This really shouldn't get the fundamental point wrong

> When an employee exercises an option, the company must issue a new share of stock that can be publicly traded.

No. When you exercise, you get the stock, but it's definitely not guaranteed to be publicly traded.

For example Graphcore gave people options, which if exercised became stock in graphcore. If you then found a buyer and asked GC to approve the sale, they declined. Not public. Later they revalued that stock at zero.

To a better approximation, stock options work if you trust the company to pay out.

This should be titled, "How Employee Stock Options Work"

It's from 2007; if someone showed you this today, as what you needed to know as a hire, they'd be scamming you.

This seems like only the "first slide's" worth of what a tech employee needs to know about stock options, and not the most important things.

It's also worded imperfectly in parts, with the effect of being misleading.

If you start by looking at the lede and first paragraph, it's unclear who this is for, and seems more like a child's "book report", with no regard for the reader, nor sufficient understanding of the space that's relevant to the reader.

Perhaps this wasn't garbage in 2007, but I'm flagging it in 2025.

>How Stock Options Work

They don't.

Of course Stanford [1] paints it like a Disney movie without mentioning:

  * Share Class & Rights (e.g. common stock, voting, etc)
  * Tax issues and how they are structured (a friend had to pay a lot even before exercising due to bad legal paperwork)
  * Dilution
  * "Market price" nonsense for private companies
  * Other risks when exercising
  * Liquidity
  * Boom/bust cycles
  * Lots of growing changes might get them to "have to let you go" and you get nothing to show for

Basically, you should talk to an experienced lawyer before taking any offer like this.

[1] Stanford to continue legacy admissions and... https://news.ycombinator.com/item?id=44846130

I know that we're writing on the Y Combinator-sponsored forum, but after the events of the Windsurf/Google fiasco, the exits of Instacart, and how the acquihire is scaling, is there any indication that SO is a really good incentive nowadays?

Atrocious formatting

This is apparently content for this class: https://explorecourses.stanford.edu/search?view=catalog&filt...

This is embarrassingly bad. Factually wrong on substantive points.