<story><title>If founders treated investors the way they treat employees</title><url>https://software.rajivprab.com/2020/08/18/if-founders-treated-their-investors-the-same-way-they-treated-their-employees/</url></story><parent_chain><item><author>carlosdp</author><text>Every time one of these is written, it comes off as if the 90-day window is something startups came up with to try and screw employees.&lt;p&gt;A reminder that the 90-day window is a requirement by law in order for options to qualify as Incentive Stock Options, and receive favorable tax treatment for employees [1].&lt;p&gt;If you want to do 10-yr exercise, that&amp;#x27;s fine, but until the law is changed those will be NSOs and not receive that special tax treatment and will be taxed on exercise instead of on sale.&lt;p&gt;[1] &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.cooleygo.com&amp;#x2F;isos-v-nsos-whats-the-difference&amp;#x2F;&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.cooleygo.com&amp;#x2F;isos-v-nsos-whats-the-difference&amp;#x2F;&lt;/a&gt;</text></item></parent_chain><comment><author>jkaplowitz</author><text>That&amp;#x27;s true and it&amp;#x27;s not true.&lt;p&gt;An increasing number of startups issue their grants such that they qualify as ISOs if exercised within the 90-day window but automatically convert to NSOs 90 days after departure (with the actual exercise deadline dependent on employee tenure), so that the employee and their tax advisors at time of departure get to decide how to handle the tradeoff of more time for reflection vs better tax treatment.&lt;p&gt;What&amp;#x27;s more, if an employee gets more than $100k of exercisable options in a year - very possible especially in cases where early exercise is allowed - only $100k of those are treated as ISOs. There&amp;#x27;s no way in which the tax law privileges a short post-termination exercise period for the excess above $100k.&lt;p&gt;Last, some companies use the same options plan both inside the US and outside, including my two most recent employers. Most employees working outside the US, with some exceptions like US citizens and green card holders, wouldn&amp;#x27;t have to care about this US tax law nuance.</text></comment>
<story><title>If founders treated investors the way they treat employees</title><url>https://software.rajivprab.com/2020/08/18/if-founders-treated-their-investors-the-same-way-they-treated-their-employees/</url></story><parent_chain><item><author>carlosdp</author><text>Every time one of these is written, it comes off as if the 90-day window is something startups came up with to try and screw employees.&lt;p&gt;A reminder that the 90-day window is a requirement by law in order for options to qualify as Incentive Stock Options, and receive favorable tax treatment for employees [1].&lt;p&gt;If you want to do 10-yr exercise, that&amp;#x27;s fine, but until the law is changed those will be NSOs and not receive that special tax treatment and will be taxed on exercise instead of on sale.&lt;p&gt;[1] &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.cooleygo.com&amp;#x2F;isos-v-nsos-whats-the-difference&amp;#x2F;&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.cooleygo.com&amp;#x2F;isos-v-nsos-whats-the-difference&amp;#x2F;&lt;/a&gt;</text></item></parent_chain><comment><author>woah</author><text>There was a talk that&amp;#x27;s been shared on here from Ben Horowitz where he explicitly pitches the 90-day window as a way to screw employees. That&amp;#x27;s probably where the perception comes from:&lt;p&gt;&amp;gt; The second way to handle it - no companies do this, which is why I actually really like this post that he wrote - is you can say up front, &amp;quot; Look you are guaranteed to get your salary but for your stock to be meaningful, these are the things that have to happened. You have to have vested. Two, you have to stay until we get to an exit. Untile the company makes it. You&amp;#x27;ve got other money.&amp;quot; Finally, the company actually has to be worth something. Because 10 percent of nothing is nothing. The reason we set the policy this way is we really value people who stay. So don&amp;#x27;t join this company if you are going to join another one in 18 months because you&amp;#x27;re going to get screwed. Our policy guarantees you&amp;#x27;re going to get screwed.&lt;p&gt;&lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;genius.com&amp;#x2F;B-horowitz-lecture-15-how-to-manage-annotated&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;genius.com&amp;#x2F;B-horowitz-lecture-15-how-to-manage-annot...&lt;/a&gt;</text></comment>