What does HackerNews think of extended-exercise-windows?
A list of startups that have employee-friendly terms for exercising your options past 90 days.
It would be informative if someone made a list like the extended exercise window list [1] for on call practices and comp if it exists
However one piece of conventional wisdom - on call rotations should be no less than eight people, and not much more. Going on call any more than one week in two months leads to burn out. Any less frequently than that you risk losing familiarity with on call procedures, the observability systems, etc.
This is why I choose to not work for companies that do not have extended exercise windows -- and IMO neither should you.
[1]: https://blog.samaltman.com/employee-equity#:~:text=2)%20Most....
Triplebyte made a splash by adopting a very similar policy months later in early 2016 (also discussed heavily on HN [2]) and all YC companies were recommended to adopt this approach off the back of Triplebyte starting from the W16 batch [3]. The rest, as they say, is history.
Many companies on this extensive list of ones with 10-year post-terminiation exercie windows [4] might not have this policy if it was not for this know-how benefitting employees put out in the open - between Amplitude, Triplebyte and it spreading to YC, making this approach table stakes a few years later.
Sir, I salute your for doing this not just for doing this for Amplitude employees (who no longer had a "golden handcuff pressure" after vesting their original grant - which is most companies actually see as a benefit, and a way to "leak" less equity thanks to leavers often not being able to exercise), but for a part in moving the tech industry forward.
Legend!
[1] https://amplitude.com/blog/employee-equity-is-broken-heres-o...
[2] https://news.ycombinator.com/item?id=11198991
[3] https://triplebyte.com/blog/fixing-the-inequity-of-startup-e...
He compiled a list of startups with sane exercise windows:
https://github.com/holman/extended-exercise-windows is a good resource!
I do think the culture around 90 day exercise Windows is changing. Here is a list of companies with extended windows [1]. At this point I would never join a company with 90 day windows.
The norm is changing. Good startups today generally offer 5-10y exercise windows. [1] This is something Triplebyte started, and they have a guide for how to implement it. [2]
[1] https://github.com/holman/extended-exercise-windows
[2] https://triplebyte.com/blog/extending-stock-option-exercise-...
1. Join a startup pre-Series A where the strike price is minimal because there hasn't been a priced equity round yet. Early exercise.
2. Join startups that support Extended Exercise Windows. https://github.com/holman/extended-exercise-windows
If your exercise window is only 90 days, then you need to exercise at least some of your options and file an 83b. Otherwise you'll be stuck at the company until a liquidity event, which can take 10+ years. If the company is successful and you need to leave early for any reason, you're potentially throwing away millions of dollars.
Fortunately, the fix is very simple: companies should just offer 10 year exercise windows. That prevents this scenario from happening to employees. We've written about this a bunch of times: https://dangelo.quora.com/10-Year-Exercise-Periods-Make-Sens... https://blog.samaltman.com/employee-equity https://triplebyte.com/blog/fixing-the-inequity-of-startup-e...
We hope that 10 year exercise windows will become the industry standard so that no one needs to worry about this anymore. Unfortunately, that hasn't happened yet. In the meantime, you can see a list of companies that have committed to them here: https://github.com/holman/extended-exercise-windows.
This is in contrast to current law, which requires only 90 days of grace period.
This effectively legislates what AirBnB, Pinterest and others have been doing due to free market pressure [0].
This is good for employees, since you might not have enough money to pay for the taxes on the stock that you vested and exercised (due when you exercise under current and proposed law). But arguably, it’s not really important for the government to mandate this; it’s sufficient for the government to allow deferred option exercise dates (which is the case in current law).
As tptacek wrote, this has a stench of pandering to it; the new tax law is IMO largely bad (and I say this as someone who probably stands to benefit from it). But this wrinkle is most certainly better than the proposal from yesterday, which I believe would have been stifling to startups and would have pushed most startups to either defer any fund-raising to keep valuation low and thus options affordable to new hires (bad for startups and VCs; good for incumbent companies due to reduced competition), or to do huge raises to compete on salary alone (bad for startup founders and employees due to presumed higher percentagowned by VCs; perhaps good for VCs if it didn’t damage startups too much; good for incumbents since it again makes startups higher-friction).
This is missing the key point of the article which is that there are also taxes to pay, not just the strike price. What you're saying is valid -- even the strike price can be a lot for someone to afford on their way out without any liquidity. But it is very important to understand that it's much worse than that at "successful" startups that have increased in value substantially over those 2 years. You also have to pay AMT (28%) on much of that gain in value, which could end up costing even more than the strike price itself.
Hopefully more startups will offer extended exercise windows of several years. Some are. See: https://github.com/holman/extended-exercise-windows
And keeps an ongoing list of companies that offer extended exercise windows: https://github.com/holman/extended-exercise-windows
As somebody who has personally experienced every aspect of the stock option lifecycle (which fortunately worked out for me), I would never take a job at a company [1] if they didn't have an extended exercise window. The 90 day expiration period creates a massive gap between the risk/reward of equity for founders and the risk/reward of equity for employees, when the whole point of giving equity is to align those.
1: Assuming it was the type of company that compensated people with stock options
However, even ISOs with 90 day expiry periods are way better than this. If you are presently employed at the company at the time of IPO/acquisition then you don't have any issue with the 90 day window, and if you do run into the 90 day window at least you have the choice to exercise them or not. And if early exercise is available then you could exercise options early on when the company is worth very little and then not have to worry about the 90 day expiry period later.
I'll extend some comments I made downthread:
a16z is a major investor (growth round resulting in a board seat for a16z) in many of the companies that have extended vesting periods, such as Coinbase, Pinterest, Asana, and Tilt (list here: https://github.com/holman/extended-exercise-windows). They also invested in CodeCombat and I'm sure some other startups on that list (I didn't check them all). So I seriously doubt they block companies from doing extended exercise windows.
And claiming that those companies were/are hot and therefore had leverage is a bit circular because hot companies are the kinds of companies a16z often funds in growth rounds (and often it is because a16z funded you that makes you hot).
Barely any companies even have extended exercise windows, so you can't go around excluding companies from the list because "they don't count". Also your logic is almost circular, because a16z tends to only invest in hot/great companies, by definition.
You can go down the list: https://github.com/holman/extended-exercise-windows. Many other companies have a16z as an investor. Tilt and CodeCombat are two of them.
Hence we've only seen the hottest companies achieve 7-10 year exercise terms. https://github.com/holman/extended-exercise-windows
I've argued that as a cohort, YC is the best candidate to make a large push against VCs and make 7-10 years vesting terms an industry standard. Learning that this is now the case is incredibly exciting. https://news.ycombinator.com/item?id=11198991
harj 119 days ago | parent | on: Fixing the Inequity of Startup Equity
We're excited to make 10 years the new standard option exercise window for startup employees. Each of us have personally experienced someone close to us dealing with the stress of trying to exercise their options within 90 days and it sucks. We'd like to see more companies making this change, we'll be keeping the public list of YC companies who have either implemented or pledged to implement an extended window, updated here: https://triplebyte.com/ycombinator-startups/extended-options
Greater portability could in theory lead to higher turnover even among happy employees. They might go on to found their own company sooner. They might see good financial sense in diversifying their options portfolio. Yet young companies need the team to stick together for a certain time. Especially very small startups at the YC stage -- turnover is very harmful.
Note: In Adam's example, nobody leaves the pre-IPO company in under 4 years of service.[2]
[1] https://github.com/holman/extended-exercise-windows
[2] "imagine a company takes 10 years to IPO. Employee A works at the company from years 0 to 4. Employee B works there from years 4 to 8. Employee C works there from years 8 to 10."
https://github.com/holman/extended-exercise-windows
Disclaimer: I work at Flexport which has a ten-year window.
You can find a (very small) list maintained by Zach Holman here: https://github.com/holman/extended-exercise-windows
I assume Zach got interested because he discovered after he was fired from github that he was close to losing all the money he "made" on options when github became a unicorn -- he probably had 90 days to exercise a very high priced illiquid security with horrid tax consequences if he fucked up. That's the thing about cash: it's not rigged. If you get cash, it stays in your bank account. Paper gains can disappear.