The Indicator from Planet Money - How stock options made him an overnight millionaire

Episode Date: June 24, 2026

In 2019, Juan Hernandez was laid off from SpaceX. Luckily, he still had the opportunity to buy $50K - $60K of the company’s stock and, years later, it’s safe to say the risk was worth it. Today on the show, how stock options built California as a tech hub. Fact-checking by Emma Ferrara. Your Next Listen — Do traders who make big bets make big money? Connect with The Indicator — Sign up for The Indicator’s brand new newsletter — Buy the Planet Money book — Find our socials, YouTube and more! — For sponsor-free episodes, subscribe to NPR+ See pcm.adswizz.com for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences.NPR Privacy Policy

NPR. When Juan Edinandes came to work at SpaceX in 2013, employees' stock options were not front of mind. You're like looking at the bottom line, like, how much you actually paint, how much you could actually take home to feed the family? Especially me, I had no experience with the stock options or the market or anything like that. Eventually, Juan started to learn that shares in SpaceX were growing and growing in value.

You would go on your little webpage and, And they would show the value kind of going up and you get the emails. You're like, huh, this is interesting. This is starting to be worth something. Tech firms aren't the only businesses that give their employees shares of the company. In fact, sailors hunting whales hundreds of years ago would often get paid a share of the profit. But startups giving all employees stock options is a particularly Californian model that might explain why the state is a tech hub. This is The Indicator from Planet Money.

I'm Darian Woods. And I'm Waylon Wong. Today on the show, why do California tech companies love to give their employees stock options? We learn what they are, why they might be the secret ingredient to Silicon Valley, and how they've changed Wad's life. It's a year of paydays for tech employees. SpaceX but shares of its company public mid-June. Also, Anthropic and Open A, are also. have announced their filed paperwork to possibly do the same too.

All three companies give their employees rights to buy shares of the company as part of their pay package. And when the companies go public, it becomes a lot easier for those workers to cash out those shares. We met one of them, Juan Hernandez. Juan was born in Mexico and raised in California. He started off working in warehouses and restaurants before moving into office work in an aerospace company. But he kept hearing about another case. company on the other side of town. They were marketing themselves.

We hired the best of the best. And, you know, it's been kind of competitive. And what I do, to me, it was just kind of like, all right, I want to work where they say the best of the best work. That company was SpaceX. And I decided to put my name in the hat. Juan says, because he didn't have a college degree, he didn't have a lot of leverage. Fortunately, I was hired.

Juan became a scheduler in SpaceX's engine factory. I had a team under me that we would schedule. or make sure that we hit our launch dates and commitments. You were responsible for making sure everybody's on target, which, you know, coming from Elon Musk, who was like a known taskmaster, that must have been a lot of pressure. Yeah, yeah, there was a lot of pressure. But he took care of us.

But yeah, he was very demanding guy. And so, you know, we had skin in the game, so we wanted to execute. The team had skinned the game because they had options to buy SpaceX stock. Ifataran is a professor at Israel's University of Haifa, specializing in startup corporate law. There are not just workers receiving wages. They are partial owners of the firm. And that ownership interest gives them a reason and an incentive

to invest their time, their knowledge, their effort in building the firm. Ifat says that retaining workers is particularly important for tech companies and their investors. They want the talent to stay around. You're basically investing in people, in ideas, in work. what they have in their heads. So you really need to work hard to make sure that you're not just creating an empty shell and the most important asset eventually walks out of the door. Now, the way employees get ownership varies between companies.

And there have been different types within SpaceX over the years, too. But a basic employee stock option situation goes like this. At certain dates, a company gives you special contracts, stock options. Those contracts are the opportunity to buy. shares in the company at the current price. Yeah, so they're not giving you the shares themselves. They're giving you the right to buy at that price. Exactly.

So let's say you have the right to buy SpaceX shares at $1 a share. If SpaceX's shares stay at $1, that option isn't really worth anything. But if the company rises in value a few years later, then that option can become very valuable. Let's say the share price goes to $100 a share. You can still pay the price of that original $1, which is not worth $100, so a pretty good deal. A very good deal. Yeah, but it's worth noting that when you exercise that option, you likely have to pay taxes on that $99 gain. And when the company's private, there are limited opportunities to actually sell some of those SpaceX shares to fund that.

Plus, there's often restrictions on how long you need to work at the company before you can actually get those stock options. and the options have expiration dates, say 10 years. So if you don't actually buy stock with that option, then its value goes to zero. That timeline is even faster if you leave the company. Once you leave, you have only three months to decide whether or not to exercise the option. And that would involve out of my pocket costs and maybe alternative minimum tax. This is roughly the problem Juan Hernandez faced after six years working for SpaceX. Unfortunately, at 2019, I got laid off.

In Juan's case, he hadn't bought any SpaceX shares while he'd been working there. He said he had 30 days to buy $50,000 or $60,000 worth of SpaceX stock or leave them forever. Convincing the wife was the biggest part is like, hey, we need to get these. I was telling her, like, it's almost a sure thing. And, you know, she was very nervous. She was nervous because, A, Juan had just been laid off. B, they need to borrow against their mortgage to pay for it. And C, it's putting all your eggs in one basket.

That is the exact opposite of what financial advisors tell you to do. She said, like, you're putting the house up. You know, we don't even own this house. Like, this is our only thing that we can leave behind at the time. And, you know, I was able to convince her. And we got to a point where she's like, okay, you know, I believe in it. Let's do it. So Juan's dilemma reflects how hard it is to take advantage of a rising company's value when you leave.

whether it's voluntarily or involuntarily. But Ifat Iran says what's distinctive about stock options is that they don't lock people into failing companies. If the company is not doing well, the options aren't worth much. So employees actually have an incentive to seek a better opportunity elsewhere. Ifat says this is a huge part of why Silicon Valley became such a success. And yes, we know SpaceX started in a... L.A. and is now headquartered in Texas, but Elon Musk really is a product of Silicon Valley.

Anyway, a hundred years ago, there was no particular reason why California would dominate as a center for tech. Bell Labs in New Jersey had extraordinary scientific talent. Boston was another contender. They had MAT engineers and defense funding and major technology companies. In those places, workers could be subject to not. Compete Clause. And this is an important point. A non-compete clause says you can't work for companies for a time after you leave. That's a strong way for a business to keep staff working for them. Yeah, if they want to keep the same light of work in the same region, they're basically stuck. But California doesn't allow non-compete clauses. So with roots going back to the 1950s, tech companies would do something else to keep their talent. They started to give ordinary employees more of a share in their startups.

Ifat thinks that employee ownership is the big factor that gave rise to the tech startup ecosystem in Silicon Valley and not elsewhere. Definitely. Because when you are investing in intangibles, you're actually investing in people. And you want them to be happy and you want them to stay and you want the incentives to be aligned. And Juan Hernandez is very happy. He says those shares he and his wife bought for $50,000 or $60,000 are now worth a lot more. He wouldn't say the exact amount. And if you've been following the markets, you'll know SpaceX stock has been erratic, to say the least. But he says it's between $1 and $5 million, if not more.

I was an immigrant and she kind of grew up in, you know, L.A. not the best circumstances. So, you know, feel blessed that we kind of got in a situation where we can, you know, now put generational wealth in our family and set up our kids to have the advantages that we didn't have, you know, kind of the American. textbook American dream, honestly. If I delivered this to Hollywood as a script, I'd say, no, go back to the drawing board. They would say, this is too on the nose. This episode was produced by Cooper Katz McKim and Emma Ferrara, who also fact-act.

It was engineered by Maggie Luther. Cake Academy edits the show and The Indicator is a production of NPR. Once upon a time, there was a listener who just couldn't get enough of the indicator from Planet Money. Who was it? Rumpel Stiltzkin. This listener tuned in all the time but thought, what if there was more? That Rumble Stillskin would be in luck because the Indicator has a brand new newsletter.

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