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Many engineers seem to either be blissfully ignorant or just way too trusting during equity negotiations. Seems pretty common to just snow them with big absolut

by rboyd 11y ago

Many engineers seem to either be blissfully ignorant or just way too trusting during equity negotiations. Seems pretty common to just snow them with big absolute numbers and not even mention shares outstanding. I know a guy that took a CTO role at a company post-YC acceptance but pre-demo day for ~5%. I can't imagine what the rest of the crew is getting. Why even join a startup at that point?

dragonwriter 11y ago
I've frequently seen advice that equity offers dangled to prospective employees in a pre-public company should be valued at $0/share, because of the uncertainty of any opportunity to realize any value from them, the possibility of dilution before the company becomes public, etc. If that advice is followed, it sort of naturally follows that there is no real rational reason to be particularly aggressive during equity negotiations, and that trading equity for other compensation is a smart move. > I know a guy that took a CTO role at a company post-YC acceptance but pre-demo day for ~5%. I can't imagine what the rest of the crew is getting. Why even join a startup at that point? Because the immediate pay and benefits, rather than the speculative equity gamble, is good, and because the work is what you want to be working on. And maybe you like the people/culture, too.
- Akkuma 11y ago
  Personally, I think you either should disregard equity altogether or accrue as much as possible if it'll be of a reasonable size.
- kzhahou 11y ago
  If it should be priced at $0/share, then I'd like to have 100% of it, please :-) Oh, but wait.... the founders want to get mega-rich if it succeeds! There is no inherent conflict between working on what you like with good people/culture, and also sharing fairly in the mega-riches in the remote possibility the thing is successful. But for some reason, employees routinely accept terms where they'll still be just making ends meet (at least in silicon valley, a million is barely a house) even if the company is so successful that the founders get to university buildings named after them.

by rboyd 11y ago

dragonwriter 11y ago

I've frequently seen advice that equity offers dangled to prospective employees in a pre-public company should be valued at $0/share, because of the uncertainty of any opportunity to realize any value from them, the possibility of dilution before the company becomes public, etc. If that advice is followed, it sort of naturally follows that there is no real rational reason to be particularly aggressive during equity negotiations, and that trading equity for other compensation is a smart move. > I know a guy that took a CTO role at a company post-YC acceptance but pre-demo day for ~5%. I can't imagine what the rest of the crew is getting. Why even join a startup at that point? Because the immediate pay and benefits, rather than the speculative equity gamble, is good, and because the work is what you want to be working on. And maybe you like the people/culture, too.

Akkuma 11y ago
Personally, I think you either should disregard equity altogether or accrue as much as possible if it'll be of a reasonable size.
kzhahou 11y ago
If it should be priced at $0/share, then I'd like to have 100% of it, please :-) Oh, but wait.... the founders want to get mega-rich if it succeeds! There is no inherent conflict between working on what you like with good people/culture, and also sharing fairly in the mega-riches in the remote possibility the thing is successful. But for some reason, employees routinely accept terms where they'll still be just making ends meet (at least in silicon valley, a million is barely a house) even if the company is so successful that the founders get to university buildings named after them.