Think twice before exercising your stock options

Startup options and when they’re worth it

Ben Werdmuller
7 min readMay 11, 2024

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I recently wrote a short aside about stock options:

But in general, for regular employees, I think options are rarely worth it. They typically require an up-front investment that many employees simply can’t make, so it’s a bit of a fake benefit to begin with, and their future value is little more certain than a lottery ticket.

Hunter Walk kindly reshared it on a few networks with some of his own thoughts; a conversation with Tony Stubblebine arose in the comments that Hunter wrote up as its own post. In particular, he says it helped him articulate the ups and downs of private stock to the average person:

For much of a startup’s life new FUNDING VALUATIONS are LEADING indications of POTENTIAL. They are what someone is willing to pay for shares today based on what they believe the company CAN DO in the FUTURE.

DOWN ROUNDS and RECAPS are LAGGING indications of PERFORMANCE. They are what someone is willing to pay for shares today based upon what the company HAS DONE in the PAST.

It’s a great post, and the comments from Tony were thoughtful. Which led me to feeling a bit bad about how flippant and imprecise my original post had been.

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Ben Werdmuller
Ben Werdmuller

Written by Ben Werdmuller

Writer: of code, fiction, and strategy. Trying to work for social good.

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