Advice: Stock Options
This morning, the Wall Street Journal had an article showing the paths two former Google contractors took and where they are now based on the decision they made five years ago. Both contractors were offered stock options instead of a cash payment for the services they performed. Both performed similar duties, with one billing Google for $4,000.00 and the other for $5,000.00.
They took different paths, however, as one took the $4,000.00 instead of the stock options, while the other took the options. As the article reads, after two stock splits, and the IPO, the stock was now worth $1.7 million dollars. The contractor can’t remember what she spent the $4,000.00 on and she regrets her decision, while the other cannot stop smiling, as she is now a millionaire.
I felt I had to report this, as this story may cause many consultants or businesses to pass on fees for stock options. My advice? Don’t do it. Over the past 8 years, I have stepped over nearly $400,000 in fees for stock options. One company was responsible for nearly half of that figure. The result of all of the ventures? Nada. Zip. Nothing. Each looked like a “can’t lose” opportunity, but each failed for different reasons. Google is a great story, but they are rare.
Instead of passing on your entire fee for stock options, you may wish to do a 60-40 split if you believe in the company enough (60% fee and 40% stock). This way, you are receiving something, and if the company can pay you initially, you know they have money. In my experience, I learned there was a reason stock was being offered – the company was broke, and was trying in earnest to raise more capital. Often when a company is having financial difficulties, the executive team makes poor decisions which takes the company into the red further.
In closing, my attorney would kill me if I didn’t remind you of the following: have your attorney review all documents and request financials before accepting stock options for payment of your services. If you need a qualified accounting firm who can quickly diagnose financials and give you expert advice, turn to Cloward and Sorenson.
Parting Shot: Whether you are a consultant or a company, be extremely careful when trading your time and/or services for stock that is worthless but has potential. Remember, “potential” is a french word which translates to: you aren’t worth a damn yet. 
The main reason I started the SEO Revolution was out of frustration. Frustration at all of the lies and misconceptions that are posted in forums, given as advice in teleconferences, and even taught in live workshops. "So why didn't all of this work?" " Why wasn't my site successful?" " Why am I still stuck in a rut?" 