Job isn’t as lucrative as other jobs, golden handcuffs.

[Anonymous]

Anonymous wrote:I mean, this is the thing with startups. You accept lower cash compensation for the chance of a larger payout down the road. You have to decide what your risk tolerance is. Do you prefer security and relatively knowable compensation? Then a startup might not be for you. Are you young without major financial responsibilities? Are you already wealthy and not in need of a high income? Then a startup can be a great idea.

DH and I have worked for startups that had successful exits. In hindsight it was worth it to stay, but we had LOTS of convos about that tradeoff above.

That’s the hard part for us. Typical UMC family living in a HCOL area with young kids. We are doing fine financially but also feel the difference majorly in cash flow and our savings are all tied up in the market and retirement. If we were wealthy already it wouldn’t matter so there have been a lot of conversations. We can do it and ride it out but it means cutting back from our lifestyle in several ways.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I mean, this is the thing with startups. You accept lower cash compensation for the chance of a larger payout down the road. You have to decide what your risk tolerance is. Do you prefer security and relatively knowable compensation? Then a startup might not be for you. Are you young without major financial responsibilities? Are you already wealthy and not in need of a high income? Then a startup can be a great idea.

DH and I have worked for startups that had successful exits. In hindsight it was worth it to stay, but we had LOTS of convos about that tradeoff above.

That’s the hard part for us. Typical UMC family living in a HCOL area with young kids. We are doing fine financially but also feel the difference majorly in cash flow and our savings are all tied up in the market and retirement. If we were wealthy already it wouldn’t matter so there have been a lot of conversations. We can do it and ride it out but it means cutting back from our lifestyle in several ways.

Say your options are worthless. What happens next? Will you be mad at DH?

If it is no biggie, and you all just move onto next opportunity, and can manage for several years (Uber was private for a decade for instance) at lower income, not sure what your problem is. No one can tell you what his shares will really be worth, but unless there is a secondary market right now they are worth $0.

[Anonymous]

Haven’t seen recent startups giving double digit employees $M option grands, that’s some dot.com nostalgia.

[Anonymous]

Shopify, a profitable tech darling, is laying off people.

https://news.ycombinator.com/item?id=32968704

[Anonymous]

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Anonymous wrote:At the previous company he had about .15 percentile and now he has around 1 percentile of the total options pool.

Well that is good, if he has 1% that’s a valuation of $400M which is not unreasonable.

That’s a huge amount of equity for a double digit employee hire, which is weird with lower salary — it would seem they really wanted him, did he they give him choice of equity or salary?

Are they profitable? With current downturn, funding will be drying up and acquisitions may hinge on more than revenue.

https://www.ft.com/content/7cbae3f3-8197-4816-aba8-860cac76cbb4

Yes it’s profitable. I don’t think so. The comp plan is just not as favorable as previous jobs, where he averaged $500+ several
years ago. It’s just a pretty big hit on our day for day spending. Any money we received from past jobs when into the market or savings.

If it’s profitable really surprised they didn’t go public last year rather than fundraising.

Revenue producing? Maybe that’s different. The valuation is under $500m. It’s only a few years old. I don’t think there is any plan for it to IPO ever. It seems similar to his last company which was acquired. That’s what I know. From what I’ve heard they are doing well and having no issues fundraising. It’s just a big question mark when an exit especially since he can be making significantly more elsewhere. He doesn’t want to leave but he’s not the one that does our family’s finances and budgeting. We live in HCOL area and we got used to his previous pay so it requires some changes. I would hate for him to give up that income for a few years and the company for some reason doesn’t have an exit.

Revenue is not profit, you can drive a lot of revenue by selling two dollars for a one dollar price, that’s a standard Internet me.

What do you mean they have no plans to IPO? What is their expected exit? Lots of companies, like large, take companies are laying off now, so I don’t think they would be looking to do an acquisition and take on more stuff with a unprofitable business?

I would really take a hard look at the long-term plan here, and try to see what the real valuation, it sounds like that’s just with their internal person to try and find a company.

I think it would be more likely they were acquired. They are hiring now, not laying off. It’s still under 150 employees. It’s not an internal person coming up with the valuation, it’s a 409a valuation.

The 409a just represents what the founders and investors negotiated as “value” for the stake they are getting vs money in. It in no way reflects any kind of market value. Not sure why you are hung up on how they came to valuation; if they aren’t profitable it’s a crapshoot.

Who is going to be doing acquisitions in this environment? Most tech startups and even big tech are looking at layoffs, their stock value is down, and borrowing capital to pay for acquisition would be more expensive than any time in last decade. You expect some cash rich company to swoop in and buy it out for $0.5B?

They are having no issues getting funding and they are hiring. There aren’t layoffs so it’s not across the board. They already received an offer for the value but are raising another round.

Sounds like they are going through a round C? I would wait until they finish that round before you say they have no issues. If not, again, what is the runway?

[Anonymous]

Anonymous wrote:I mean, this is the thing with startups. You accept lower cash compensation for the chance of a larger payout down the road. You have to decide what your risk tolerance is. Do you prefer security and relatively knowable compensation? Then a startup might not be for you. Are you young without major financial responsibilities? Are you already wealthy and not in need of a high income? Then a startup can be a great idea.

DH and I have worked for startups that had successful exits. In hindsight it was worth it to stay, but we had LOTS of convos about that tradeoff above.

+1

Reasonable general advice.

OP: Your risk tolerance should place an emphasis on the fact that your husband supports the family and that you have several young children.

[Anonymous]

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Anonymous wrote:At the previous company he had about .15 percentile and now he has around 1 percentile of the total options pool.

Well that is good, if he has 1% that’s a valuation of $400M which is not unreasonable.

That’s a huge amount of equity for a double digit employee hire, which is weird with lower salary — it would seem they really wanted him, did he they give him choice of equity or salary?

Are they profitable? With current downturn, funding will be drying up and acquisitions may hinge on more than revenue.

https://www.ft.com/content/7cbae3f3-8197-4816-aba8-860cac76cbb4

Yes it’s profitable. I don’t think so. The comp plan is just not as favorable as previous jobs, where he averaged $500+ several
years ago. It’s just a pretty big hit on our day for day spending. Any money we received from past jobs when into the market or savings.

If it’s profitable really surprised they didn’t go public last year rather than fundraising.

Revenue producing? Maybe that’s different. The valuation is under $500m. It’s only a few years old. I don’t think there is any plan for it to IPO ever. It seems similar to his last company which was acquired. That’s what I know. From what I’ve heard they are doing well and having no issues fundraising. It’s just a big question mark when an exit especially since he can be making significantly more elsewhere. He doesn’t want to leave but he’s not the one that does our family’s finances and budgeting. We live in HCOL area and we got used to his previous pay so it requires some changes. I would hate for him to give up that income for a few years and the company for some reason doesn’t have an exit.

Revenue is not profit, you can drive a lot of revenue by selling two dollars for a one dollar price, that’s a standard Internet me.

What do you mean they have no plans to IPO? What is their expected exit? Lots of companies, like large, take companies are laying off now, so I don’t think they would be looking to do an acquisition and take on more stuff with a unprofitable business?

I would really take a hard look at the long-term plan here, and try to see what the real valuation, it sounds like that’s just with their internal person to try and find a company.

I think it would be more likely they were acquired. They are hiring now, not laying off. It’s still under 150 employees. It’s not an internal person coming up with the valuation, it’s a 409a valuation.

The 409a just represents what the founders and investors negotiated as “value” for the stake they are getting vs money in. It in no way reflects any kind of market value. Not sure why you are hung up on how they came to valuation; if they aren’t profitable it’s a crapshoot.

Who is going to be doing acquisitions in this environment? Most tech startups and even big tech are looking at layoffs, their stock value is down, and borrowing capital to pay for acquisition would be more expensive than any time in last decade. You expect some cash rich company to swoop in and buy it out for $0.5B?

They are having no issues getting funding and they are hiring. There aren’t layoffs so it’s not across the board. They already received an offer for the value but are raising another round.

Sounds like they are going through a round C? I would wait until they finish that round before you say they have no issues. If not, again, what is the runway?

OP is an elementary school teacher, I don't think DH is sharing this information with her, and she just wants to hear that because all these investors are interested, and they have already had a "full price offer" there is no risk (I think her DH is selling her this).

As long as your DH is straight with you (they had an offer but went with more financing (growth?), they are profitable, he is not going to be laid off), I'm confident you will be a millionaire by 2024 (since recessions average length is 15 months, so even if we enter one today, that will be the end and I'm sure they will jump at an exit)

Congrats and hang in there!