Why shouldn't I collect a ton of equity by job-hopping?
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Editor’s note: A version of this question originally appeared on Reddit.
I’ve been at a startup for the past 3 years and I’m casually starting to look around at other opportunities and it struck me — what’s stopping me from getting hired, vesting stock options for the first year and then quitting after my 1-year cliff? I could build a tidy little portfolio of sorts of every pre-IPO startup that I’m interested in. What do you think? Is this a viable plan?
- Anonymous
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Dear Anonymous,
Job-hopping right after your 1-year stock options vesting cliff is an interesting idea.
I could see a couple benefits — in theory, you could continually negotiate a better salary and better job titles by hopping from company to company. The average startup employee stays in their role for just 2 years, so cutting that down to a new job every year isn’t totally unheard of.
You’d get exposed to a lot of different teams, tools, work cultures and best practices, so you’d certainly get valuable perspective on ways to work. You’ll also meet and work with a lot of people, building your network.
Plus, if you make it a point to exercise your vested stock options right after your 1-year cliff, you could also build a small collection of pre-IPO shares in a variety of companies — the quality of which would be entirely up to you and your ability to pick promising startups.
Venture capitalists do something very similar, except instead of job-hopping, they hop from investment to investment, knowing that it’s better to spread their risk around, rather than focusing all of their resources on a single company.
Of course, there are pitfalls — job-hop too often, and you might start throwing up red flags with recruiters, who decide to pass on your resume because they (rightly) suspect you aren’t in it for the long haul.
You also might manage to join a promising early-stage startup that later experiences a massive exit. Instead of building equity in that company for several years, you might instead hop to three more startups, all of which experience less impressive exits or, more realistically, fail to exit.
Remember: There were people who joined Facebook, Google, Amazon, etc. when they were tiny startups and left their jobs before the IPO, leaving employee stock options on the table that today would have been worth millions of dollars. Hindsight is 20/20, and you may find it’s more valuable to pick a company that you’re really excited and optimistic about, rather than constantly hopping.
- Vieje Piauwasdy, Senior Director of Equity Strategy, Secfi
Do you have a question about your stock options? Email us at ask@secfi.com