My $0.5 Million Mistake: Three Lessons

[rant] I joined LinkedIn fresh out of school, about ten months before it IPO’ed and I made the mistake of leaving far too early; this post is for people whose companies are growing rapidly and have likely/will g0/are going through/about to go through a liquidation event. I’m thinking of you Uber, Lyft, Pinterest, Dropbox, etc. I don’t want you to make the same mistake! So here’s my story:

I think of myself as fairly capable and intelligent, but I don’t have all the financial street smarts in the world kind of engineer; that’s what you get when you have an eastern block raised academic of a father, but I digress.

When I joined Linkedin it was around 500 people total and I was engineer number 200 something. It was my first real job out of school. Yes I got given this thing called “stock”, but it’s just bonus to the high salary I’m already making right? Oh, how naïve I was… More on this in a bit.

Lesson One: stay at the core of a fast growing company.

At a rocket ship of a company, you’re in a hiring frenzy. The numbers are hockey sticking, machines are falling over, and there isn’t much jostling and battling for projects just because there are so many to choose from. Put it bluntly there’s a lot of opportunity to shine.

Now there’s this thing called the “halo effect”. It manifests itself around whatever is core to the company and whatever team(s) bring in one of the main key performance indicators (KPIs) will get far more reward than teams that don’t. I learned this the hard way by chasing interesting projects, but unfortunately having things out of my control cancel them, leaving me with diddly-squat — “Johnny, I’d like to give you a promotion, but because none of your projects shipped, I can’t make the case for you to management.” That also meant I never got an extra stock bump since I never was promoted; double diddly-squat.

For those that don’t know, stock a.k.a. equity, is the only way for the ordinary Silicon Valley tech worker to comfortably live and raise a family in the Valley. Don’t believe me? See this Wealthfront blog post. If you’re at a hyper growth company, the likelihood of the stock increasing in value and becoming liquid is worth more than you think. So positioning yourself properly to get more probably isn’t a bad idea; instead it’s a great idea, especially if you stay at the core.

Lesson Two: Don’t be immature. Think win/win.

I haven’t lived long enough to see this done well, but as hiring pressures take their toll, there inevitably are cultural and managerial fissures that will manifest: manager one-on-ones will be rare; the manager who hired you might move up and you’ll be stuck with a fresh manager with little to no managerial experience; if you don’t know what’s going on you might be left with the legacy software no body wants to maintain, etc.

Being a free citizen, you get choices. I get to decide where I spend my money, I get to decide what charities I contribute to, I get to decide who I want to vote for, etc. The flip-side of that is that if I don’t like a product, or dislike the way I have been served at a restaurant, I can decide to vote with my feet and cease to be a patron. At a fast growing company, don’t think like that! The reality is that no body has the time to deal with your something or rather. Sure, in a perfect world they would, but your needs most likely aren’t going to be addressed until the company settles and it comes out in a net promoter score (NPS) survey, or some other initiative by HR. I was quite immature with regard to this. Perhaps I was too idealistic, but I decided that I should seek greener pastures, that’ll teach ‘em *shakes dust off of sandals*… In hindsight, had I been more mature about the situation, there were many avenues I could have taken; I could have asked to switch teams, I could have been more pro-active in reaching out to my manager; I could have found a something that worked out.

Looking back on it all, I think it comes down to the fact that I wasn’t thinking win/win. Due to the “distress” that I was encountering and my immature way of dealing with it, winning for me and winning for LinkedIn wasn’t an option; if you want out, you’re going to find any way to check out. Instead, when the rocket ship is jumping about, stay calm and think win/win — thinking about how you’re going to help keep the rocket ship keep going while finding a comfortable spot to reside.

Lesson Three: If you do decide to go, make sure you know what you’re leaving behind.

So I decided to leave; a brash emotional decision, rationalized as “It’s not all about the money, and I can find something more stimulating else where.” Even in such a cloud of emotion, don’t forget that you have leverage.

Basically engineers are super expensive in the Valley. If you can find someone who’s never negotiated well, they’ll be a guaranteed $20–30K in salary lower than everyone else. So you giving them a $10K bump and giving them the “standard amount of stock to all new engineers” will make you look generous. Okay now I’m ranting about my current employer — I digress. Remember this, most start-ups end up being duds, except in the case when they are a fast growing company. Never mind how I negotiated, I never used the leverage of the stock that I had, because it was actually worth something, plus more. In addition, trajectories at fast growing companies are more valuable than at smaller start ups; you’re far more likely to get promoted and need I say it again, you’re stock is actually turning out to be worth something.

So I thought I found the right startup, but I made the mistake of not properly valuing the trajectory of LinkedIn and what effect it would have on the stock I was given; current stock price x amount left == money I am losing right? Wrong! If you know how your company is doing (what’s growing, etc), you should be fairly confident that your stock will appreciate (except if you’re Zynga or Groupon), not to mention those extra stock bumps you’ll get when you get promoted. So if you’re negotiating, make sure you factor in that growth.

So where does the $0.5 million come from? Well I left $100K of ISOs on the table when I left, that are now worth $250K. Add in a promotion, and a stock refresh of RSUs we’re talking “largely in the bag, you just need to stay there and work” $250K. So $250K + $250K = $500K == $0.5 Million.

So here I am, reflecting on the years that might of been at Linkedin, and realizing that I have made some poor decisions. Big scores, don’t come that often, let alone ones where the work was interesting and the people were (in hindsight) great to work with. So for all you who think the grass is greener somewhere else: it probably is. Except, I bet you there’s a greener patch in your company, right at the core of it, and you just need to have the maturity to look. [/rant]

P.S. Leave your abus… I mean remorse/hindsight is 20/20 stories in the comments.