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Fuck Your 90 Day Exercise Window (2016) (zachholman.com)
129 points by mooreds 5 months ago | hide | past | web | favorite | 80 comments

Equity is monopoly money. So many ways for it to fall thought so few for it to actually pay out.

As someone whos spent ~12 years in the startup space... when you take a job expect only the money guarnteed to you. If your not happy with that move on... Equity? That is a windfall.

But do I buy the options when I leave the startup? That's a hard choice.

Not to mention the savings account on the side you have to start building to buy your options when you resign! I never factored that in until I realized I had to come up with $15k on the spot to quit if I wanted to take my options with me. Now I know and am prepared, but for 24 year old me fresh out of college leaving my first startup job, that was a tough realization.

If the options are worth something, shouldn’t getting 15k in credit feom a bank be pretty easy?

That's often a big "if".

Thanks for writing this. I quit my "startup employer" last year. I was leaving at a critical juncture and the company begged for me to stay at least for 3 months to complete an important project. I said "fuck you" and left. I had $300K worth of ISOs and 90 days exercise window which I let expire.

In fact the 90 days window is what made me quit before completely 1 year. Quiting sooner is better than wasting 5 years.

I'd strongly advise against saying "fuck you" to anyone. Leaving on good terms is important, and pays off. Make it a habit early on.

You know, there are times when it's entirely appropriate. Perhaps we could treat each other as adults and simply ask if there was a particular reason they didn't think parting amicably was an option? They may have had one.

> Perhaps we could treat each other as adults

A good adult like thing to start with is not literally say "fuck you" when leaving.

Depends a lot on the context behind that leaving. There are absolutely situations where it can be warranted - abuse (including verbal), for example. Politeness is the default state of affairs, but depending on how you behave, you might lose that privilege.

In any case where a 'fuck you' is warranted deadpan silence works better.

Sometimes the company deserves it.

you usually don’t want to burn bridges, true. However don’t ever let anyone treat you like shit. Walk away. Burn that bridge to the ground.

Like the time where one of the seniors was clearly an asshole and was right on the border of racism. My manager wouldn’t do anything to jeopardize his promotion. He was clearly a bully.

Fuck that bullshit. I walked away as soon as I got my green card.

Sometimes the employee deserves to vent out his anger. He needs closure. He needs that satisfaction that after years of exploitation and humiliation he had the final word.

"Don't burn your bridges" is a good advice only when ghosts of your past are not going to cross the bridge and attack you in future. In many cases you should set the bridge on fire and destroy it till the last brick.

My point is that losing your composure is undignified, let them be the angry ones, they should understand that you have lost nothing and it should eat away at them. Giving a 'fuck you' is in a way providing closure for them.

So, basically, don't do it to hurt them more?

What if you want to provide a closure for yourself, and don't care about them?

Exactly. You should be good enough at what you do that you are never the one in need of closure.

Closure is an emotional thing that is not necessarily (in fact, I'd say not usually) connected to "being good enough" in any meaningful sense. If anything, it can be the opposite - when you realize that you have been treated in a way that is far beneath the value that you were providing, the realization of that fact can very well lead to a "fuck you".

Totally agree. It might feel good to drop the f-bomb on them but it's never in your best interest.

A good adult thing to do is to start recognising that different people have different ways of dealing with situations. A good adult thing to do is to start understanding that there is no one absolute answer to almost any question one could ask - including, but not limited to, the question: "Is it appropriate to tell someone 'fuck you' on the way out the door?".

Adults realize that actions have consequences. Saying fuck you to someone might make me feel better in the moment, but what would it give me in the long run? I would be giving others the chance to view me as childish, unprofessional, and uncivil. Where is the gain in that?

If you were childish, unprofessional, and uncivil, it would be the honest thing to do. Not everything has to be done for personal gain.

On a related note, I'd much rather be told an honest "fuck you" than a dishonest "it was good working with you". The former is an opportunity for me to reflect.

Not necessarily. Know a girl who said fuck off to her boss and walked out of the cabin because the boss wanted sexual favors and tried to force himself on her. Honestly even punch in the face would have been a very adult response. So it depends on the situation.

It may be entirely appropriate and deserving, but the person saying it is usually just shooting themselves in the foot. The employer, at the end of the day, does not care. It is temporary catharsis, but all it can do is hurt you in the long run.

This is likely to be true, but I must take issue with the assertion that "all it can do is hurt you". It is far likely to not matter at all - especially if one doesn't use that party as a reference, and if one was so unjustly treated as to be prompted to say such a thing; why would one do so? Still, one should also probably err on the side of discretion - it's certainly not bad advice but it isn't the one answer.

The start-up world is not at all a place where basic adult norms apply.

If they are shoving you in a loud sardine can for 12-16 hours per day while paying you way below market despite VC funding, no match on the 401(k), telling you to “wear many hats” instead of taking your career goals seriously, scamming you with “unlimited vacation” and probably not even bothering to give you decent health insurance, then a “fuck you” on the way out is frankly better than they deserve.

It's not a question of what they deserve but what it costs you down the road. My friend and I both worked at the same Bay Area startup under extremely trying circumstances. We knew the deal going in but this was ridiculous (no salary, just illiquid stock plus room and board--in a house that was under construction). When I left, they wanted me to pay for my long distance charges (this was in the 80s), which I couldn't afford to do because I'd been working for free and spending my meager savings down. I was so tempted to tell them "fuck you, fuck your phone bill and keep your stock." But I swallowed my temper, worked out a deal and parted on good terms. When the company was acquired by Microsoft, I was invited up to Seattle to join them. The stock I was ready to throw in the dumpster was eventually worth millions (plus additional stock grants from MS). My friend went the other route and sued the company for labor law violations. He got some short term satisfaction and a $20,000 settlement but burned some major bridges.

The moral here is not to endure abuse politely but to remain civil when possible. Leave before you get to "fuck you" territory. (Bonus moral: you think the startup world is crazy now? You should have seen it then.)

Your story presumes (in a somewhat horrifying way to me personally) that someone should choose to value financial outcomes in a case like this. I don’t see why that needs to be the case. The millions of dollars in your story seem like a bad thing to me, particularly given how they underscore the cumulative inequity and total lack of consequence inherent to the system. I don’t believe it would be morally acceptable to value that more highly than expressing visible signals that may help others avoid the people you’re dealing with in the first place.

If some shitheads get rich, who cares? I certainly don’t want to help them get rich. If I get rich doing that, I’ve failed.

And of course this is all to say nothing of the extreme selection bias inherent to your perspective. For every story like yours (essentially winning the lottery) there are ten thousand people who swallowed their pride, ate shit at work with a smile, did whatever was asked of them, and got absolutely no financial reward for it at all.

Okay, let me try this again. Forget the money. Forget the job at Microsoft (which was a huge deal back then--Microsoft was the center of the software universe at the time). Consider only this: if you have to walk away, walk away. But be civil about it. That's my point (I said as much in the final paragraph). However satisfying, going out with a "fuck you" is going to cost you. Maybe not money, but relationships, opportunity and reputation. I didn't swallow my pride and eat shit. I made a deliberate decision to value that relationship over my temper. I was lucky (as you say); it paid off. But even if it hadn't, even if the stock had dropped to zero, I still would have felt better about walking away from that relationship like an adult instead of an angry child.

My point stands, regardless of the outcome, though I can see how focusing on the money skewed the story for you.

But when you’ve been treated the way modern startups treat employees, the employer has already communicated to you that they don’t value the relationship, at a deep intrinsic level. They don’t value your basic workplace health (e.g. open plan offices, poor hours, poor insurance), they don’t value your career goals (“sorry you can’t focus on data pipelines like you were told... shrug ... wear many hats”), and so on.

If you find yourself later in life needing a professional assistance from that person who utterly does not value you, this is representing some much more gigantic failure and a worry about having burned a bridge is too insignificant by comparison to care.

Having said that, I don’t care so much about the “fuck you” aspect as much as, say, writing an honest Glassdoor review so that job applicants may avoid falling into their trap, or giving them exactly two weeks’ notice and no more despite whatever circumstances the project is in, and simply not staying in touch with them.

A good way to look at this is as a risk-adjusted return. Anybody can get rich by putting their life savings into crypto or some YOLO far-OTM options play, but that doesn't mean it's a good investment.

Why not on the way in then and avoid all the mess?

Hey, I fully agree. We software engineers do such an embarrasingly bad job negotiating for minimally healthy working conditions or wages that more fairly reflect our contributions to profits.

A totally reasonable heuristic if you’re looking for a job that won’t make you miserable is to just wholly avoid start-ups. To be clear, this is a heuristic even for people who are looking to work with modern tool stacks, be given responsibility they might not be given at traditional companies, gain exposure to business or VC insight or networking, etc.

Start-up jobs don’t offer those types of things.

May the bridges I burn light the way!

Depends on the circumstances. I'm pretty easygoing but ultimately, bridges have two ends and either end can be set alight.

Even if you feel the bridge has already been burnt, what's the benefit of burning the other end yourself?

If nothing else, it signals to others that you're not prepared to accept that kind of treatment. The small potential loss from cutting off a proven hostile party can easily be outweighed by the benefit of everyone else you deal with thinking twice before burning you.

Hopefully, nobody else outside of the company is going to know about that interaction.

Anger is a form of communication. If anything, OP would be helping to send a message that if you push people far enough they will act out, maybe they shouldn’t be pushing other people quite that hard in the future. Boundaries are being crossed, and badly.

> it signals to others that you're not prepared to accept that kind of treatment.

It signals it in such a way that the employer will attribute your decision to your lack of professionalism and not to their own actions.

I think quitting is enough to signal you won't accept that kind of treatment. I don't think other people will treat you better as a result of adding a "fuck you" when you quit. I think it's more likely to make you look like the villain rather than the one who was being mistreated.

Quitting is "enough" to signal a myriad of things, but it just doesn't communicate any particular thing with any reliability. People quit for lots of personal reasons. "Fuck you" means they quit for outrage. Saying "I'm outraged" may presumably communicate the same thing, but as it does in notably tepid manner, it really does not.

Let's look at this situation again:

> I was leaving at a critical juncture and the company begged for me to stay at least for 3 months to complete an important project. I said "fuck you" and left.

Does the "fuck you" here signal unambiguously that this person is outraged at the way they've been treated? It could just as easily signal that this is an asshole who will screw you over when the opportunity arises.

Something along the lines of "I'm sorry but I can't continue to work under the conditions you've put me through the last 9 months" would be a much clearer signal. Maybe throwing in some swear words would improve the message, but a "fuck you" on its own leaves unnecessary ambiguity as to who the asshole is. Perhaps I'm overly concerned about my reputation, but I'd rather not add room for people to side with the person who mistreated me.

Well, I wouldn't have assumed that they said nothing more. I've personally never worked at a place where I only spoke my mind when handing in my resignation.

Human beings have these things called "feelings". Sometimes they make sub-optimal or irrational decisions based on—and in service of—those feelings.

If you set your end of our bridge on fire, I'm nuking my end from orbit. Why? Because screw you. If you don't need me, I sure as heck don't need you.

I understand why there's an urge to do that. The disagreement here is about whether it's a sub-optimal or irrational decision. You seem to agree with me on that point.

My point, that you seem to have missed, is that sometimes what may objectively be the "best" long-term decisions are quite often not "worth it" short-term.

Acting on feelings is usually good for the mental health, even if it seems irrational or inefficient.

Don't knock it until you try it.

> My point, that you seem to have missed, is that sometimes what may objectively be the "best" long-term decisions are quite often not "worth it" short-term.

I'm still not sure what your point is. Are you saying that the "fuck you" is the best long-term solution once you factor in your mental health? Or are you saying that the short-term mental health benefits of the "fuck you" are enough to justify the long-term detriments?

100.0000% the latter.

And a big part of growing up is controlling those feelings when they lead to outcomes that you'd rather not have.


You are right. And this is one of the places where an employee takes a bigger risk than a founder. An employee needs references from previous employers. A founder does not need any references from employees. It is often the case this risk is underestimated and not compensated sufficiently.

There is a need to normalize startup employee comp, in a similar manner founders package was normalized about two decades back. It was YC that did it, AFAIK.

The advice is absolutely well taken. Just to clarify I did not use such harsh words for anyone though that is what went inside my mind and that is what the employer felt. In that sense it was a symbolic fuck you rather than a real verbal one. It kind of makes the entire discussion on this thread moot.

Also it is about optics. Many employers blatantly engage in exploitative behavior with a straight face and talk about "how we are like a family". Similarly I too can make a beautiful farewell speech that how I learned so much at the job and how thankful I am for such wonderful co-workers working towards a noble goal of changing the world with a straight face. Everyone knows it is fake, everyone knows the facts and yet everyone is forced to smile

The above employer faked the valuation data to make his company look far more valued than what it actually was. So I have no idea what those $300K convert into in case of a real acquisition. But I have to pay thousands of dollars to the employer and IRS to exercise them. They did tamper with some of my key immigration status, filed patents without including my name in it and also coerced me into signing a "bond" (though it is illegal if you are on h1b). Of course it took lot of patient negotiations and "difficult conversations" to resolve every single issue and throughout I felt humiliated (my current visa status is tied to the employment and hence I could not quit on the spot.) People say why don't you go back to your country then but when you have 2 US citizen kids in school and wife whose work authorization is linked to your visa status you have to patiently drink all the insults and quietly suffer the humiliation for the sake of family.

Agreed. People will forget the details of an exit before they forget the emotion. And somebody somewhere will do a back channel background check on you. 3 (or 12) years from now the reference (whom you won’t choose) will remember how they felt about you more than how they felt about your performance.

The issues with an exercise window should be discussed on the way in, not the way out.

> on the way in, not the way out.

My employer acquired another startup where I worked and hence I ended up with the new employer. As said above it was immigration status that gave mess less negotiating power because my status in the country is dependent on the employer.

Sounds like abuse of the visa system. It puts you in a tough spot.

Agreed. Would be nice if this attitude was weeded out before anyone was hired though.

Maybe I am alone in this but goood ol fashioned profit sharing has again and again been a better long term value for me

I have found employees & employers tend to do more favorable in a number of ways:

* All levels of employees get to participate in compensation

* do in part to that, participants (in my albeit subjective look at things) tend to work equally as hard

* there seems to be a natural tendency to reduce waste of resources everyone gets some of the revenue slice

The only real down side I can think of is the same ones stock options have (except for the vesting period, to be frank): the longer you have been with the company and or the higher you climb the ranks usually the more you get.

Also it is true that in profit sharing a lot of times a buyout may not always be spread around, unlike with options (though it happens with options too)

To me at least with straightforward profit sharing the gains are realizable In a consistent and judicious manner

Startups generally have no profit to share.

They can share only future profit which is in the form of stock.

It is strange that the typical window is so short, or that employees accept the ability to buy something as compensation in the first place.

> the ability to buy something as compensation

While that is indeed the mechanics, really what you get is exposure to upside without exposure to downside. The fact that it's options is a (probably outdated) structure that is beneficial from a tax perspective.

Only if the company IPOs. More commonly you buy the options, pay taxes on them, then the company goes under before you make your money back.

While that is common, that is unrelated to my point.

Being given an option grant does not expose you to downside. Exercising the grant can result in a loss, sure, but exercising is not necessary to have exposure to upside.

As the OP points out though, 90 day windows force you to exercise (and be exposed to downside) or forfeit your upside.

Big enough potential dollar signs in the eyes is enough to impair most peoples' critical thinking, sadly.

Has anyone successfully negotiated their way out of a 90 day exercise period or is it the kind of thing that can only be negotiated at a new job?

(Not A Lawyer disclaimer)

There's a tax law reason why this isn't a trivial change. Best reference I could find is here:


In short, to be treated as an Incentive Stock Option - which comes with benefits for you (taxed as capital gains, not as income, if you hold 1 year from exercise and 2 years from grant) and for the company (different accounting treatment and they don't have to withhold taxes at exercise time) - the option must expire within 90 days after your employment.

Some companies are now moving toward treating options as NSOs if you keep them after your employment, and ISOs if you exercise them during this period - but this kind of change comes with lawyers and accountants (and maybe even a change to the stock option plan approved by the board of directors) attached, so it's not easily negotiated for a single employee.

So, in your (uninformed, nonlawyerly) opinion, is a NSO grant with 90 day expiration just taking the piss?

For someone who was an uninformed early stage employee who has seen the company grow but far from being public, I find AMT to be a much bigger problem than the 90 day window. Although I suppose if I had a longer window, I could potentially avoid AMT by waiting.

I feel obligated to repost a recent comment of mine (full thread at https://news.ycombinator.com/item?id=19020085):

One of the former companies I worked at never allowed early exercise and issued standard ISO with 90 day expiration upon leaving, which is unfortunately essentially the analogue of "standard and clean" when it comes to employee compensation. By the time I was ready to leave (4+ years, I was very early) all my equity was vested, and buying it required spending ~250k (USD!) between cost of exercising and AMT taxes, all while the company shares were illiquid as ever. The company had no interest in helping me, despite me asking for an extension to the option expiration, they were too bitter that I was leaving and creating significant "damage" to the business.

It was incredibly painful and I felt very cheated and stupid for agreeing to those terms in the first place (actually faced some deep depression and anger against the world for a few months because of this, and thought about going to therapy), but what did I do in the end? I paid out the money. Yes, I wrote a check to my employer for 60k, and another check to the IRS for 190k, depleting my non-emergency savings (and this is from a very frugal person, who never even spent more than 8k on a car, car being my biggest expense ever). There were funds who would lend me the money, but wanted 50%+ of the proceeds, and if the company goes under you're still on the hook for a taxable event when the loan is forgiven.

Luckily AMT for ISO exercise can be slowly (very slowly) recouped in future tax years (and the new tax law made it a bit easier by increasing the deduction and the phaseout limits), but I still had to waste so much of my after tax money just to leave with what I matured over the years. And that money is now sitting in the government pockets for years, producing me no interest and losing value with inflation until I recoup all of it.

Fortunately, a year after I bought those shares one of the investors contacted me and bought some of my equity, so I was able to recoup all what I originally put in (and then some). But it's simply insane, and I am still in the hole for all that AMT that I will recoup in ~10 years, no less.

Other coworkers who left and didn't have the money to come up with the exercise and tax liability, simply lost them, justifying to themselves "well, they're probably not going to be worth anything anyway" (which could be totally true even after paying thousands to exercise them!).

It's a plain insult to startup employees. I wish all startup employees would rebel against this and refused to accept any startup offer unless there was early exercise paid by the company upon joining, or option expiration window of 10+ years.

I, for one, know that will never __ever__ join another startup again for this reason.

Very few people have $250K in liquid assets lying around, especially for such a risky venture.

I'll tell you a worse story: your company does allow early vesting so people exercise their options at grant time, long before the vest. This way you avoid the whole taxation problem were the exercising to be happening later.

But guess what? The company does a down round and lays off people, effectively 'buying back' the stock that laid off employees had paid for by 'early exercising' (i.e. the unvested remainder). Since the company buys back the shares at the same price employees bought it at, you think, hey - 'even stevens'? No! Because it's a down round, you're selling something 'above fair market value' (even though it's the price you paid) - and you have to pay taxes!

So consider that: you have to pay taxes on stock that you never properly owned, and never made a dime on!

Ex: you have 10K shares with strike price of 50 cents, vest over 4 years. You exercise them all right away (before vesting) at 50 cents. After 2 years, you get laid off, the company buys back 5K shares at 50 cents. Same price. But since there's a 'down round' the shares are only worth 20 cents each. You now owe taxes for selling 5K of something you bought at 50 cents, sold at 50 cents, but are only worth 20 cents, ergo 30 cents a share 'profit' - that you never realized on shares you never actually owned!

The company in the meantime, bought something at 50 cents only worth 20 cents and gets a tax write off.

The IRS is ballpark neutral, so it's really like the company taking money from employees they just laid off.

Now, the company can issue a ton more shares and wipe out the value of laid off employees equity, and issue new equity to the staff that stayed on to keep the current staff happy.

In terms of % ownership, this has the effect of simply transferring ownership from laid off staff to the current staff + owners.

This happened to me, I'm not sure how common it is, but surely it's not that rare.

This is why after working at startups for years I decided to take a FAANG job.

83(b) with pre-vesting exercise if you can, probably only works at early early stage. I did that twice with different outcomes, overall positive.

“If you can”... I’ve never quite figured this out. Is this something the company has to offer or can anyone do it with the financial means and acccess to a good tax lawyer / accountant?

Early exercise is a benefit provided by the company at the time of the option grant. Same company may choose to make the benefit available for some grants and not others (some reasons why they might not are listed here: http://www.startupcompanylawyer.com/2009/01/11/should-a-comp...).

You mention financial means, but keep in mind that depending on the stage the company is at, "financial means" ratchets upwards. The last "real" pre-IPO company I joined would have required a ~$300K check from me to early exercise.

You don't necessarily need to early exercise all of your options.

Does anyone actually understand the consequences of turning ISO's into NSO's?

It's easy for someone to say "oh yeah, just convert the ISOs to non-quals and give me my 10 year exercise window". What does it actually mean for the companies (and yourself on the other side) to support this?

We went through a giant hassle to provide this for our employees. Oddly enough, they don't appear to give a shit. At all. My cofounder and I thought this would be a big selling point.

The downside to an employer is: first, you know that in a 90-day exercise or lose them world, lots of ex-employees don't exercise. That's great for your options pool. Second, our employees seem not to care. Third, anything nonstandard raises questions in future rounds. Fourth, there's apparently some more complex tax accounting according to our cfo.

I don't know the exact consequences for the company, but my employer gave employees the option to convert ISOs to NSOs to give us a 10 year exercise window. It was a really nice thing to do because I for one couldn't afford to exercise my options.

I have had to walk away from several hundred thousand like this. Sickening

Seems like an obvious opportunity for a specialized financing firm...

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