Tag Archives: Silicon Valley


When Should You Exercise Your Stock Options?

Stock options have value precisely because they are an option. The fact that you have an extended amount of time to decide whether and when to buy your employer’s stock at a fixed price should have tremendous value. That’s why publicly-traded stock options are valued higher than the amount by which the price of the underlying stock exceeds the exercise price (please see Why Employee Stock Options are More Valuable than Exchange-Traded Stock Options for a more detailed explanation). Your stock option loses its option value the moment you exercise because you no longer have flexibility around when and if you should exercise. As a result many people wonder when does it make sense to exercise an option. Tax Rates […]

How New College Grads Should Approach Stock Compensation

Over the past two years we have written numerous posts to help you evaluate job offers that include stock options or Restricted Stock Units (RSUs). We assumed in all our posts that job seekers were evaluating offers from companies at a similar level of maturity. For many new graduates, however, the comparison gets more complex if you aren’t sure whether you want to join a very mature company like Google or an earlier stage company like one of our recommended mid-sized companies with momentum. The purpose of this post is to help make that task much simpler. The Mechanics of Stock Options Let’s start with the basics of stock compensation. A stock option gives you the right to buy common […]

Demystifying Venture Capital Economics, Part 3

The funding of almost every new and successful technology market can, to the uninitiated, have the appearance of a financial bubble. A tsunami of venture capital flows into hot new markets at what appear to be ridiculous prices. Amazingly, the capital invested in the market winners is almost always justified. A few other companies will drive small returns while the vast majority of new entrants will lose money. This dynamic benefits the premier venture capital firms and consistently hurts second-tier firms. Most successful new markets begin the same way. A market-sensitive technologist recognizes an inflection point in technology that enables a new kind of product. It’s not uncommon for more than one individual to recognize the potential of the new […]

Steve Blank on “Should I Get an MBA?”

Editor’s Note: I came across this post by Silicon Valley veteran entrepreneur, noted author and lecturer Steve Blank while updating last week’s post on the same subject. It offers perspectives that will resonate with many among our readership who might be considering an MBA. This post originally appeared on The Wall Street Journal’s Accelerators blog on April 1, 2013 where Steve has been a regular contributor; the post has been published here with the permission of the author. -Davis   I usually hear the “Should I get my MBA?” question at least once a month. If you’re an entrepreneur, the glib answer is “no.” It’s also the wrong answer. A while back I had coffee with a former engineering student […]

Should You Get an MBA?

If you’re considering an MBA, you face two separate but related questions: ‘Is the degree worth it?’ And, ‘How will I actually pay for it?’ They are important questions because so many people consider pursuing an MBA to advance their careers. But an MBA isn’t an automatic ticket to success, and it carries a high price. This post, the first of a two-part series, is an update of one we published two years ago. It covers some of the basics for those considering the pursuit of an MBA, including how to decide whether the degree is worthwhile given your personal situation, the range of costs you’ll likely incur and the resources available to pay for a degree. In our upcoming […]

106 Career-Launching Technology Companies

Each year we publish a list of rapidly growing mid-sized private technology companies. In our opinion, these companies are the ideal places for young people to start their careers. Our logic: Nothing early in your career is more important than achieving success — and nothing signals success more than working for a successful company (for a complete explanation of this logic please see  48 Hot Tech Companies To Build A Career). To qualify for our career-launching list a company must have revenues between $20 million and $300 million and be on a trajectory to grow at a rate in excess of 50% over at least the next three years. We built our list by surveying the partners of the following […]

How to Trade Salary for Equity

These days it’s more important than ever to maximize the financial value you extract from your job. In You Need Equity To Live In Silicon Valley we made the case that it’s very hard for a Silicon Valley based couple who earns $250,000 per year to afford to buy a home and put their kids through college without generating wealth from an equity stake in a private company. We have written numerous posts to help you identify the kind of employer that is most likely to help you achieve your goals (peruse the Careers section of our blog to see them). This post focuses on how you might think about trading off some salary for additional equity, something we are […]

The Impact of Dilution

Most people don’t realize that the percentage of the company they are initially awarded when they start a new job is not  what they will ultimately own. That’s because private companies tend to raise additional capital as they mature and the ownership associated with the additional capital dilutes your ownership. Your ultimate ownership depends greatly on the maturity of your employer at the time of your offer and the rate at which it grows. Before I show the impact of future financings on your ownership I need to explain how a successful company trades ownership for financing. Dilution from Financing These days a very successful company may need four or five rounds of financing before it has the opportunity to […]

The Two Types of Job Offers

In the past we have written numerous posts to help you evaluate specific job offers, but recently we realized we neglected a critical piece of information. There are two distinct job-offer approaches companies take; each can provide you some real insight into how they operate. Some companies believe in starting with a low offer to see if you will negotiate, while others offer fair market value and usually are not willing to negotiate. There isn’t a correct answer but you do need to recognize which type of company you’re dealing with and decide which type of company you want to work for. The Low-Ball Approach Unfortunately, a common characteristic of very successful entrepreneurs is they are often very cheap when […]

Demystifying Venture Capital Economics, Part 1

The other day my co-founder, Dan Carroll, asked me a number of questions about Venture Capital returns because he was stunned by the valuations of some recently announced deals. After I answered the question, Dan and a few colleagues who were within earshot encouraged me to share my perspective on the subject because it is so poorly understood. Much has been written about the financial performance of the companies backed by venture capitalists, but very little has been written about the economics of the venture capital industry itself. With this post we open the kimono on who funds VCs, what returns they expect and how the best VCs consistently succeed in outperforming those expectations. Who Funds VCs? The primary providers […]