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[Michael S Czeiszperger <czei AT webperfcenter.com>]

>  "It used to be if someone left IBM (IBM) people would wonder, 'What did you
> do wrong'," says Jones, who believes the area's techies are still a little 
> slow to grasp
> the potential value of stock options.
>

This statement is misleading given that stock options are extremely difficult 
to evaluate. At
least in my own experience, by the time "techies" get involved in a company, 
in order to make
any money at all from stock options the company has to be sold for a 
ridiculously high amount
of money, which certainly does happen, but isn't that common on a percentage 
basis. Using the
oft cited 10-1 failure rate, a 10-1 chance to make a $100,000-$200,000 or so 
from stock
options doesn't have that much real value. The only ones getting enough stock 
options to be
worth in the six figure range are founders or the first few employees.

Now, getting a 10-1 lottery ticket to make $100,000 by itself isn't a bad 
perk, but with most
companies stock options are given to "techies" in lieu of cash. At least in 
my opinion, taking
a $20,000-$60,000/year pay cut in real cash isn't worth trading for the stock 
options,
especially since at least in my experience start ups often expect a 
ridiculous amount of hours
in return. I actually talked to an investor who wouldn't hire anyone with 
children, for
example, to work at a startup, presumably because he/she wouldn't be totally 
committed to the
company.

In the end, the problem with stock options is taking a few poster companies 
that do very well,
and then pretending their experience is normal. The number of technical 
people making a lot of
money from stock options at start ups is a small minority.

Michael Czeiszperger




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