Good morning everyone. Today is a BIG day for me, and a big day for my investing strategies going forward. I'm exercising around 1/4 of the options I've been awarded in the startup I am working for. Although this won't have a huge impact for me in the near term, over the course of the next 3-4 years I am hoping this single decision will save me thousands of dollars (or if I am really lucky, tens of thousands) in taxes.
Just this week, Dropbox joined the relatively short list of billion dollar "unicorn" startups that are going public. Only 26 venture backed companies of any size went public last year, and there are more than 100 US companies valued at $1b or more still sitting on the sidelines waiting to IPO. The ultimate question for the people who work at those companies is: should I exercise my stock options, and if so, when?
If you work in technology you know that there's a deep seated rivalry between San Francisco and Seattle. Which has the most startups? Which has the most successful technology companies? Which is the best city for innovation? Which is the most pleasant city to live in?
A couple weeks ago I told the story of my own stock option sale, and the lessons I learned from it. This week I wanted to dive into the plan I laid out at the very end of the post, the "25%" plan, and go into some more detail.
The hardest part about being an owner in anything is knowing when -or if- you don't want to be an owner anymore. For anyone who has ISO or RSU stock options, you know what I'm talking about. If you sell your stock and it skyrockets afterwards, you locked in a lower price (and massive FOMO). If you DON'T sell, and it tanks afterwards, you are stuck with a bunch of nearly worthless stock.
As I'm writing this it's April 15th in the US, and tax day is finally here. It only seem appropriate to continue my "Stock Option Basics" series (Part I, Part II) with an overview of how ISOs are taxed and a quick look into a couple of ISO tax situations you DON'T want to get yourself into
Go work for a startup! If you work in technology, chances are you've heard this advice, or you've thought about it on your own, or you're already working for a startup. In any case, I've noticed that there are tons of questions on Quora and Reddit and various other sites with people wondering how to find the "right" startup to join, which usually seems to actually mean "how do I choose a company that's going to make me rich." That's a little narrow-minded maybe, but it's reasonable to wonder how to find a company worth joining.
One of the biggest challenges people face when evaluating job offers that include Incentive Stock Options is understanding how to value their ISO grant. In order to do that, you have to know how many shares you have, how many shares there are total, and a rough estimate for how much the shares are worth now. Let’s take a look at why, before we delve into how to find those numbers.
ISOs (incentive stock options) vest over time, giving you the ability to purchase shares at a discounted rate and participate in the (potential) rise of your employers stock. If used properly, they are also tax advantaged.