At this point in the game, can any new employee expect to get options that are not insanely diluted?
I guess if you're a Lars Rasmussen-class talent you're going to get some special class of stock to entice you to come over, but what about the rest of the new hires?
Dilution doesn't really apply to these employees. They don't care about their amount of ownership in the company. All that matters is how much stock they get and what they expect the stock to be worth at IPO. If they've received 10,000 shares and the IPO is at $100, then they're millionaires by the end of that day (on paper, at least).
...at the end of the employee lockout period, you mean. =)
By most estimates there are 300 million shares of Facebook generated in various capital rounds and whatnot. From my experience, if you're coming into the game this late you'll make some money with an IPO but only the founding members and VC groups will make fuck-you levels of wealth on the offering.
These employees have the opportunity to possibly make 10 to 20 years of their current salary in a day. Most people don't need more of an incentive than that.
How does the stock thing work? Is it given to all engineers? It seems to be just Silicon Valley companies who give away stock/options as a matter of course, so I'm a little mystified.
The two startups I worked in so far (Incorporated in the US, working in India), have offered me stock options, so its certainly not a "Valley only" thing.
I've had people try to offer me stock options in the kind of companies that would never go public too. It's a very popular option for shady businesspeople with M.B.A.'s.
One company I am familiar with is a private company that will never go public. They give stock to their employees, and in fact, 100% of their stock is owned by employees (down from 49.9999%, when 50.0001% was owned by the founder). They have zero outside investors. The value of the stock is set by some sort of auditing firm, but there's no actual market valuation.
If this doesn't sound questionable enough, keep in mind that this is the only retirement plan they offer to employees and that upon leaving the company employees are required to sell back their shares.
Maybe it's totally legit, but it always struck me as very, very questionable.
A company doesn't have to go public to make money on your options. A profitable company pays dividends with their profits, and the options, when exercised, give you a share of those profits. Might not be a jackpot (and few are), but an extra $30k a year, every year, is nothing to blow off.
