I worked at a promising mobile-app startup whose gigantic ambitions didn't pan out; I figured they'd be an acquisition target and bought my options for like $4K. At some point the founders decided to cash out, but instead of selling, they started paying out dividends.

That first check alone more than tripled my money - and came with a cap table, too, so I could see the $1m+ payouts to each founder as a nice little lesson in the disparity between founder and early-employee outcomes.

Not that I'm complaining - this has turned into the single highest-performing investment I've ever made :) Career-wise it launched me into the big leagues. A+, would do it all again.

The only other startup that paid me equity money, I got enough to buy a used motorcycle. Yay.

Depends on your definition of unicorn. I did quite well out of options at a previous gig. They IPO'ed shortly before I left and are now trading at >50x the exercise price.

Several close friends have had their options worth $1M+ at Splunk, Slack, JFrog and more - I know the numbers because they've called me for financial advice.

Did that in the past in the UK at BT.A (and the forced split of cellnet) and RELEX more recently and I am in an EMI scheme at the moment that will pay out on the sale of my current employer

Having said that there are significant protections in UK law for employee share schemes

I was part of a startup for a few days short of a year. We got acquired by Apple and I walked away with ~$400k after taxes (no 83-b election benefit). I’d say that was a significant amount for me for 1 year of work.

It's very common to sell stock at > 30x exercise price when you get into a growing company at the right time. A lot of imponderables in that, and all of that risk is borne by you. You end up making VCs and founders rich: they get to sell stock at even higher multiples, and at much lower risk: they get to sell on the day of IPO, and they also get preferred shares, which have more protections (founders used to have Common Stock only, as the article states, but that has changed, and they also get to sell stock during intermediate financing rounds, which also considerably reduces their risk).

Significant is $, not %. 10% of $1M beats 100% of $10k.

Why would you expect options to pay big for a non-unicorn? Unicorn means the startup investment succeeded in its goal. No one gets rich when their investment fails.

The percentage is actually more relevant to what we're discussing here, because it represents the gain from the employee's known starting point when they were hired. If they were only offered a measly number of options on being hired, well they can just decide to bail - it's the percentage gain that is the unknown and variable part of the equation.

> Why would you expect options to pay big for a non-unicorn?

I think the idea is that there should be a good swath of successful startups between "failed" and "unicorn". Indeed, the whole name unicorn came about because they used to be incredibly rare. So the parent is really asking "If you were in a moderately successful startup, did you get anything out of your equity?"

Unicorns are startups with private valuations over $1bn, but I don’t know anyone that wouldn’t be happy with 1% of a $100M non-unicorn exit

Unicorn means the startup is as rare as a unicorn. Taking that as your benchmark for success is extremely unhealthy.

I think the generally accepted definition (as I understand it) is any startup with a private valuation over $1bn. So there is a lot of room for very successful companies that are not unicorns.

I think there's been a bit of an inflation when talking about unicorns. It just means any startup that is valued at >= $1bn

A lot of nitpickers commenting on this, but ignore them. Your basic thesis is correct: the ultimate valuation of the company matters way more than anything else. As engineer #100, say, the stock granted to you as a % of the options pool is negligible: there are effectively no differences in the ownership fraction no matter what company you choose. Whether you choose a company that grows into 50 billion vs 5 billion makes all the difference.

If you choose a company that ends up achieving a 500 million valuation as engineer #100, then your time will be wasted, massively. You will end up making no or -ve amounts of money.

20x at a startup recently acquired for 1B (assuming they hit earn-outs), right at the unicorn threshold.

I have. Twice.

My situation is far more common than the people making millions from unicorns at IPO.

The majority of exits don't come from IPOs. They come from acquisitions of small-ish companies by big or medium size companies. These don't make headlines because they're not very noteworthy for the average person.

Pretty sure a ton of people have done this via acquisition.