I worked for 5 different technology startups in my career. Finally rang the bell on #5. Generally, startups run out of cash from their angels and die on the vine prior to IPO.
In the end, a successful technology IPO and longevity of operations depends on your value proposition and how high the barrier to entry is for other competitors. One I remember that went wild in the .com craze was pets.com. Over a billion is valuation for a website selling kibble? A teenager could become a competitor by the end of the day!
In my last endeavor, I knew we had a winner when the military started sniffing around. We were breaking new ground in the early 2000’s in functionality and encryption of voice over IP. We were the first to begin displacing NORTEL and other big telephony platforms with PC’s running Windows.
Once you get to the point you have a pile of stock options with positive equity, you have to make decisions about when to take it off the table. In technology, the rides can end suddenly with little to now warning. One misstep by the company or a move by another competitor and your equity can vanish in a moment. Sell too soon and miss the big win. Nothing worse than watching your equity vanish and you’re handcuffed by a “quiet period” where insiders cannot trade.
I made my decisions at the beginning of each trading window for insiders. Some came out multi-millionaires, others rode it all the way to obsolescence waiting for more and got nothing.
Thanks for that post. I’m sitting on a bunch of stock from the company I work for that went public in 2019. Brand new technology and I’m trying to work out when to sell.