> It’s just starting to grow in its market
Then you should not work at one. Genuinely. The only way comp makes sense at a startup is if you think the equity will end up valuable. Most people who believe this will be wrong, so you have to really believe that you're the exception. If you don't, it makes a lot more sense to work somewhere that's already found product-market fit. Your labor is an investment that's very difficult to diversify.
> Treats its employees the way GitLab treated me
This is tough, but I know people who exercised shares after being fired, and then saw those shares become valuable. How do you decide that you being fired doesn't signify the company having lost its way? How do you hold the idea that you were fired and it's bullshit at some level, but the company will still do well and you can make money? I don't know, it's hard. You should think very hard about this, if you're in this position.
IMO, part of working for a startup is accepting the risk/instability. Another part is taking on responsibility at a much faster rate than you otherwise would.
That's typically compensated via equity.
The author of this post played an important role in GitLab's early development. They deserve to have their $1 million payday now that it is public, regardless of how they felt in the months after being fired.
They were robbed by GitLab's unethical stock options terms.
Employees also get screwed when they, under time pressure, exercise stock options which then go on to be worthless. And when they simply can't afford to exercise options. It's a huge flaw in the current startup system.
It would be great if YC used its muscle to actually fix this problem. Startup employees are getting screwed by this every day, in many cases by YC companies.
fwiw if anyone is ever in this spot personally... there are almost always VCs/banks/investors/coworkers willing to front the cash to exercise options in exchange for some upside on the potential gain (I think there are entire startups based on this premise?). It's def worth asking around.
Edit: I thought this was a recent post, didn't realize this was from 2017.
If anything, the stock price tends to go up when a company announces layoffs(sometimes even if what prompted that was financial distress).
The Borg Collective could go IPO on "Assimilation Enterprises Inc" and it would likely have an outstanding valuation.
When making financial decisions, it's one thing to vote with your wallet. It's another thing to not want to 'invest' in a company because they wronged you in some way. It was a business transaction to them, it should be a business transaction to you.
I get that the author had all reasons to think the company would go under (high churn for one, competition, etc), which would make his options worthless if that were the case.
Ultimately though, he got offered a bunch of options for a small price. There are drawbacks to exercising them, as he pointed out. But the way he was personally treated should not have factored in his decision.
I hope he bought bitcoins in 2017, at least.
Not sure the point of posting it now, feels a little bit like dancing on his grave.
EDIT: See https://www.esofund.com/
There are other newer places also like https://join.equitybee.com/
Also, brokers who create a secondary market for this equity will also arrange financing, but it depends on the "hotness" of the equity.
SIDE NOTE: If you have SpaceX stock, and you're going to leave it on the table due to taxes, reach out to me and I can arrange for something also. But go to ESOFund, etc first of course - those are professional outfits.
18k isn't a small chunk of change, but it should be managable by most engineers. going from 4000 (.27*15k) to 20+K is a big jump, but it shoudn't be what scares you away.
Tomorrow on the 14th of October 2021, GitLab is going to the public markets and will be priced around $60 - $66 a share. So this person threw away his $1m worth of stock options because of GitLab's culture.
4 times your annual salary in one lump payment is a life-changing sum of money for most people.
A cold-hearted, unemotional, calculation might have led him to a different conclusion four years ago--cheap options are very cheap, so the risk is low. But it is very hard to know that. And if a company has done you wrong, not giving it any more money, time, and emotional investment can be worth a lot of money to you.
This is one area where I think the company didn't make the consequences clear. But I also understand that they were trying very hard to not appear to be giving tax advice. Also, my company specifically asked us NOT to do small purchases. I guess there were people doing monthly exercises with each paycheck and the company didn't like that (it wasn't forbidden, just frowned upon).
The tax if exercising at this point two years down the road might have hurt.
What you describe -- and as someone that was bit by the AMT wrt ISOs, I recommend -- is exercising as soon as they vest to minimize the gain between the strike price and the fair market value at time of exercise. If the FMV goes up, you're going to be stuck paying the AMT on the spread, and not even be able to sell your shares to cover the tax, because pre-IPO stock is effective illiquid. If you wait until after the post-IPO lockout date to exercise, you'll pay even more in taxes, but at least you can sell some stock to cover it. Ironically, this is actually less painful, because you actually have liquidity.
If the company needs the cash more then maybe they'll let you keep the unvested shares, but since your usually-Common-Stock strike price is typically a lot less than what investors will pay for their Series-X shares it's likely they'd rather take back the Common Stock (?) even in cases of one or more transpired or likely down rounds (?).
If Gitlab IPOs at $66/share, that means the author will get almost $1M from selling their shares they acquired for $0.27.
As far as I understand it, you don't usually get to keep your options when you're fired.
Rest of the post? Disgruntled employee trying to spin "I was fired!" into "I quit!"
Is gross misconduct present in this article? I can't say. But the author does not paint a positive image for themselves.
I don't really sympathise with the author, either. He's just boasting about money on the table that he could afford to say no to. He's an asshole, I don't care for him. Perhaps Gitlab fired him because he was a jerk. Who knows, who cares.
Being a Fired American isn’t some stigma that one needs to “spin”.
Which would have been the better investment?
That said, if you'd invested $4k on a couple winning horses at Golden Gate Downs in 2017, you could also be a millionaire, so this sort of backwards-looking estimate is of limited value. :)
Now Gitlab the open source tool was pretty nice back when I used it half a decade ago. Was much better than using that monstrosity called Gerrit. But nowadays I just use Github and don't even think about it anymore. They've won, kinda like Kubernetes vs Docker Swarm.
Whoops! That was… foreseeable.