I need to read books like this with extra intentionality or it all just flows through and I might retain a couple of key concepts if I'm lucky.
1) Highlighting or underlining along with folding page corners to make it easy to find high impact passages when flipping through later.
2) Writing a short chapter summary in the blank space at the end of each chapter. Just a couple of minutes to reflect on what I just read and to summarize the core message of the chapter.
Sounds like they're getting paid based on his note to employees:
> "The proceeds from Meta's investment will be distributed to those of you who are shareholders and vested equity holders [...] The exceptional team here has been the key to our success, so I'm thrilled to be able to return the favor with this meaningful liquidity distribution."
Honestly if this acts as a liquidity event for a whole bunch of current employees, while at the same time giving off "Meta hand picked the CEO and whoever they felt were the best AI engineers and jumped ship" energy, I wouldn't be tooo surprised if current "scaliens" view this as the inflection point, and decide it's not worth staying for the other ~51% of their shares.
Lol, what triggered this absolute hatchet job targeting Mercury? I haven't read other posts from the author but are all of them of this style?
Most of it reads like a Muddy Waters style short-seller exposé. The author whirlwinds through a bunch of hot gossip, paints a customer-experience focus as some sort of evil scheme, dredges up a handful of old issues most of which seem to have been since remediated, cherry picks a handful of transactions out of millions, seems to blame Mercury for the actions of multiple other businesses and individuals, references a wire transfer doc that was pulled from some random Synapse server without knowing what else might have accompanied that doc in the original workflow and so on and on and on.
Banking, payments, and money movement are hard and absolutely ridden with fraud. Any company that moves money will encounter fraud, money laundering, all of this.
The focus on consent orders as proof that Mercury is breaking the law seems like fluff. Most of the banks that were willing to partner with fintechs at the start, and maybe still most of the banks doing this, are local or small regional banks that don't have the robust BSA/AML programs that larger banks have so some growing pains are expected here. The FDIC issued consent orders for 25 banks in 2024, at least 13 of those were for BSA violations and/or fintech partner oversight.
The request to make an exception for OnlyFans without changing the terms for all adult entertainment businesses does not seem at all damning? Immad calls out that they are a "very big specific client and they have a very strict content policy". That seems true and possibly exception-worthy when there's a blanket policy disallowing a specific type of customer?
The Axis Consulting invoice callout is pretty random and unsubstantiated. It's just a screenshot of an invoice then commentary saying "purports to be" and "no trace of 'Axis Consulting' at the listed address". With one minute of searching it is possible to see that Axis Consulting, LLC was registered with the New Mexico Secretary of State and the company that formed the entity does appear to be a marketing agency.
I'm sure there are issues at Mercury and they probably did cut some corners while growing rapidly and push some limits trying to streamline things for customers but what in the world is this post. It reads like a man scorned and on a rampage.
If this were actual journalism or research there would be some sort of "compared to what". What is Mercury doing today that is bad and why is it bad? What laws or regulations apply to their business and what are they failing to do properly?
I'll also note that I have multiple Mercury accounts and part of the way they have mitigated the risk of easier account opening and taking on higher risk customers is that they impose fairly low transaction limits on new customers and limit the ability to write checks without going through their platform. There are probably other similar limitations that I haven't hit yet.
These are annoying, especially if you don't know you are going to encounter them and a transaction gets held up, but they make sense for offsetting risk while speeding up account opening and expanding the profiles of customers you take on.
We allow early-exercise too but I (possibly, incorrectly) assumed that this was the standard for newly incorporated startups - at least within the last 2-3 years it has become significantly more common.
"secondary sales restricted only by a short right-of-first-refusal period"
I really like this as well, I've always found it confusing when private companies are anti-secondary for former employees especially. I'll look into adding something like this to our stock plan, ROFR protects against any hostile take over weirdness and I'm confident we could add something like this to make it relatively easy to sell on secondary under a certain % threshold.
Early exercise is purchasing shares before your options vest, making you a shareholder sooner and solving a bunch of tax issues. The company retains the right (basically the obligation) to repurchase any unvested shares should you leave the company before fully vesting.
Not a restriction of the 83b election but a restriction of when you can exercise. Without early exercise you are stuck exercising as you vest so there’s more likely to be a taxable spread between your option strike price and the value of the stock. With early exercise you are exercising and making the 83b election when there’s no taxable spread.
What would this even look like? An 83b election is something I file with the IRS. Are you suggesting a company might have me sign a contract committing me to not file an 83b election?
How would they ever find out if I did file, and why would they care?
My understanding is that 83b applies to stock, not options, so you have to first exercise the options and hold unvested stock. That requires early exercise.
It's been a possibility in my options contracts. However, the company must agree to it, cash your exercise check, and send the necessary paperwork to the IRS. If they choose not to cooperate, you're out of luck.
I think there's a confusion between the related events. Filing the 83(b) form with the IRS is between you and the IRS. Company isn't involved so not something they can restrict.
However, filing that 83(b) only makes any sense if you are allowed to early exercise and that is indeed entirely up to the company. So if they don't let you early exercise you also won't be filing the 83(b).
Pro tip: Never join a startup that does not let you early exercise!!
Yes i assumed parent was referring to early exercise but maybe i misread. Imo early exercise doesn’t make a ton of sense when the company no longer qualifies for qsbs especially if long exercise window is offered so probably why it’s not offered - to avoid a ton of drama later on
> Imo early exercise doesn’t make a ton of sense when the company no longer qualifies for qsbs
I strongly disagree, early exercise is always optimal if the cost makes sense to you.
The primary reason it is so valuable is so that you don't lose everything if you have to change jobs for whatever reason before a liquidity event. If you join a startup and don't early exercise, now you are going to have to work there for however long it takes for liquidity, which could be many many years. Maybe your life changes and you have to change jobs, but you're trapped, or lose everything you worked for.
Always early exercise! If the startup doesn't allow it, find a different startup.
Edit: I should add that by not early exercising you can still lose a lot even if there is a liquidity event while you're still there! I lost a staggering amount of money on my first startup due to not early exercising even though it went through an IPO while I was there. But later I left (lured to another startup) so I had to excercise (same day sell) all the option in the typical 90 day window after quitting. Had I early exercised years before when I joined, I could've held those shares for 15x returns.
See my point about long exercise window - 5-10y is not uncommon now. I’d rather have that even though it converts to PSOs than gamble ~50k + amt on early exercise. Unless you’re super early ofc which changes the math
I'd be curious on survey data on that if something is available.
Personally I've never encountered a startup that had anything other than the standard 90 day after you quit exercise window. I know these long exercise windows exist but as far as I knew they are pretty rare.
> gamble ~50k
That's a huge number though, I'd never gamble that much either.
I'm talking about very early in the startup. If the strike price is above a few pennies, it's too late (although of course depends on the number of options and your personal budget).
Anecdotally, i've received more offers in the last ~5 years with extended window. I think it's just natural evolution due to increased competition for talent with high-paying public companies. Here's an incomplete list btw[0]. There are usually some strings attached - e.g additional cliff to qualify (like 2-3 years with the company) and you need to sign a separation agreement when leaving, etc
> That's a huge number though, I'd never gamble that much either.
I've been offered early exercise of 25k options with a $2 strike price. Series B startup. So yeah...
No idea how complete that is, but it lists roughly ~160 companies. Which is nice, but according to [1] there are about 71K startups in the US. (Of course both of these counts might be wrong but let's go with these numbers.)
So about 0.2% of startups have extended exercise windows. Not a lot ;-(
Sorry, separate concepts executed at separate times.
Early exercise (yep, 83b in the US) when options are issued then allowing employees to sell shares down the road, outside of fundraising events (Forge, EquityZen, sales to angel SPVs, etc.).
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