Bottom line: Calculate ROI before deciding whether to take equity incentives now or wait for IPO

Honestly, I felt quite emotional reading this report by QbitAI. The Andrew Ho case—sitting on $700k in OpenAI equity, urging former colleagues to cash out overnight, don't wait for the IPO. I understand his anxiety, but let me say, it's not that simple.

First, my judgment: For startup employees, cash out if you can, don't hesitate. But for a company at OpenAI's level, the situation is more complex.

Why Andrew Ho is right: Liquidity risk is more fatal than valuation risk

When I led teams back in 2007, I saw too many people cling to options only to end up with nothing. A simple truth: Valuation is paper wealth; cash is hard currency.

Andrew Ho said AI frontier lab valuations are "built on extremely optimistic expectations." I agree halfway. Look at OpenAI's valuation curve: from $30B to $80B to $150B, and now $300B. This growth rate is indeed crazy, but the question is, can revenue growth keep up?

By my rough calculation, OpenAI's current annualized revenue is around $5-6 billion. A $300B valuation corresponds to a 50-60x P/S ratio. This isn't outrageous for tech companies, but it assumes revenue can continue to double. If growth slows, the valuation correction will be severe.

Key data points:

• Equity value: $700k (at current valuation)
• Assume post-IPO valuation drops 30%: $490k
• How much can you get in a tender offer now? Usually an 80-90% discount
• Cash in hand in two years vs. cashing out now and reinvesting: You have to calculate opportunity cost

But don't forget: OpenAI's equity structure is a "black box"

Some ex-OpenAI engineers on my team told me their internal equity incentive plans are extremely complex. There are Tender Offers, secondary market transactions, and employee stock ownership plans. Not all equity can be cashed out anytime.

Andrew Ho's advice only applies to employees who have a "liquidity window." If the company stipulates that you can only sell via internal tender offers, then you need to see who the buyer is and what the price is. I've seen some companies' tender offer terms so harsh that "even after a 30% discount, you're locked in for years," which is worse than waiting for the IPO.

From a manager's perspective: What exactly does equity incentive incentivize?

I mentioned in my previous post "When AI Reliability Becomes an Organizational Management Issue" that tools must serve organizational efficiency. Equity incentives are no different.

The paradox of equity incentives:

• For early employees: Incentivizes them to take risks and create value
• For later employees: Incentivizes them to keep their jobs, don't jump ship
• For departed employees: It's just an uncashed check

Andrew Ho has $700k on paper. This number isn't high in the AI industry, but it's not low either. His choice to leave and start a business shows he's more bullish on his own project than on OpenAI's IPO returns. That's fine, but don't use "cashing out" to mask the choice of "leaving".

My suggestion: Depends on the person and the situation

Situation	Suggestion	Reason
You're still employed and believe in long-term value	Hold, but set a stop-loss line	Valuation pullback risk exists, but long-term view favors the AI track
You plan to leave or have already left	Cash out immediately if possible	Liquidity risk is highest; equity value decays over time
Your equity accounts for >50% of your assets	Cash out >50%	Diversify risk; don't put all eggs in one basket
You're purely speculative	Cash out now, invest elsewhere	Flip during high valuation period; secure profits

Summary: Andrew Ho's advice to "cash out ASAP if you can" applies to 80% of employees. But for founding team members who truly believe in the company and are willing to hold long-term, sticking it out for the IPO might be more reasonable. The key is to clearly calculate your own risk tolerance; don't let valuation numbers cloud your judgment.

Action item: If you have over $200k in unlisted equity on your books, do the math today—if the valuation halved, could you still sleep well? If not, cash out.