Savings should only come into it if you're leaving before the liquidity event.
Quite a few years ago, a well known company was sending offers where the exercise cost of the shares was around $200k, plus whatever fun you'd have with AMT at exercise time. The company still hasn't seen an IPO, and I know quite a few people that didn't exercise their entire allocation just because it was just way too expensive for something illiquid... and that was with a company that was going (and still is!) going very well. Today you'll find companies that went for a decade without a liquidity event, and where a whole lot of options that were well in the money went back to the company, unused.
Options would be far more worthwhile if there was a standing offer to, on departure, sell the options back to the company at departure time, but we all know this isn't how it works. So you end up in situations when two people join a company and leave at the same time, and their savings separate their final outcomes by 8 figures, because one could buy the shares and wait the necessary X years for the liquidity event, when someone else couldn't.
Which is another way some startups screw people. If the company is not willing to budge on the "standard" 90-day exercise window, there shouldn't be any negotiation. Just walk away.
He compiled a list of startups with sane exercise windows:
The a16z link is astonishingly self-serving. Their top line solution was: “One existing solution to the ‘dead equity’ problem has been — and still can be — to make exceptions where appropriate for certain exiting employees. In fact, employers make exceptions all the time for certain employees, depending on their contribution to the company, critical skill set, and so on.” Riiiiiiight - asking nicely for a handout when you are quitting is a great strategy!!
And I would love to know how they come to this conclusion “In our model, we estimate that moving from the current 90-day window to a 10-year window will cost the average remaining employee as much as 80% in incremental dilution.” - just, wow.
The last unicorn I worked for had a ten year exercise window after employment ended.
Depending on your indebtedness (outstanding student loans, mortgages) savings and current earnings a bank could still refuse to lend you enough money, if at all
I had no trouble getting an uncollateralized loan at a reasonable rate for $75k; and I had $100k in student debt, a $500k mortgage and little else in the way of assets. And when I say “no trouble” I mean I applied for the loan, was approved 30 minutes later and had the money in my bank account within 2 hours. That loan is paid off now, but if your income is high enough banks will lend you money on that alone (I was making an equivalent salary to a principal developer at the time).
Its nice everything worked out for you, that has nothing to do with your ability to perceive a simple solution available to you.
Bigger risk comes in if someone wants to do an exercise and hold to sell much later, which can bring tax advantages. But this is a different game entirely. In the case of employee with little spare cash (to the tune of borrowing money for the exercise), not doing exercise and sell is really leaving money on the table. My 2c.
What goes on between the founders, board, current investors and likely future investors is likely known to very few amongst them, if at all.
Even if you believe strongly in the product and know the market-fit is bang on, you don't know if the option is currently priced correctly.
It wasn’t life-defining, plus she noticed that many other employees didn’t have enough savings to actually exercise.