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Startup Employee Series (Part 3 of 3)

Planning ahead will allow you to capture as much of the upside potential as possible with your employee stock options.

Recap — Part 1: “triple-pain” in down markets:

  1. Employment status inherently less stable
  2. Losses suffered in retirement “savings” (qualified retirement) plan
  3. No control or access to “savings” when it is needed

Recap — Part 2: employee stock options are not really a bonus:

  1. Even if you perform, the value of the “bonus” is not guaranteed
  2. You must first buy your participation in the “bonus”
  3. Significant stock option upside can be thrown out the window if exercised inefficiently

Part 3: Leaving Money on the Table

In this article, Part 3, we will focus on the lost upside financial gain most startup employees experience when the underlying stock appreciates but the employee uses a “cashless exercise.” …


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Startup Employee Series (Pt. 2 of 3)

I think there is a misconception about what employee stock options are and why they get them.

In Part 1 of this 3-Part series, we laid out three risks that startup employees take that can cause “triple-pain” in down markets:

  1. Employment status inherently less stable
  2. Losses suffered in retirement “savings” (qualified retirement) plan
  3. No control or access to “savings” when it is needed

Higher risk should have an associated price that is not usually covered by a startup employee’s salary. We are told that we are compensated for this risk by being awarded employee stock options…

Employee Stock Options

Most people look at employee stock options as a “bonus” or an incentive for working hard and bringing a startup company to life. While I agree that it is indeed a strong incentive. I do not agree that it is a “bonus.” At least not in the way many people think. For many, there is a fundamental misunderstanding about the underlying principles of stock options. And I think this misunderstanding can lead to a large amount of risk and/or lost opportunity cost for the startup employee. …


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Startup Employee Series (Pt. 1 of 3)

Investors are an integral part of the startup ecosystem. They risk their capital on the ideas and reputations of startup founders, and their teams, to help bring a new company to life. The average person would probably consider the amount of money investors risk on any given venture to be significant. However, it is most likely the case that the money invested in a high-risk startup venture is not the money an investor lives on, day-to-day.

For startup employees, however, this is probably not the case.

Startup employees have a unique opportunity. They are the group of people that get to solve the problems that lead to discovering something new and/or better. …

About

John D Perrings

Unbeatable Startup Employee Stock Option & Personal Finance Strategies | StackedLife.com | Authorized IBC

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