It's from 2007; if someone showed you this today, as what you needed to know as a hire, they'd be scamming you.
This seems like only the "first slide's" worth of what a tech employee needs to know about stock options, and not the most important things.
It's also worded imperfectly in parts, with the effect of being misleading.
If you start by looking at the lede and first paragraph, it's unclear who this is for, and seems more like a child's "book report", with no regard for the reader, nor sufficient understanding of the space that's relevant to the reader.
Perhaps this wasn't garbage in 2007, but I'm flagging it in 2025.
anotherhue · 1m ago
Couldn't agree more. The tech boom made a lot of people rich, you might call that egalitarian, and believe that you too could share in the wealth.
The financial class call that uncaptured value, and they have since altered the terms to prevent that. Naturally the company still wants to pretend otherwise so when you hear the TC you add USD to timebomb banana bucks and come out with a USD total.
If you want equity start your own business. You are not in a position to get any of theirs.
wiseowise · 2h ago
What would you suggest in 2025?
daveguy · 1h ago
Always consider stock options to be worthless.
No comments yet
yohannparis · 1h ago
Where can I find up to date information on a stock-option?
M3L0NM4N · 2h ago
This should be titled, "How Employee Stock Options Work"
Sohcahtoa82 · 2h ago
Not to mention how much it leaves unanswered.
What happens to your options if the company goes public or gets acquired before you exercise?
What if you exercise but decide you want to sell but the company isn't public?
braza · 1h ago
I know that we're writing on the Y Combinator-sponsored forum, but after the events of the Windsurf/Google fiasco, the exits of Instacart, and how the acquihire is scaling, is there any indication that SO is a really good incentive nowadays?
jiveturkey · 59m ago
I can cherry-pick examples also. Figma, CoreWeave, Voyage AI.
Today, yesterday, stock options have always been a lottery ticket.
JonChesterfield · 2h ago
This really shouldn't get the fundamental point wrong
> When an employee exercises an option, the company must issue a new share of stock that can be publicly traded.
No. When you exercise, you get the stock, but it's definitely not guaranteed to be publicly traded.
For example Graphcore gave people options, which if exercised became stock in graphcore. If you then found a buyer and asked GC to approve the sale, they declined. Not public. Later they revalued that stock at zero.
To a better approximation, stock options work if you trust the company to pay out.
jdcampolargo · 2h ago
> stock options work if you trust the company to pay out.
100%
cyberax · 1h ago
> For example Graphcore gave people options, which if exercised became stock in graphcore. If you then found a buyer and asked GC to approve the sale, they declined. Not public. Later they revalued that stock at zero.
From looking at Wiki, the company is basically bankrupt with just $2.7m revenue for 450 employees. So their stock is literally worth nothing.
If they do get acquired by Softbank, employees will get a portion of the sale according to the amount of shares they own. The company valuation won't make any difference.
JonChesterfield · 1h ago
Wiki is out of date. Softbank acquired graphcore ages ago for many million dollars. Employees got zero times however many shares they owned.
For related reading, see "drag along" for why the voting rights attached to shares mean nothing.
Well, it's not much different. The investors with preferred stock got some money back, taking a loss overall. So this was basically a bankruptcy with employees and founders getting nothing.
JonChesterfield · 24m ago
"Founder liquidity" is worth looking up. If you're curious about this specific case, UK companies register accounts that can be read by anyone. I'm mostly calling this out as an example of why "public" is an important error in the op. Were the shares publicly tradable, the employees that chose to could have exited.
alecco · 1h ago
Of course Stanford [1] paints it like a Disney movie without mentioning:
* Share Class & Rights (e.g. common stock, voting, etc)
* Tax issues and how they are structured (a friend had to pay a lot even before exercising due to bad legal paperwork)
* Dilution
* "Market price" nonsense for private companies
* Other risks when exercising
* Liquidity
* Boom/bust cycles
* Lots of growing changes might get them to "have to let you go" and you get nothing to show for
Basically, you should talk to an experienced lawyer before taking any offer like this.
This seems like only the "first slide's" worth of what a tech employee needs to know about stock options, and not the most important things.
It's also worded imperfectly in parts, with the effect of being misleading.
If you start by looking at the lede and first paragraph, it's unclear who this is for, and seems more like a child's "book report", with no regard for the reader, nor sufficient understanding of the space that's relevant to the reader.
Perhaps this wasn't garbage in 2007, but I'm flagging it in 2025.
The financial class call that uncaptured value, and they have since altered the terms to prevent that. Naturally the company still wants to pretend otherwise so when you hear the TC you add USD to timebomb banana bucks and come out with a USD total.
If you want equity start your own business. You are not in a position to get any of theirs.
No comments yet
What happens to your options if the company goes public or gets acquired before you exercise?
What if you exercise but decide you want to sell but the company isn't public?
Today, yesterday, stock options have always been a lottery ticket.
> When an employee exercises an option, the company must issue a new share of stock that can be publicly traded.
No. When you exercise, you get the stock, but it's definitely not guaranteed to be publicly traded.
For example Graphcore gave people options, which if exercised became stock in graphcore. If you then found a buyer and asked GC to approve the sale, they declined. Not public. Later they revalued that stock at zero.
To a better approximation, stock options work if you trust the company to pay out.
100%
From looking at Wiki, the company is basically bankrupt with just $2.7m revenue for 450 employees. So their stock is literally worth nothing.
If they do get acquired by Softbank, employees will get a portion of the sale according to the amount of shares they own. The company valuation won't make any difference.
For related reading, see "drag along" for why the voting rights attached to shares mean nothing.
https://sifted.eu/articles/graphcore-conditional-sale-agreed...
[1] Stanford to continue legacy admissions and... https://news.ycombinator.com/item?id=44846130
This is embarrassingly bad. Factually wrong on substantive points.
They don't.