I coulda been a millionaire

Execs are kicking themselves for turning down stock options at hot Internet companies.

It could happen to the best of us. A job opportunity comes along with some fledgling company. The business model sounds iffy. We take a pass. But increasingly, such caution is becoming costly. Just ask writer Michael Lewis, who rejected a chance to own up to 5 percent of TheStreet.com. That stake is now worth roughly $12 million. And he's hardly alone.

"It's the story of the Valley," says Lewis, who currently teaches at the University of California at Berkeley and writes about nearby Silicon Valley. "There are all sorts of people who could have worked at Yahoo (Nasdaq:YHOO) ."

Lewis, author of the riotous "Liar's Poker" about life on Wall Street, was offered his stake in TheStreet.com in return for writing a weekly column. He opted instead for publication in The New York Times - and cash up front. But only recently, an investment in TheStreet.com (which will soon go public) by The New York Times valued that 5 percent stake at an estimated $12 million or so.

Regrets?

"It's false regret," he explains. "If you could have told me how it all would have happened, I still wouldn't have done it. I wouldn't have wanted to spend two years at TheStreet.com." On the other hand, he notes, "I feel so foolish for having so misdiagnosed the situation."

Foolish, perhaps. But in good company.

Executive recruiters throughout the high-tech industry say their Rolodexes are filled with the names of people who rejected the notion of working at companies as quirky as eBay or Amazon. Likewise, Internet firms are filled with employees who previously failed to convince friends or relatives to buy stock or join the company.

Stock options gamble
In most cases, stock options are the key to the failed dreams. A new, mid-level hire at an Internet high-flier like eBay or Excite might expect to receive the option to buy several thousand company shares in the future at the same price at which shares closed on the day of hire.

Not many who turned down such opportunities are eager to talk about it. Two mid-level executives who chose to join a well-established entertainment-software firm rather than eBay, for instance, declined to be interviewed. Likewise, a student at a well-regarded graduate business school chose to return to get his degree rather than begin working for eBay before it went public; the student would offer no comment.

EBay, the online auction house, traded in the mid-teens last September, when it went public, before shooting to about $170 a share today. Thus, 5,000 stock options granted in late September could be worth about $800,000 now.

Individuals who unwittingly passed up such opportunities try to remain philosophical.

"There's no lesson in life that isn't worth the price," says one editor who passed up a job with Excite that would have entailed about 6,000 stock options. "Now I know, sometimes these things can be gold mines."

Ironically, one reason the editor rejected the offer was financial. With two-bedroom ranch homes in Silicon Valley selling for $500,000, he figured it wasn't worth the raise and the stock to move from the East Coast to the West Coast.

And besides, he says, Excite was trading in single digits and "it didn't seem like this was going to be a big windfall."

Handicapping the winners
That's what seems to gall author Lewis most. "What's interesting about the story to me," he says, "is that these things have the valuations that they do right now.

"Something real and important is happening right now," he adds, "but a lot of the companies that are valued very highly today will be worthless, and some will be worth a lot." Telling the difference may be impossible, he notes.

To Lewis' point, not all start-ups and quirky Internet companies are worth joining. On the contrary, Randy Block, a staffing consultant with Block and Associates in Mill Valley, Calif., estimates that only about one of every 15 start-ups ends up handsomely rewarding owners of its stock. "It's a crapshoot," he says.

Still, David Cole, a San Diego-based research consultant, says he has learned to keep his eyes open and his antenna up for extraordinary opportunities. Not long ago, he says, he was advising a man named Jay Walker about how to enhance his marketing services for video-game makers.

Walker is now best known as the billionaire chief of Priceline.com.

"Whoa," Cole recalls saying to himself upon reading about Walker recently, "I should have kept in closer contact with him."