, so you write open source projects, etc. Then, something
happens. Either your company gets outside investment, or is bought-
out/merges/buys another company, or they fall on hard times, or there is
competition, or someone in management reads some new book or goes to some
conference, or you just get different management, and now you all of a sudden
either have been driven to cut corners which leads to a mess, or morale sucks
or people buy into management's crappy philosophy which which leads to no
innovation and suddenly it feels like no one else is using the crappy
libraries and frameworks you had been using, or things for some other reason
just suck.

In this case, you're still making a lot of money. Happy now? Sure you _could_
have found a new job, but wait hold on a second- you are in the top 5-10% so
jobs that pay that well may not come as easily. Looks like you're fucked.

2\. You work your ass off as an independent, grow the company, and are doing
well working for large company X in NYC. You had an awesome time putting your
family through hell in the beginning for peanuts, but somehow you managed to
make it past all that.

And now, what do you have? You're making a lot and have several guys/gals
depending on you and you are still working your ass off and now you feel like
if you quit, you take all of them down with you. Maybe even you're still on
your own, but if you quit to take a break, your family will suffer because
they won't have what they did.

What I suggest: do what you believe in as long as you can survive and meet the
needs of your family. Push hard or don't, but be happy if you can. This will
make the world a better place. You may end up making too much and getting into
the same predicament, but if you're lucky, you'll at least not be focused on
more money than you need. And if you do get more money than you need- share
it. Much good in the world has come from those with money sharing what they
have.

