If you go to work at Chime or a similarly positioned company that is already receiving large valuations and on the precipice of IPO (or like WeWork a year ago) and then they IPO do you get rich? Or do you have to get on with a company earlier on? I don’t really get how pre-IPO works and wonder if it’s like other things in life where if you don’t know until everyone knows then you know too late. TC $328,000 M2, 11 YOE, non-tech
Yoe?
M2, 11 YOE, non-tech
Tech or non tech?
M2, 11 YOE, non-tech
IC or manager?
M2 is manager
M2, 11 YOE, non-tech
So it took 4 comments just to know about OPs role, yoe and TC.
I think it’s too late. There was hype in 2021 that pre ipo will easily go up to 2x~3x like Snowflake but most of 2021 IPOs are below the opening price. The upside is limited in the current market. In the current market, I guess 2x at most in the next few years. It may go down to 1/2 like Robinhood in the short run too. I think the range is 1/2 x ~ 2x in the short run. If you wanna get rich, I think finding promising series B/C company is important.
Thanks to be honest your post seems like it is super helpful but it is going over my head. So when you say 2x-3x you are saying that your RSUs become valued at 2x-3x their value pre IPO? Like I received $270,000 RSUs when I was hired (again, non tech). So if this was at Chime for example, those RSUs would be worthless or “funny money” pre-IPO but the hope would be after the IPO they are worth $500,000-$750,000?
Yes. Also, there can be some dilution on IPO though. Typically 5%~10% dilution on IPO but that’s the basic idea. For highly valued pre IPOs, I would multiply 0.7(arbitrary multiplier) to the paper money because anything can happen before the IPO(Wework, Better, IPO on the horizon almost forever etc.)
If you join a company the day before IPO you'll get something close to the IPO price for your RSUs. IPO price is not the same as the opening price on the first day of trading, or the closing price on the first day of trading, or the price when the employee lockup ends. IPO price is basically always less than opening and closing price on first day of trading. It's usually less than price when employee lockup expires also. So if you join a company right before IPO, it's very very unlikely that the value of your grant will go down before you can sell. It may not go up much, though. That depends on how well the company does.
Like anything in life, risk == reward (and higher chance to lose) This list is ordered by highest risk, highest reward. • Seed stage • Series A • Series B • Series C You get the picture, the earlier you join the better the deal, you also want to join at a very low valuation, and you want a flat number of shares.
This makes perfect sense thanks
Regarding flat number of shares, as opposed to what?
I think after series c,d it's relatively safer to join. But to get returns you need to join at proper valuations. If you join a company at less than 10b valuations it's easy for that to become 3x 4x if company is doing good but if you join at 15b 0r 20b valuations it's extremely difficult for any company to become 3x 4x unless the company has some unique moat.
At end of the day your judgement depends on luck also. Facebook or Google post IPO performance and reputation is no where comparable to Uber performance. Do whatever decision you take at the end it depends on how th company executes in post IPO period to maintain the same standard. There were mass migrations from Microsoft to google to Facebook to Uber what we remember but there are many in between which flopped( or didn't grow as expected) even after having Rockstar engineers. Because at the end it depends on founders vision how they want to carry their company in long term. Ex - Facebook was written off many times in past due to it's known issues but mark has grown the company irrespective of those critics. May be Uber case would have been different if Travis was still the CEO because founder driven companies in general do much better than other's. So you can take the gamble and if it hits then you get rich but there are chances that gamble won't work even when all check boxes are ticked
Your level?
M2, 11 YOE, non-tech