Startup Stock Options & Equity 101 for Tech Employees

How does startup equity and startup stock options work for employees? What does it mean when a private company offers you stock options as a part of your employee package? This video starts to dive into some of those things!

I go over potential company exits, what it means if a company IPO’s, what it means to buy or sell options, and how to decide if buying your company’s stock is right for you.

Hopefully this video will help you get a basic understanding of how the system works so you can make better financial decisions!

SOME THINGS TO NOTE: Premium Stock is also called Preferred stock, and the time you need to hold your stock post-IPO is also called the “lock-up” period.

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FILMING EQUIPMENT USED:
Editing: Adobe Premier Pro

MUSIC WITH PERMISSION:
Mood Robot

*Note: This is not a sponsored video! I sometimes use affiliate links. As a customer, you do not pay any more or less because of an affiliated link. A small percentage of the sale goes to the person who generated the link. Thank you for supporting my channel!

[JenniferBrick]

Una - this video is so perfect for helping people understand their equity. I made a video this week to help people consider equity in context of an offer and I shouted out and linked this one. Anyone who is new to startups needs to watch this one!

[mattjwayad]

Great video! Just one clarification... If you decide to leave the company before an IPO or sale, you can exercise your options (buy your shares), as mentioned. The cost to exercise equals your strike price multiplied by the number of shares you buy. The current value of the pre-IPO company shares has no bearing on the cost to exercise your options. Taxes (either short term or long term) would be incurred only when you sell the shares you purchased.

[baba]

I join a company and I get 10, 000 options for $1 a share. Company is valued $1b at the time. After a funding round the valuation is now $10b - are the options now worth 10x more I.e $10 a share? Or is it more complicated than this

[sarazepeda]

Super helpful! I work in employee benefits and this is such a good primer for folks who are unfamiliar with stocks. Thank you!

[goproingtheworld]

Thanks for the video. You made very simple a lot of the things that I have heard over and over at my company and I never understood.

[lennytheboy]

Heya, I just found this video on options and I think your channel has some really useful info. Keep up the good work!

[luismccarthy]

Una, very informative...I got lost with the example...did you say 25, 000 or is it 2, 500 (what's on the board)?

[haquezameer]

Thank you for the video. I just got into my first full time job and I have been wondering what stock options were. I thought they were like equity but nah 😅

[hivesteel]

When the stock splits they don’t necessarily increase the number of your options, likely your number of stock options stays the same and the value goes down

[demetrius]

Lock up periods after IPOs are not always 6 month, they vary depending on your contract. Typically they are between 90-180 days

[anre]

Was a knowledgeable video.

Strike price. Vesting. Common shares. Premium shares.

[someguynamedvictor]

Wow, just realized a sick loophole. If you offer employees options, pay them below market, you can burn them out right until they could buy and then fire them beforehand. Or just wait until they could buy but since they are being paid below market they won't be able to actually afford it because they've been skimping to live off less than market salary.

[SivaBhargavRavella]

What if the company doesn't go to IPO and fold? All the money paid (5000) is lost?

[bobweee]

if stock is $2 and you put 100k into it
you bought 50k stock options.
if ipo and stock worth $10
you exercise
making $8 a share x 50k? so make 400k but tax then hits that

[theethicalhacker]

Great video! She’s very beautiful and colorful!

[warrenarden]

This is such a con game…work for a company that makes something

[piyushaggarwal]

Man! your weeks are too long and too inconsistent