The Well-Known Bright Side

Equity compensation is a form of non-cash payment that companies use to incentivize and retain employees. It offers employees ownership interest or shares in the company, aligning the employees' financial interests with the company's success.

During the tech boom, numerous Silicon Valley companies popularized and expanded the use of equity compensation during the tech boom, making it a key component of Silicon Valley culture and compensation strategies.

People mostly talks about the bright side of the story such as:

Charlie Ayers, the chef who joined Google as its 56th employee, made a significant fortune from his stock options when Google went public. Originally skeptical about the value of his equity, Ayers' shares became worth millions as Google's revenue and value skyrocketed over the years. His story exemplifies the potential financial windfall associated with early employment at a successful tech startup.

David Choe, a graffiti artist, chose stock over cash for painting murals at Facebook's first offices, a decision that resulted in an estimated net worth of $300 million after Facebook went public. Despite initially doubting the potential of Facebook, Choe's choice to accept stock instead of a $60,000 payment reflected a remarkable intuition about the company's future success.

Steve Ballmer joined Microsoft in 1980, initially as Bill Gates' assistant, before rising through the ranks to become CEO. His wealth, now estimated at around $115 billion, largely comes from the equity stake he secured early on, making him one of the world's richest individuals, closely trailing Gates himself.

Many people are drawn to success stories, particularly those that involve achieving success with minimal effort. The appeal of such stories is straightforward, making the dream of prosperity a powerful magnet that draws numerous aspiring individuals to Silicon Valley from across the world.

Yet, the allure of these narratives diminished after the burst of the dot-com bubble. Many who had pursued their dreams in Silicon Valley found themselves trapped in a “golden handcuff”.

In fact, there seems to be a deliberate avoidance of discussing failures, and yet, people continue to fall into this trap even today.

The Ignored Dark Side

I find it intriguing to discover that there are numerous recent stories where things have gone awry. It seems that such stories recur with some regularity, and I anticipate this pattern will continue. It's astonishing to witness so many exceptional Silicon Valley talents, capable of solving world-class engineering challenges and complex mathematical and statistical problems, yet struggle to navigate equity compensation. Therefore I decided to list two stories for case study purpose.