I had been talking to various officials in leadership for a few months
hammering out the details and had been under the impression that we had
reached an agreement, but I was surprised to find out that wasn’t the case.
I was informed 28 hours before my 90 day window closed that the agreement I
had thought I had didn’t exist; it was then that I realized I had 28 hours
to either come up with hundreds of thousands of dollars that I didn’t have
to save half of my stock, or I could sign the agreement as-is and avoid
losing half of my already-diminished stake. I opted to sign.
[...]
But I still haven’t found the next thing I’m really interested in, which
just feeds into the whole cycle some more. For better or worse, that’ll be
changing pretty quickly, since I’m pretty broke after working part-time and
living in San Francisco for so long. Even though I helped move a company’s
valuation almost two billion dollars, I haven’t made a dime from the company
outside of making a pretty below-to-average salary. That’s after six years.
Think on that, kids, when you’re busting your ass day and night to strike it
rich with your startup dreams.
Those options are worth a lot less than you think they are. One of the wonders of cash is it's very hard for companies to retroactively steal it back.
If you're going to a company that gives options, demand either an 83b or iso to nso flip / 10 year exercise window.
What you actually need to ask for in this case is RSUs (vs options). The 83b election is something you independently file with the IRS. (you may need a letter from the company for proof, but they'll have drafts of those already that they've used for the founders -- speaking from experience as the person who set this up for our company)
However, RSUs only make sense in the seed stage. Past A round, the 10 year exercise window or an early exercise clause of ISOs into RSUs might make sense depending on the numbers, but likely not.
Even though I helped move a company’s valuation almost two billion dollars, I haven’t made a dime from the company outside of making a pretty below-to-average salary. That’s after six years.
Can anyone unpack this statement a bit more? What is "already diminished stake" in reference to? Is this saying that Github made some kind of offer that would let him keep half his vested options without putting any money up, like converting them to NSOs or something?
I'd really like to understand how companies handle exits like this. Certainly it's a valid perspective that employees are entitled to 100% of their vested options. But, devil's advocate: There is also the counterpoint that pre-IPO valuations are very high and based on special terms given to private investors, so maybe there is a rationale to negotiating a discount on pre-IPO exits.
I would like to understand if Github acted out of good faith here to any degree, i.e. where they were not contractually obligated to.
I also understand Holman noted he hasn't "made a dime" from the company outside his salary, which would be completely f'd up. But it's unclear to me whether that's merely in reference to liquidity or if he actually walked away with no stock. It sounds like he did walk away with some stock as a result of a negotiated agreement with Github.