I spend a lot of my time recruiting the best people I can find to join our portfolio companies.
These days one subject comes up frequently – namely, “leaving money on the table”.
Some of the folks being recruited have vested a subset of their total equity and if they leave their current employer, they will be leaving perhaps something like 25% or 50% of their economics behind. And for many people this can be a sizeable amount of equity and value especially if the stock is liquid or likely liquid in a short period of time.
Often the candidate starts to think about how much equity they will get in the new company and how much that will be worth vs the amount of “sure thing” money they have in their hands if they can stick it out another few years at the current company.
This is a very personal decision and there are many ways to evaluation the decision. But since this is my personal blog and people ask me how to think about this tradeoff, here is what I tell essentially share with them and how i’ve done things in my life.
1 – There can often be financial costs for leaving your current employer beyond the leaving money on the table part. Unfortunately some employers don’t make it clear to their employees that if they leave the company, the employee typically has 90 days to exercise their vested equity. That can be expensive and needs to be part of the equation. It can be helpful if the stock is liquid but costs can be real. So make sure you understand this part fully. Don’t just ask your friends or your manager. Ask your accountant.
2 – Some folks don’t have to exercise upon leaving a company because they bought their stock early (via 83b election). in that case, life is a bit simpler. This is also a very nice advantage about joining a company in its earliest days.
Okay, putting aside the tax & accounting issues (and there are likely other things to also consider), here’s the heart of the matter.
Are you happy at your current job? Do you love it. Do you care about the product, people and problems you are trying to solve. Are you learning? Do you spend more time thinking about your current work or thinking about the next thing?
If you spend more time thinking about the next thing you should just move on.
(Another perspective: if your current employer stock goes up a ton, then your vested equity will obviously also appreciate so you will get the benefit. )
Yes, there is a chance that the money you are leaving on the table will be more valuable than going to a new startup that doesn’t work out. That is clearly a risk.
But if that new prospective company is capturing all your attention and imagination than the price for not moving is much more expensive in my opinion.
What you do on this planet is more valuable than the extra few bucks you may make a long the way.
I haven’t had any regrets about the money I left on the table. It was a big deal at the time. Im happy with my choices and never looked back.