Absolutely agree. It’s a numbers game but the first 9 may not hit but the 10th makes you wealthy. So if you’re on your 6th then you will feel the equity value is worth $0
You seem to be unfamiliar with the AMT trap? I would recommend Googling it. It impacts people who are not well-off prior to exercising their options by triggering AMT upon exercise.
Right, but why exercise the option without next selling it? If you’re quitting, that’s a risk. And AMT is applied on the gains. So your strike is $1, valuation currently at $100 and you pay tax on the $99 gain. Unless it’s Theranos that valuation wont go back to $1, so yes, you’re privileged.
In private companies, you often are unable to sell your shares because it requires board approval. The AMT trap, in oversimplified terms, is being wealthy enough on paper, due to shares, to trigger AMT but unable to sell shares to cover the taxes.
It can be a tough decision, but I have been through it enough times that I don't really care what the options package is. I just want one if everyone else gets one, but otherwise I look at salary and benefits. Because most likely the shares will become worthless, and if not, I most likely won't be around to see the liquidation event. I never exercise unless I know for a fact a liquidation event is coming.
Thats different than being an uber early employee and knowing your private equity is worth a ton. I also wouldn’t exercise random startup shares unless they were real cheap and I wanted to roll the dice. The uber example is clearer. I’d always rather be a paper millionaire than not a millionaire at all. At least you have the choice to exercise some if you leave, or all if you can afford the loans. Also uber is a bad example since people DID sell their private shares as there was enough of a marketplace for it.
Because you literally can’t sell it. This is why we people get stuck at startups. You must immediately exercise upon leaving but cannot sell, incurring huge tax bills but zero cash in your wallet.
If you are rich you can afford it. If you aren’t, you are forced to take zero.
Huh, TIL. Investopedia only says "may also include early investors" [0]. I've checked the S-1's of some companies.
Cloudflare's S-1 has a 180 day lockup for "Our executive officers, directors, and the holders of substantially all of our capital stock"
In One Medical's S-1 "We, our directors, executive officers and the holders of substantially all of our equity securities, have agreed" to 180 day lockup.
In the Unity S-1 they have "certain holders of our common stock": "All of our directors and executive officers and certain holders of our common stock and securities exercisable for or convertible into our common stock, are subject to lock-up agreements that restrict their ability to transfer such securities for a period of 180 days after the date of this prospectus", and apparently they allow selling of 30% of the stock within the first two days of trading. Couldn't find any reference on who those certain holders are.
I suspect it may be the IPO underwriters, the big financial institutions that most companies going public will work with to make their shares available to the public. In short, the company and these institutions negotiate the initial price of the shares beforehand, and on the day of the IPO, those institutions purchase those shares from the company at that price (thus funding the company) and then immediately flip them (hopefully for a profit) to the masses.
Musk has been really bullish on AI. In 2015, he seemed pretty sure we’d have super intelligent AI in 5 years (ie now), and he worried about it which is why he started Neuralink. So he probably was hoping for transhumanism by 2021. That’s why I discount those who think Musk was scamming about self-driving being available soon. He was naive and he tricked himself. Don’t believe his time projections about anything like AI.
Doesn’t mean those goals won’t be achieved, even if they are late, tho.
Most criminals didn't know these existed. For that matter, neither did most citizens know that cameras were peering into their backyards and microphones doing machine learning on what people were saying. Sorry I don't have the links to the tech specs handy.
> At that level public schools shouldn’t exist as private do a better job by all metrics.
There is no real "that level"; average are misleading without better context. Bill Gates walks into a bar and "the average net worth is 1 billion per person".
> At that level public schools shouldn’t exist as private do a better job by all metrics.
Private schools have the liberty to pick and choose their students. A special needs student that requires extensive care throughout the day will be rejected by a private school, but the public schools have to accommodate the student. Most private enterprises are efficient precisely because they select their customers with a view to minimum cost and maximum revenue. This is fundamentally incompatible with a public teaching system that has to serve everyone.
Currently under investigation as arson.