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This is a useful response not because I'll ask for the same terms as investors, but because I think that's a good negotiating tool to ask for more equity. I dou

by kohanz 11y ago

This is a useful response not because I'll ask for the same terms as investors, but because I think that's a good negotiating tool to ask for more equity. I doubt they want to give me the same terms as their investors, nor do I want them because I'm not an angel investor, but that's a tangible way to state that the type of equity I'm awarded has less value and therefore should be calculated differently.

blackguardx 11y ago
I think that trading salary for equity makes you in the same league as an angel investor. In my opinion, early employees are absolutely entitled to the same terms as investors and should be treated with the same respect.
- sanderjd 11y ago
  You're definitely in the same league, but you don't necessarily have the exact same incentives, which might affect the negotiated terms in various ways. But in general, investors are very sophisticated and aware of how to get a good deal, so negotiating for the same terms they get is a good stand-in for negotiating for good terms without needing to be as sophisticated yourself.
ChuckMcM 11y ago
You will be safer/happier if you simply value the equity offer at $0. This is especially true of pre series A companies. If you do that, and it ends up being worth nothing (common case) you will not feel a "loss", but if you have been imagining it was worth something, and was now worth nothing, you will grieve that loss, irrational as that is. I have seen it again and again, where the stock price of a company hits some value, the employee does the math of "option price x quote" == $some number, and then when the stock price goes down feels bad about how much they have 'lost'. You protect yourself from that by setting the value to $0 and making your decision based on that. If it happens to be worth something later, bonus! if not, well you didn't count on it anyway.
- tarr11 11y ago
  Won't this method discourage you from working with startups at all? Generally, they offer less cash, longer hours in exchange for more equity. If you value the equity at zero, the rational thing to do is avoid working for a startup at all.
  - sanderjd 11y ago
    I think from a purely financial calculus, that's right, but most people make decisions based on non-financial incentives as well, and startups sometimes score highly on that front. There are tons of variables here where startups can be more attractive than big companies: bureaucracy, job self-determination, responsibility relative to experience, passion / cynicism, etc. And the biggest one is probably learning how startups work so that you have a huge leg-up if you start your own one day.
    - ChuckMcM 11y ago
      Exactly this, you work at a startup because you are passionate about the mission, or you want to learn something outside your basic skills training, you want to work with someone you respect, or you like to challenge yourself. Never ever ever work at a startup because you feel it is a way to financial success. You believe in the mission - often startups will take on business or social challenges that are unserved by larger companies. This can be very rewarding to be part of a solution to an otherwise unserved or underserved customer. You want to stretch your boundaries - titles in startups are rarely indicative of what you do, often you may participate in marketing, QA, development, business development, sales, project management, operations, and product management just by showing up that week. Rarely do you get a chance in a large company to "try on" a role that isn't on your resume, nor when you do get that chance, get the leeway to try several in a short amount of time. You may want to work at a technology company but not sure of what role you want, a startup lets you try many roles. Further when you find one you like you can live it for a while and then move to a larger company in that same type of role. Work with someone you respect - Sometimes you will find a startup where someone you know, either in person or through meetups or other social sites that you respect and feel you could learn from. If they are at a startup you may find it easier to get employed and work with them than you would if they were ensconced in some high office at a large company. Challenging yourself - startups are usually fast paced, stressful, and often have a lot of unknowns flying around. Being able to focus and get stuff done in that sort of an environment is a learned skill. Being able to "go with the flow" on a project, change directions quickly, and see promising areas of development in the midst of crashing and burning are all things people often experience in startups. That sort of stamina can be useful in large companies but it is hard to learn it in large companies. Don't join a startup to "get rich." You will end up burned out and disappointed and it can take years to get past that.

by kohanz 11y ago

blackguardx 11y ago

I think that trading salary for equity makes you in the same league as an angel investor. In my opinion, early employees are absolutely entitled to the same terms as investors and should be treated with the same respect.

sanderjd 11y ago
You're definitely in the same league, but you don't necessarily have the exact same incentives, which might affect the negotiated terms in various ways. But in general, investors are very sophisticated and aware of how to get a good deal, so negotiating for the same terms they get is a good stand-in for negotiating for good terms without needing to be as sophisticated yourself.

ChuckMcM 11y ago

You will be safer/happier if you simply value the equity offer at $0. This is especially true of pre series A companies. If you do that, and it ends up being worth nothing (common case) you will not feel a "loss", but if you have been imagining it was worth something, and was now worth nothing, you will grieve that loss, irrational as that is. I have seen it again and again, where the stock price of a company hits some value, the employee does the math of "option price x quote" == $some number, and then when the stock price goes down feels bad about how much they have 'lost'. You protect yourself from that by setting the value to $0 and making your decision based on that. If it happens to be worth something later, bonus! if not, well you didn't count on it anyway.

tarr11 11y ago
Won't this method discourage you from working with startups at all? Generally, they offer less cash, longer hours in exchange for more equity. If you value the equity at zero, the rational thing to do is avoid working for a startup at all.
- sanderjd 11y ago
  I think from a purely financial calculus, that's right, but most people make decisions based on non-financial incentives as well, and startups sometimes score highly on that front. There are tons of variables here where startups can be more attractive than big companies: bureaucracy, job self-determination, responsibility relative to experience, passion / cynicism, etc. And the biggest one is probably learning how startups work so that you have a huge leg-up if you start your own one day.
  - ChuckMcM 11y ago
    Exactly this, you work at a startup because you are passionate about the mission, or you want to learn something outside your basic skills training, you want to work with someone you respect, or you like to challenge yourself. Never ever ever work at a startup because you feel it is a way to financial success. You believe in the mission - often startups will take on business or social challenges that are unserved by larger companies. This can be very rewarding to be part of a solution to an otherwise unserved or underserved customer. You want to stretch your boundaries - titles in startups are rarely indicative of what you do, often you may participate in marketing, QA, development, business development, sales, project management, operations, and product management just by showing up that week. Rarely do you get a chance in a large company to "try on" a role that isn't on your resume, nor when you do get that chance, get the leeway to try several in a short amount of time. You may want to work at a technology company but not sure of what role you want, a startup lets you try many roles. Further when you find one you like you can live it for a while and then move to a larger company in that same type of role. Work with someone you respect - Sometimes you will find a startup where someone you know, either in person or through meetups or other social sites that you respect and feel you could learn from. If they are at a startup you may find it easier to get employed and work with them than you would if they were ensconced in some high office at a large company. Challenging yourself - startups are usually fast paced, stressful, and often have a lot of unknowns flying around. Being able to focus and get stuff done in that sort of an environment is a learned skill. Being able to "go with the flow" on a project, change directions quickly, and see promising areas of development in the midst of crashing and burning are all things people often experience in startups. That sort of stamina can be useful in large companies but it is hard to learn it in large companies. Don't join a startup to "get rich." You will end up burned out and disappointed and it can take years to get past that.