Career decisions in a downturn

Published July 5, 2022.career (27)

When I joined Yahoo in 2008, I was given a few options. I don't remember how much - it was very little - but I know my strike price was around $16. I don't remember it because my strike price was particularly lucrative, but rather because some of my co-workers were complaining about their strike prices being underwater in the $50s. Considering the stock was trading around $18, it was easy to see why my team members were a little flustered. As far as I know, these options held by my colleagues stayed out of the money until they expired.

I thought of Yahoo recently during a few discussions with people who expected their business to reassess their options given the economic turmoil of 2022. The answer to "when will your business reassess your options" is almost always "never", but it's a natural topic in an environment where a company like Klarna has gone from a valuation of $45 billion last year to an increase in its next round at $6.5 billion.

The repricing of options remains an exceptionally rare event. It happens: Google changed its price in 2009 after dropping from $747 to $308, and Zenefits changed its price in 2016 after changing CEOs and losing half its value. Even then, it's not necessarily a great outcome for employees. Employee vesting schedules are usually reset. Those three years of acquisition you've already completed? They never happened.

Options repricing is just one of many discussions I haven't had in almost a decade now popping up with the 2022 downturn, and I've tried to put together my career advice for people going through their first downturn. My career advice for the current downturn:

There is some disagreement about whether we are in a recession. If we are in a recession, there is also disagreement about when the recession started. That said, the average recession lasts 15 months, so a conservative plan would think of the downturn lasting until the end of 2023 – how should you use that time frame? If a given role can prioritize profit, pace, learning, prestige, or people, then now is a good time to focus on working with good people in a role where you are learning. There's a lot to learn right now, as many companies abruptly shift from long-term growth goals to short-term profitability orientation. Prioritizing profit is difficult because so much of tech compensation is based on stock valuations. The mainstream wisdom is that FAANG companies are the easy way to outrageous compensation, but Netflix has gone from $691 to $179 in the last 8 months and Google has gone from $2,965 to $2,181. Private companies are even harder to value right now, ranging from Klarna's earlier valuation change to the many recent layoffs (additionally, layoffs may not correlate with lower valuations, as valuations have moved from a anchored on growth to anchored on profitability). While you may be familiar with the financial challenges of your current business, it's quite difficult to know if other opportunities are more financially sound. Likewise, it's a tricky time to chase prestige as many companies that were prestigious a year ago like Netflix are in dire straits or going through a hiring freeze like Meta. Although FAANG will remain prestigious, the most prestigious companies of 2025 are much less obvious than they were twelve months ago Combining the last points: My general advice to people would be to stay where you are as long as you're reasonably happy day to day and feel like you're learning at a good pace. Even if your actual compensation has dropped a bit, it's very difficult to determine whether another company's compensation will hold up either. Don't get me wrong, if you're not satisfied...