Goodness. Congratulations on the IPO! But what and how to sell is really a tough one.
If you’d sold shares in almost any SaaS/Cloud IPO in the past 7 years, you’d feel a bit of a fool:
I did. 🙁
But it’s hard to know. Marc Benioff sold a huge amount of his Salesforce stock before its run from $2b to $85b in market cap.
- Can you afford to lose it?
- How much are you OK risking?
Everyone is a Genius in 2018.
Some general thoughts though:
- Maybe sell 20% now. You can give up some future gains to lock in some actually liquidity today.
- Taxes are important, and confusing. Paying a ton of taxes now to hold for the future can be awfully risky, especially if the taxes are very high. Don’t put your financial health in jeopardy to pay a ton of taxes now in hopes of selling for a higher price later.
- What if the stock price falls 50%? Are you OK with that? If so, maybe hold the rest. If not, maybe sell off over the next 2 years (see the next point).
- Most VC firms sell off quarterly or so in the 24–30 months after the IPO. And they’ve been doing this a while. And have seen a lot of IPOs. They aren’t that OK if the stock price falls 50%, actually. So this is their general plan. So maybe this should be your default plan.
- Maybe, sell less if you plan to stay an employee and have no tax issues. Options are options, after all. They are designed to give you time. They give you a shot at leveraging power laws without putting any cash up front. That’s special, if you are working at a winner.
- Family first. What is best for your family? Even a relatively modest amount of financial security can be incredibly different than none at all. Even if you want to roll the dice, just double check your thinking here.