How do you value eso when you have a offer from a pre ipo company? Some people say they should be valued at 0 but in that case the offer value would always be less than a big company offer with real stocks
Attempt to learn about private financials, get runaround. Guess numbers anyway. Apply 30-50% liquidity discount based on personal preference for risk and phase of moon.
0, just ask anyone who worked for Mark Pincus.
50% of FMV. If you are close to an IPO, assume it will drop 50% in the first 6 months.
Avoid Dropbox (my personal opinion obviously)
Google Black-Scholes (sp?) option pricing model. For volatility use 2X the current VIX. Warning, you will be depressed.
I doubt that many folk in this audience actually know what options are. Their value is exactly 0 assuming the strike price is the current fair market value. If you accept it as compensation, you are betting that the company will have a successful exit with a growing valuation that is large enough to cover preferred investor pricing and leave some cash for salary folk like you. This outcome is pretty uncommon, hence the fairly recent switch to RSU compensation in most companies. My advise is, unless you are 100% confident on the company going gangbusters from here, you should treat all stock option compensation as an unexpected surprise if you get anything.
Do you really believe you are the only special snowflake who understands options? (hint: no. and your answer is wrong)
In effect u are saying it never makes sense to join an preipo company offering esos unless they match cash+stock with just cash of a public company's offer
Lol a lot of people at big public companies say that. That’s why they work at big public companies…