Stock options are hard

Stock options are hard

As an employee, startup stock options are hard.

I'm feeling pretty confident by now, but only because I've seen my friends get burned and been burned myself.

What's so hard?

  1. At one company, my option contract was to be signed "at a future date", not together with my employment contract. In the end, I got the option contract almost a year after signing, and the number of options was 2-5x less than what I was indicated during the offer.
  2. At another company, a friend got it even worse: they worked for 2 years without having received an option contract, and in the end, were let go without any stock (even though they'd passed their cliff).
  3. It's really hard to value grants. Founders/recruiters can tell you all kinds of stories, but unless you push them, you don't get the requisite numbers for figuring out the last-round valuation of your grant, and even less so any revenue-multiple-based valuation based on revenue and growth numbers.
  4. Nobody tells you about liquidation preferences.
  5. In the template startup documents many Estonian startups use, the company has the right to fire you and take away any already-vested options (Bad Leaver clause).

No wonder so many people treat option grants as just a nice perk, not something of economic value.