Stock options from a start-up's potential IPO or RSUs from publicly traded company. Which do you prefer?

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dood1

New

dood1
Nov 2, 2020 13 Comments

When looking for a new job which one has more potential financially? Startups can IPO and early employees can be awarded a lot of stock options or it may fail to go to an IPO for many reasons. Publicly traded company almost always give RSUs at joining but theres a cliff.

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TOP 13 Comments
  • Oracle / Product
    aTEs87

    Go to company page Oracle Product

    PRE
    Intel Corporation
    aTEs87
    Startups could take over 10+ years to ipo. Startup employee stock could get diluted and end at 0. With RSUs you know what you are going to get for the most part. Working for startups as employees is a high risk low reward situation.
    Nov 2, 2020 2
  • I spent about 15 years at 3 startup, and even had 1% equity in the last, where I was a VP. Two were sold and one became a lifestyle business for the founder. Max TC was $185k.

    Net value of all my stock was a $500 long term capital loss, since all equity was worth $0. For the startup where I was a VP, I did get a $350k cash payout from our main investor, and package from the acquiring company that gave me a 2.5x bump in TC, so it wasn't all bad. Of course, if I'd spent 10 of those years at FAANG, I would have been much, much better off. That said, what I learned at startups is probably what let me have a shot at FAANG to begin with.

    In any case, young me would probably still go the startup route for the experience, despite low probability of payout. Older me, with kid and a mortgage, is more about stability and (semi) predicability, so public company RSUs >> private RSU/options.
    Nov 2, 2020 2
    • New
      dood1

      New

      dood1
      OP
      What skills from the startup was able to help transition to FAANG? What role do you play at FB now?

      Isn't it fair to say that the last decade has been really good for FAANG and in hindsight, working at FAANG would have been a great move? We don't know how the stock market will behave the next decade and we may not see the kind of stock appreciation we've seen to make FAANG an obvious choice in the future.
      Nov 2, 2020
    • Startups offer end to end ownership of everything and tremendous ability to determine exactly what you work on, and when, especially at smaller startups. I've owned client, server, mobile, web, product, and even customer service at various points of my life. System design/architecture is an all day, every day kind of thing (a fun side effect is that I absolutely LOVE the system design part of interviews). As a VP, I was able to manage budgets, org strategy, and corporate strategy. A bonus of being acquired is that I've spent a bunch of time interacting with SVP, EVP, and C-level folks at a > $100B company. I can communicate at the executive level, but still can get into the weeds technical issues.

      To actually answer your question, I'm an M1 at FB who joined because I liked the tech and Director assured me there was a great growth path, which swayed me away for other M2+ offers I had. I agree that optimizing for FAANG right away probably would have netted me more money, but what learned in startup land put me in a place where I can walk into an interview for pretty much any role and come up with a real life experience where I had to deal with situation parallel to whatever an interviewers can come up with. Hell, even in terms of stupid LC questions, I'm old enough to have had to actually implement tree searches, sorts, etc. manually.
      Nov 2, 2020
  • I wouldn't mind the possibility of the upside of options as long as the base comp & bonus are on par with similar positions at established public companies - but that is almost never the case - usually start ups have lower comps to preserve cash, and enticement is options. Worked for 3 start ups, all went belly up - wasted 5 years of my life on hope and luck - I would have doubleed my net worth if I had done those 5 years at an already established public company....
    Nov 2, 2020 2
    • New
      dood1

      New

      dood1
      OP
      I understand it's more risky but even if 1 startup in your career goes public and is successful, it's enough to FIRE if you are an early employee. Look at startups like Snowflake etc
      Nov 2, 2020
    • If you are at sr director or vp yes if it sky rockets, if lower you will get enough to get into a nice house, get a nice new Porsche, but certainly not enough to retire early
      Nov 2, 2020
  • Google
    puff puff

    Go to company page Google

    puff puff
    Lmfao
    Nov 2, 2020 1
    • New
      dood1

      New

      dood1
      OP
      GTFO if you have nothing to contribute
      Nov 2, 2020
  • Options and shares are pretty much same thing synthetically speaking. It should not matter to you
    Nov 2, 2020 0