It only makes the options less valuable if they are actually offering a liquidity event, otherwise it is actually advantageous to employees as any new option grants (both new hire and refreshers) are delineated in dollars, so a lower valuation means they get more of them.

I get that this might not align with the perspective of their employees, especially if they skew young and their expectations were shaped by tech stock price dynamics of the 2010s. A lot of folks haven't yet come to terms with the new normal. From an ISO/RSU earning employee's perspective, it's better for prices to correct quickly and completely so you can start getting new grants at more reasonable valuation with real upside.

It really depends. A lower valuation also means raising money will be at lower valuations, which means investors get more of the company, which means more share dilution.

For any employees that have already exercised their options, that also means the value of what they thought they were getting just went down.

The imaginary value went down, unless they are actually offering liquidity for employees who have exercised.

Secondary markets exist for Stripe stock.

If they buy back after exercising, they would be making a profit!

Haha there has got to be some law against this.

Yes, but that a risk they accepted.

Sure, but it's still compensation that is now less attractive. I never called it a moral failing.

Nobody said otherwise. Doesn’t make make it anymore attractive though.

There are typically two valuations of private companies. The "internal valuation" is usually the valuation of the common shares (ie, those that are granted to employees) whereas the "external valuation" is the value of the "preferred" shares that investors purchase. The external/preferred valuation is usually higher because the preferred shares have more attractive terms (such as that you get your money back first before other equity holders are paid out).

From the article: "A 409A valuation is an independent estimate of a startup’s fair market value often used to price stock options to employees."

I know this is totally standard and everything, but imagine if we applied this to any other context:

- The “internal” assessment of the bridge’s strength, and the external assessment of the people who drive over it

- In politics, you have a “public position” and a “private position”

Makes you think!

I don't think it's as nefarious as that. What people are calling the "public" position here is the value of preferred stock sold in a financing, and the "internal" valuation is the value of common stock. They're different things - the preferred stock has downside protection and other special rights that make it more valuable than the common stock so it should have a different price. These internal valuation reports pretty explicitly calculate the value of the common stock as a discount applied to the preferred stock price, due to the rights and liquidation preferrence and the fact that the common is not freely tradable.

The first one is not analogous since it is not the same bridge. As pbreit pointed out, the terms are different.

The second one is true in any human to human relationship. I would not believe anyone’s outwardly stated thoughts exactly match their internal ones.

stripe doesn't do stock options. they do yearly cash-value RSU.