Google bought Wiz for $32B — but did rank-and-file employees make any money?

It’s a common question given so many sad stories of early employees getting nothing in an exit, and even sometimes founders getting nothing. In the case of Wiz, yes. Pretty much everyone made money. I’ll break it down.

• Founders (and early investors): Crazy money in this deal
• Early employees: Great exit and in many cases life changing money
• Recently hired employees (like last 12 to 18 months): Yes, but a bit more complicated, here’s how it works (we’ll focus on this group)

Wiz raised a VC round last year at a $12B valuation, and they sold for $32B. That’s more than 2.5x since then. (A lot of folks were hired around that time due to hiring surge.)

But those employees — even if they came on board around the time of that $12B fundraise — had a strike price (what it costs to buy one of their shares) MUCH lower than the $12B valuation.

Say what?

Yup, companies have to do something called a 409a valuation, also known as a common stock valuation.

This is what determines the stock option strike price, which is the price you as an employee have to pay for each share.

It’s common practice that the 409a valuation (which again sets the strike price that you pay) is significantly lower than a VC round’s valuation, sometimes > 75% discounted.

Wiz Example

Let’s break down a Wiz example:

An employee starts there a year ago, and is offered 0.001% equity as part of their job offer.

The 409a valuation is based on $4B (much lower than the $12B vc round). That determines the price they would pay for their options.

Now, a year later, the company sells for $32B, which is 8x the 409a valuation.  So the employee gets the advantage of not only the huge rise in valuation, but also the discounting effects of the common stock valuation.

See below for a detailed breakdown of how this might actually work for a recently hired employee.

Calculate Your Exit

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Check it out here.

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