stock options/RSU #s

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bay_anon

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Apr 5, 2010, 8:26:22 AM4/5/10
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What would be good numbers in terms of RSUs at places at facebook
right now ?.

What should be good numbers of options expected at places like Zynga/
twitter/?

What does one mean by google was generous, how many options did one
get over the years as in percentage wise since absolute numbers would
be confidential...as in was it obvious then or in hindsight

How does one compare X RSU/ Z options in say google/microsoft versus Y
options in say Zynga ?

Piaw Na(蓝俊彪)

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Apr 5, 2010, 9:42:36 AM4/5/10
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> What would be good numbers in terms of RSUs at places at facebook
> right now ?.

This is an impossible question to answer without knowing what position
you're getting an offer for. You can value Facebook by comparing it
against Yahoo to get an idea of what a reasonable valuation would be.
(Yahoo currently has a $22.8B market cap. At $40/share, FB is valued
at $20B)

> What should be good numbers of options expected at places like Zynga/
> twitter/?

Again, depends on your position. Zynga should not be compared to
Twitter. As far as I know, Zynga is profitable and growing fast.
Twitter is not. I have no information about revenues, etc., and so
can't provide a comparison company. Since Twitter is a much higher
risk company than Zynga, I would expect a far more generous options
package out of Twitter than out of Zynga. Facebook is much lower risk
and I would expect them to be less generous with stock at this point.

> What does one mean by google was generous, how many options did one
> get over the years as in percentage wise since absolute numbers would
> be confidential...as in was it obvious then or in hindsight

It was obvious then. Google was generous in that despite being
extremely profitable even in 2002, the options it handed out were
quite likely to make millionaires out of employees if they sold at the
right time. In fact, right after the IPO, Google was for a period even
more generous than just before the IPO. (A few employees complained to
me privately about that)

> How does one compare X RSU/ Z options in say google/microsoft versus Y
> options in say Zynga ?

Build a spreadsheet. RSUs are very easy to value, since you just
multiply the # of RSUs by the stock price. Options are slightly harder
because there's a time-value attached, but you can keep things simple
by multiplying the # of options you got by the expected stock price of
the company. That's why it's impossible to give you data without
information about the company revenues, etc. You need a comparison
company for this technique to work properly.

--
Piaw Na
http://piaw.blogspot.com
Author of An Engineer's Guide to Silicon Valley Startups
(http://books.piaw.net/guide/)

bay_anon

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Apr 5, 2010, 12:58:42 PM4/5/10
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Thank You Piaw,

As an concrete example if one got
X RSUs from google =~ 600X

and the startup had a valuation at say 200M but employees got stock
valued at Y stock at valuation 100M

so how does one compare them

should Y(delta price) =~ 600X

Also in the case of a senior/staff engineer range what should one
expect in terms of RSU/options from soon to IPO companies like Fbook/
Zynga

Should salaries in startups be ~15% higher than bigger companies since
bonuses are in that ball park and most startups dont have bonuses.

> Piaw Nahttp://piaw.blogspot.com

Piaw Na(蓝俊彪)

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Apr 6, 2010, 1:33:58 AM4/6/10
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> As an concrete example if one got
>  X RSUs from google =~ 600X

OK, an RSU from Google is worth about $500 today. (I'm rounding down
to make numbers easy, and also to reflect the risk in an RSU). 100
RSUs would be $50,000.

Facebook stock is valued at $40 today internally. That values them at
$25B. Let's say they'll double over the next 4 years to be
conservative. So the expected value would be $80/share.

$50K/80 = 625

So 100 GSUs == 625 FSUs

Roughly. You can over-weigh or underweigh the expected value of FB
stock depending on how bullish or bearish you are.

> and the startup had a valuation at say 200M but employees got stock
> valued at Y stock at valuation 100M
>
> so how does one compare them
>
> should  Y(delta price) =~ 600X

Once you are in startup land, it makes no sense to consider valuation.
That's meaningless. As I mentioned in the book, 3 things matter: Are
the people folks you want to work with? What percentage of the company
are you getting? And what are the future prospects of the firm?

Whether you're working at the next Google or the next Perforce makes a
big difference. The former touches everyone and can expect a
castle-in-the-sky valuation, and the latter won't ever make a splash
in the newspaper, and you have to be realistic about which one it is.
(For instance, mint.com made the right decision to get bought --- it
is doubtful that an IPO would ever have raised a ton of money)

> Also in the case of a senior/staff engineer range what should one
> expect in terms of RSU/options from soon to IPO companies like Fbook/
> Zynga

I really can't answer that question. That would require me to know how
generous the founders are, how much the VCs own of the company, what
the remaining employee pool is, and how well you interviewed. The more
the firm is convinced they need you, the more generous they will be.
For instance, I would be surprised if Greg Badros got less than a $2M
equity package. But then he's Greg Badros!

> Should salaries in startups be ~15% higher than bigger companies since
> bonuses are in that ball park and most startups dont have bonuses.

Depends on the startups. First of all, I discount bonuses at big
companies too. Those go away when the company hits bad times.
Secondly, if it's an early stage startup, then you're effectively
trading that bonus away for equity, and you need to negotiate
accordingly. Someone I knew recently got more than 1% of an early
stage startup that was self-funded (and therefore had a big employee
stock pool).

For later stage startups, you can expect a competitive salary. That
means that if you usually get 15% bonuses, add that to your base
salary and expect the startup to match it. Keep that paperwork and
show it to the startup. :-)

--
Piaw Na

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