But that is a large problem today, because you have no idea when, if ever, the liquidity event is going to happen. There are companies that spend a whole lot of time private, and if said company is going well, it's going to be growing so fast that in 4 years, it might be unrecognizable. Even if you love the job you joined, you might hate the equivalent a few years later, and you probably still don't have a 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.

That’s kind of how it worked out when we sold our company. All the transactions happened simultaneously so the only real payments was the net of it all. Both business and tax lawyers where involved to set up that whole process.

> Savings should only come into it if you're leaving before the liquidity event.

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.

There are two types of options, NSO and ISO. You want ISO as an employee because it's better for taxes, but that has a 90-day exercise window set by the IRS. You can push for yourself paying higher taxes in exchange for more flexibility, but it's a tradeoff.

https://carta.com/blog/pte-90-day-window/

Zach Holman one of the first github employees didn't get to exercise any of his options for the aforementioned reasons. When they tell you to throw your life away to believe in the vision, nobody tells that 24 y/o to get a lawyer to understand what that actually means.

He compiled a list of startups with sane exercise windows:

https://github.com/holman/extended-exercise-windows

At the bottom of that link: “It's worth noting that Andreessen Horowitz has come out in strong favor of the 90 day window. If you feel strongly about extended exercise windows, it might be worth considering whether a16z portfolio companies are a good fit for you.” with a link to https://a16z.com/2016/06/23/options-timing/

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.

It’s completely possible to have ISOs that convert to NSOs past the 90 day window.

The last unicorn I worked for had a ten year exercise window after employment ended.

ISOs also don't save you from the AMT trap, so they're not really that useful.

I think the AMT fear is overblown, you can avoid it in most situations, especially if you exercise early