Why Now Really is a Great Time to Join Facebook

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Jason Lemkin

It might seen like with FB stock off almost 50% from the IPO price, now is a terrible time to join.

You’d be wrong.  There’s a couple of reasons for this, and if you haven’t working for a public tech co. before, some if is non-obvious:

  • First, as Mark Zuckerberg said at TechCrunch Disrupt, you get a lot more options, with a lower strike price, if you join when the stock price is lower.  This is true at most companies.  The reason is two-fold.  First, HR and finance departments have to put a value on options.  They generally use a somewhat static derivation of a Black-Scholes analysis.  Without getting into the details, basically, the higher the existing price of a company’s stock, the higher the implicit value and cost of the options/RSUs – hence you get less because the options have to fit in a cost budget.  The higher the price, the fewer options available for the budget, and the fewer you get.  By contrast, when the stock price dips, you can often get more, if the calculations is adjusted.  In addition, even employees who are sitting on underwater options/RSUs may get either repriced, or granted more options.
  • Second, tumult creates opportunity.  When everything is perfectly to plan, it’s hard to get promoted quickly, it’s hard to stand out, it’s hard to change anything.  I’d bet it’s a bit easier to make changes and take risks at FB now than 12 months ago.  Which is good for those who like to make things happen.

{The same turns out to be true at start-ups, if you join on the dips.  It’s just, it’s hard to see them as an outsider at start-ups.}

Obviously, this math doesn’t work if you join a dog on its way to zero.  But Facebook is a great company, insanely profitable, with great management and a great product.

Now would be a great time to join Facebook.

Published on September 12, 2012
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