Re:Ask HN: How do I gauge the value of stock options that I ...
by lacker on Monday November 22, 2021 @02:29AM
(#29303786)
* their exercise price is almost certainly going to be equal to the 409A valuation, which means they're worth $0 upfront*
I don't think this is generally the case; typically the 409A valuation is using accounting rules that are different from how you would personally judge the value of the stock, and the founders are trying to minimize the 409A valuation, so typically 409A valuations are much lower than people would buy the stock from you if there were a market for it. But you have to make your own judgment of how much you think the stock is worth.
But essentially, my point is that even with quite optimistic assumptions, the OP is not getting a good deal, and I think we clearly agree on that, it's just a question of "how bad" a deal the OP is getting.
If those options are ISOs, then their exercise price is almost certainly going to be equal to the 409A valuation, which means they're worth $0 upfront[1] and gain value as the company grows more valuable. Since you only make money if the company's value goes up, it's almost impossible to accurately assign a value to it.
[1] I use "worth" loosely here. More accurately they have intrinsic value of $0 upfront (maybe a bit more because the company has grown since the last 409A), and some hard-to-determine time value. see: https://en.wikipedia.org/wiki/Option_(finance)#Basic_decompo...