I lost $8K on a $40M sale. Lost another $10K when a company "extinguished" prior shares (they are now worth $7B).

This is basically legalized gambling with a house that's allowed to have a rigged table. If you want to do well, become a senior engineer at a FAANG.

But was this a surprise to you? Did you expect to make more money from the sale of the company, and if so, why?

Because most of the shiny things in SF were paid for with equity. And there are plenty of shiny things in SF. I am not saying you should work for equity, but I think you should realize why the real estate is as expensive in SF as it is. There are plenty of times when people got screwed over, and there are also - fewer, but enough to move the market - people who didn't. So when you ask the question "how could you have been so incredibly stupid to believe that equity is not worth $0," you just have to look around yourself and ask "how come that zillow lists so many properties for over $10m?" You shouldn't count on your equity returning anything, but you also shouldn't listen to people who take an overly unhealthy view at the potential upside.

I’m willing to bet good money that the real estate in the SFBA is driven much more heavily by FAANG stock than startup stock…

Startups mint multi-millionaires. FAANG does it at scale day in and day out.

Even at FAANG, not enough people have the seniority for their base salary to turn them into buyers of $10m homes. I appreciate your point that RSUs are different from options, but I still think it's indicative that cash rarely comprises the majority of the wealthy people's income.

Oh, fully agreed that cash rarely comprises the majority of wealthy people's income - but my point is that most of the tech wealthy in the SFBA comes from FAANG equity wealth, not startup equity wealth.

Startups exits sometimes make a handful of people mega-rich, but as this thread has revealed, making ordinary employees rich is quite rare. Not so rare are the people who hang out at FAANGs, collecting large amounts of equity, and riding the industry up. And yeah, the wealth in this case is typically not of the level to buy $10M homes, but $2M homes?

Once in a while you have a founder who strikes it rich, but that effect is overwhelmed by the more numerous folks just riding $GOOG, $AAPL, $FB, etc. to multi/deci-millionaire status.

Sorry, I wasn't suggesting anyone was stupid for believing the hype that founders use to punt their stocks. What I was trying to get at was whether you had an idea of the valuation of the stock relative to your exercise price. If so, and that looked good, what happened to your company for it to sell at a low price?

Gotcha, I misunderstood.

Did you know the cap tables at those companies?

I don't think anybody knew the cap table for those companies. To be more precise: one of them didn't even have a cap table, the other was a secret between the lead investor and the original owner (an incubator). Needless to say nothing was disclosed to engineers, or any one of them for that matter. Even in this state, both companies raised a shitton of money.

This is what had been surprising to me in my experiences... first few startups the cap table was shared info but no specifics (investor pool 33%, employee pool 7%, etc) so at least you knew the rough outlay.

Then one recent startup was championing transparent salaries but wouldnt share anything about the cap table which seemed odd to me.

My current company the CEO answers questions about the stock outlay but not specifics but also doesnt claim to be transparent.

I just assumed from my earliest experiences most small companies were happy to explain the cap table and walk folks through dilution events.

Cap tables can change very quickly too. Even if you know at the beginning, you’re not privy to any changes later on.

Sure. More the reason to have a rough representation that is public in a transparent company.

Cant make good decisions without full information.

> To be more precise: one of them didn't even have a cap table

A cap table is a representation of ownership. Saying a company doesn’t have one is like saying I don’t have a height.

So you’re infinitely short? Joking.

What I meant is that the cap table was not disclosed and changed so often that nobody really knew what it was at a given moment in time.

Were you given a signing bonus to stay on after the acquisition?