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You’ve invested in your education and building a career – finding the right company and negotiating the right offer to capitalize on this investment can be a challenge, but foundational in building a healthy financial future. Learn how to maximize the return on your most important investment, you.

WhatsApp: What an Acquisition Means for Employees

The announcement that Facebook is buying WhatsApp for $19 billion generated a lot of interest. The most popular question we received is what does the acquisition mean for the employees financially. IPOs tend to get all the headlines, but in many cases technology companies are acquired. This post will walk through the economics of an acquisition and how it affects all the parties involved. The Terms of the Deal From what I have read, Facebook will acquire WhatsApp for $4 billion in cash and approximately $12 billion worth of Facebook shares. In addition Facebook will grant $3 billion in RSUs to founders and employees that will vest over the next four years. I do not have any special insight into […]

When Success & Stock Options Make It Expensive to Leave

They can be an incredibly rewarding and inviting incentive. And among those working in Silicon Valley stock options have become an inextricable part of most job offers. However, actually benefitting from them is not always as easy as you might think. Employees who decide to leave mid-sized companies often awaken to a pretty big and increasingly common surprise — they can’t afford to exercise their options. In our post The 14 Crucial Questions About Stock Options we discuss the questions you need to ask about the stock option component of your offer before you join a new company. We specifically didn’t address how long you see yourself staying with the new employer or when the company is likely to go […]

How Do Stock Options and RSUs Differ?

One of the biggest changes in the structure of Silicon Valley private company compensation over the past five years has been the increasing use of Restricted Stock Units (RSUs). I’ve been in the technology business more than 30 years and throughout that time stock options have almost exclusively been the means by which startup employees shared in their employers’ success. That all changed in 2007 when Microsoft invested in Facebook. To understand why RSUs emerged as a popular form of compensation, we need to look at how RSUs and stock options differ. History of the Stock Option in Silicon Valley More than 40 years ago a very intelligent attorney in Silicon Valley designed a capital structure for startups that helped […]

An Employee Perspective on Equity

Andy Rachleff, Wealthfront's President & CEO

A couple of days ago we wrote a post for company founders that describes our proposal for allocating equity to attract and retain outstanding employees.  We call it the Wealthfront Equity Plan. It’s equally important to take a look at the Wealthfront Equity Plan from the perspective of an employee. When a prospective employee is considering a job offer she should be concerned not only with the amount of options she receives when she joins a company but also how well she is going to be rewarded for outstanding performance. Back in April 2012 we wrote a blog post that listed the 12 questions you should ask about the options associated with your job offer.  All the questions focused on […]

The Wealthfront Equity Plan

Ask These 12 Questions About Your Options

“The defining difference between Silicon Valley companies and almost every other industry in the U.S. is the virtually universal practice among tech companies of distributing meaningful equity (usually in the form of stock options) to ordinary employees. Before companies like Fairchild and Hewlett-Packard began the practice fifty years ago, distributing stock options to anyone other than top management was virtually unheard of. But the engineering tradition that spawned Silicon Valley was much more egalitarian than traditional corporate culture.” — Steven Johnson, The Peer Society The equity culture among young technology companies is almost universal today. And when implemented properly, broad employee ownership within a company can: Align the risk and reward of employees betting on an unproven company Reward long […]

IPO 101 Series: What Happens to Employees After the Big Day?

Ask These 12 Questions About Your Options

In our previous posts, we’ve covered why companies go public, and how the IPO process works.  In this post, we jump to the first day of trading to understand how IPOs affect employees. IPO Day: Trading Begins Shares are typically priced at a 10% to 15% discount from the price at which the bankers expect the shares to ultimately trade at the end of the first day.  The discount is offered to compensate investors for taking the risk of buying shares in a company that has no trading history. While most offerings close the first day at the expected premium to the offering price, a reasonable percentage do not. Companies need to observe a quiet period from date of filing […]

100 Career Launching Technology Companies

If there is one thing we have learned from Wealthfront’s clients and our own experience in Silicon Valley, it is that picking the right place to work is the key to success. Getting equity in a mid-size, high-growth company is one of the best ways to launch your technology career and perhaps generate some wealth in the process. So today, we are proud to announce Wealthfront’s list of 100 Career Launching Technology Companies, an integral part of our first eBook. Compiled through a survey of top venture capitalists, all meet our criteria of being mid-size high-growth companies. We believe these are the companies that will generate the greatest career opportunities and the most significant potential for equity wealth in the […]

Why We Need Online Open Courses

Many people have recognized the potential of massive online open courses (MOOCs) to bring education to distant places in the world. Others have speculated on the use of these courses to enhance or even replace some traditional college classes. However, one of the most significant benefits has been little discussed but is already crucial to many people in the working world, both inside and outside the U.S. In the past two decades, the demand for knowledge workers has grown fast. But technology, which has transformed many sectors, constantly changes the knowledge needed to perform those jobs. Online open courses help meet that challenge by creating both an opportunity for lifelong learning, and a new legitimacy around the idea that people […]

How Long Should You Stay At Your Job?

Over the years many people who have been granted options or RSUs have asked me for advice as to how long they should stay at their employer. As with most questions the answer is it depends. It depends on your happiness, the company’s prospects and your career path. For many people, four years seems to be about the right span of time. It’s no coincidence vesting periods for most companies are four years, but your decision to stay at a job should not be driven by your vesting schedule. Don’t job hop, but don’t be miserable, either People who are interested in maximizing the diversification of their private company option or RSU portfolios tend to only stay at each company […]

The Advice You Need, Not The Advice You Want

Last week’s post, You Need Equity To Live In Silicon Valley, generated quite a bit of emotion from our readers. A number of people missed the point of the post, which explains the economics of living in Silicon Valley. We pointed out that it’s hard to make the numbers work if you don’t own equity in a business that could be worth something in the future. Unfortunately a number of people misinterpreted the article as a condemnation of Silicon Valley. Real estate is expensive in the Valley because so much wealth is created here. You can waste your time making a value judgment about whether it’s good or bad that the wealth we create, combined with a low inventory, drives […]