📅 January 26, 2021
👷 Chris Power
I wanted to make a post that explores a subject I find fascinating. You see, over my ten-year career I have worked for a variety of startups. And while working for these startups, I almost always got employee stock options as part of my compensation package. With this article I want to go over how these investments worked out for me, over the last ten years.
Now, I’ve seen a lot of articles about engineers working at FAANG companies talking about their employee stock purchasing programs. I’ve also seen headlines and articles about engineers working at unicorn companies, getting in at the early stages and striking it rich. But not everyone can work for a FAANG company, and not everyone can find a unicorn startup to strike it rich with.
What I find far more interesting are the stories of people who work for normal, everyday startups with stock options. I like hearing about these people becuase I find it much more accessible, and relatable.
So today, I want to talk about my experience over ten years. I have worked at many small startups, all of which I am sure you haven’t heard of. I have bought all the stock I could at almost all of these startups, and I want to share how well these investments paid off for me. And at the end of this post, I have a cautionary tale behind one of these companies I used to work for. so be sure to stay until the end :).
My second job out of college was with a company called uTest. They made software that allowed companies to crowd-source their manual testing needs. Think of it like this: If you made a mobile app, and you needed to test it on a variety of devices, you could use uTest’s user base to test your app on almost any possible device you could think of. It was a really cool idea, and I enjoyed working for them.
When it came time to move on from uTest (I found my first job in software while working here). I had the ability to buy up to 2.5 years worth of vested employee stock options.
My strike price — The $$ per share that the company allows you to buy their stock, generally FAR lower than the public market — was only $0.22/share. This was a really easy decision, and I bought all 1,850 shares available for purchase.
This turned out to be pretty boring investment at first. Over the years, I kept a close eye on uTest. They had rumor after rumor come out about a possible IPO being imminent. But it never happened. They never IPO’d, but they did eventually get bought out by a holding company.
Now, I thought this was just another scheme to keep the company private, and I didn’t give it much thought. I certainly didn’t think I’d make any money as a shareholder. But boy oh boy I was wrong.
One day I get a settlement email, telling me to mail my shares back to the company to be bought out. I mail my shares back, and in a couple weeks I get a check for $32,000. Those shares that I bought for $0.22/share were bought out at $15.xx/share.
It was an amazing investment. Not exactly life changing money for someone living in the NYC area, but it was amazing none-the-less.
After a brief stint with a different company that never amounted to much, I worked for a tele-health startup named Teledoc in Greenwich, CT. This was a big moment in my career, because it was my first Ruby on Rails job. This is where I really learned how to code, and I was really enjoying it.
After two years at this company, my now-wife and I moved to Boston to be closer to friends and family. Teladoc was gracious enough to set up a WFH arrangement at a time when nobody actually worked from home. After a few months; however, I was getting burned out and decided to find a job, and a new experience, in my beloved city of Boston.
When I gave my notice to Teladoc, I completely forgot about buying the shares available to me. Maybe it was because of the distance, maybe it was me being young and stupid. Either way, I completely forgot about buying my options until it was too late. About 9 months after leaving, I inquired about my options, and although they were gracious, they said the time had passed to buy them. I totally understood and had no hard feelings, but man I was upset.
At the end of this post I’ll tell you what happened with Teladoc. But for now, lets move on.
After leaving Teladoc, I found a really interesting opportunity at GamefaceMedia. They were a really small startup working on an interesting product. Their MVP was also created by one of my favorite companies — Thoughtbot.
I thoroughly enjoyed my early time at GamefaceMedia. I got to work hand-in-hand with a lot of great engineers at Thoughtbot — some of whom I still stay in touch with from time-to-time. I got to work as a lead engineer, I got to hire a junior developer, and I had pretty full autonomy in the decision making. Suffice to say, GamefaceMedia was a really great job.
I made sure not to repeat the mistake I made with Teladoc, and I bought all shares available to me as soon as they vested. At the time, all my shares were available to buy at around $1,700. I forget exactly the strike price, but I made sure to buy my options. My thinnking with the purchase went like this: The company was run by an ex-banker with a lot of industry ties who had no issues finding funding up to this point. I figured at least the company would have a modest exit, making a large sum for the CEO, and a moderate bump for myself.
Unfortunately, this didn’t work out. The company is still running, somehow, on the same Heroku dynos I set up about 7 years ago. There is a skeleton crew still managing operations, but an exit is absolutely nowhere in sight. Not to mention COVID-19 has more than likely crushed all of Gameface’s potential revenue.
I am pretty sure I will make nothing on GamefaceMedia’s stock, making it a loss of $1,700.
Shortly after leaving GamefaceMedia; my wife and I decided to move back to CT to settle down and start our family. In New Haven I found a really intersting company working on essentially a CMS for goverments. That company is called SeeClickFix.
I had a really interesting working relationship with SeeClickFix over the span of about 3 years. I joined SeeClickFix first as an engineer working on their Ember frontend and Ruby on Rails backend as a fullstack developer. I spent only 6 months with this company, when some friends offered an amazing contract to work as a consultant. I very humbly left SeeClickFix under good terms and stayed in touch. After about 2 years of contract work, my wife and I had two beautiful children and I needed a more stable source of income.
My “Investment” with SeeClickFix starts with my second stint at the company.
Somehow, SeeClickFix accepted me back with open arms. Apparently New Haven has a limited pool of engineers to work with. I was happy to be back at a good company with a good tech stack, and to see some familiar faces as well. While working here on my second stint, SeeClickFix got bought out by a larger company.
I was not able to buy my shares before the company got bought out, I did not hit the 1 year cutoff for vesting. The CEO of SeeClickFix; however, is a very generous man. He made sure that all employees — regardless of vesting — got paid for all stocks that were assigned to them.
And just like that, without any investment, I received a check for $10,000 after taxes.
Currently, I’m working for an AMAZING company called Indigo. We make software that helps farmers gain an extra source of income, while sequestering carbon from the atmosphere. It truly feels amazing to work on products that I feel will help battle global warming, and make the world a much better place overall.
I am still working here, and I can guarantee you; dear reader, that I’ll buy every ounce of stock available to me. Indigo has already received over $1Billion dollars (yup, billion) in funding, and has a roster of about 1,200 people. This is by far the biggest, and most innovative company I have ever worked for. I am excited to see what this company has in store for the future.
Oh right, I almost forgot. Well, actually, I didnt forget. I just wish I forgot.
You see, Teladoc is currenlty a public company. And at the time of this writing, they are trading at $287. 00/share on the NYSE.
If I had bought my shares, They’d probably be worth multiple hundreds of thousands of dollars right now.
To conclude. I think its always a great idea to buy your employee stock options. I think you should use your common sense, and don’t stretch yourself too thin financially. But if you can afford it, do it! So far, things have worked out pretty well.