If you are enticed to become “a stakeholder” in a company or startup by having the stock options or warrants carrot dangled in front of you as an incentive, my own “stock options and warrants” tales of woe are a flip-side you need to hear. Especially since you’ll hear A LOT of the “You’re gonna GET RICH” from those trying to hire you or colleagues naive enough to think stock values go up automatically.
TALE #1: STOCK OPTIONS
In December of 1999 I accepted a job at Vignette, at the time the fastest growing software company in history. With the initial shares I received, and the ones I’d be granted and earn-out over four years, I began to consider the realistic possibility that I’d enjoy an options gain of $5-6M over that four year vesting period.
You know about the “dotcom” crash in March of 2000, right? I sure do because Vignette never recovered and the stock (and my initial options) tanked. Though subsequent option grants were adjusted downward, those ended up in value too. It’s been said that “you can make a lot of money on the way up and the way down” if you hang in there with a downtrending company and I did, but that money was NOT made on stock options. When I left in 2003 with thousands of fully vested shares…they all were so far ‘underwater’ that all were worthless.
Don’t think “Oh poor Stevie…he missed out on being rich” since I’ve done all right over the years and have a wonderful family, friends, my health and (hopefully, if the economy holds) a solid retirement portfolio. Plus, my Vignette experience was a remarkably good one. I worked with lots of great people, met and hung out with a handful of executive-level customers, most of whom I’m still in touch with to this day. Went on club trips (my wife and I took our kids with us to Maui to the Four Seasons) and learned a lot playing the enterprise game at that level.
Sure would have been nice to make millions though, heh? Yes, but after a stint running strategic alliances at Lawson Software (now part of Infor), I ended up going off on my own to perform management consulting and had an opportunity with startups and young companies that gained me tens of thousands of stock warrants…ones that would surely make me rich. Or so I hoped. [Read more…]