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I'm really surprised at how dismissive people are about the value of equity on Hacker News. Would you never start your own company, because then your compensat

I'm really surprised at how dismissive people are about the value of equity on Hacker News. Would you never start your own company, because then your compensation would certainly be tied to the value of the equity? If you really think that the shares are, on expectation, worthless, then don't work there, because your efforts will be for naught when the company folds.

yesimahuman 11y ago
It could be that founders (many in the community here) have a similar mindset to VCs: I need 10%+ to make it worth giving it a go. Standard equity grants for employees are tiny in comparison.
tdicola 11y ago
You don't have to take funding if you're starting a company...
hibikir 11y ago
Equity, as a VC or a founder, is very important. You also have a good amount of control over where the company goes, your stake only gets diluted on your terms, and the company's behavior can be tweaked to make sure you get a good exit. As an employee, getting a small amount of common stock, none of those things apply: In practice, if things aren't going wonderfully, it's pretty easy for you to end up with worthless options, even when the founders and VCs end up alright. Even when the company is doing fine, founders rethinking how much equity they really want employees to have is not unheard of. Any calculation you make doesn't matter, as you are at the mercy of other people. You'd see valuing employee equity very differently we all had not heard of, or been a part of, those horror stories.
- ryporter 11y ago
  Again, if you really think that there is a significant chance that you will get screwed over by the founders, then don't join the startup. Joining a startup is, in no small part, a bet on the founders, and it requires that you take some risk yourself. Yes, a lot of early employees have ended up with worthless stock. That's the risk they took. There are also a lot who have become very rich.
saryant 11y ago
Founder equity isn't comparable to equity held by employees for the simple fact that employees have no control over the rules governing the equity. Cash in the bank, on the other hand, is quite straightforward.
a_c_s 11y ago
Most employees end up with common shares, unlike the preferred shares that founders and VC's end up with. This can lead to situations where the VC's and founders make tons of money and employees get nothing. http://www.businessinsider.com/how-liquidation-preferences-work-2014-3 http://www.businessinsider.com/how-liquidation-preferences-w...
- tomknight 11y ago
  I've never seen a founder end up with preferred shares. Lots of shares, sure, but not preferred.
geofft 11y ago
First, there's a huge difference between the value of 10-100% of a company's equity and the value of 0.1% of a company's equity. You can make up the expected value of 0.1% of a company via a very meager increase in salary. Second, if I'm starting my own company and taking venture funding, I'm going to be paying myself and my cofounders a healthy salary out of that funding, enough that we're not constantly wondering why we're not taking a well-paying industry job. If I'm not taking venture funding, I'm doing this because I enjoy it more than I enjoy salary, because I have enough personal funds to cover the venture being unprofitable. Any profit is a bonus, but not the primary motivator. If I'm working for someone else, profit is my primary motivator.

yesimahuman 11y ago

It could be that founders (many in the community here) have a similar mindset to VCs: I need 10%+ to make it worth giving it a go. Standard equity grants for employees are tiny in comparison.

tdicola 11y ago

You don't have to take funding if you're starting a company...

hibikir 11y ago

Equity, as a VC or a founder, is very important. You also have a good amount of control over where the company goes, your stake only gets diluted on your terms, and the company's behavior can be tweaked to make sure you get a good exit. As an employee, getting a small amount of common stock, none of those things apply: In practice, if things aren't going wonderfully, it's pretty easy for you to end up with worthless options, even when the founders and VCs end up alright. Even when the company is doing fine, founders rethinking how much equity they really want employees to have is not unheard of. Any calculation you make doesn't matter, as you are at the mercy of other people. You'd see valuing employee equity very differently we all had not heard of, or been a part of, those horror stories.

ryporter 11y ago
Again, if you really think that there is a significant chance that you will get screwed over by the founders, then don't join the startup. Joining a startup is, in no small part, a bet on the founders, and it requires that you take some risk yourself. Yes, a lot of early employees have ended up with worthless stock. That's the risk they took. There are also a lot who have become very rich.

saryant 11y ago

Founder equity isn't comparable to equity held by employees for the simple fact that employees have no control over the rules governing the equity. Cash in the bank, on the other hand, is quite straightforward.

a_c_s 11y ago

Most employees end up with common shares, unlike the preferred shares that founders and VC's end up with. This can lead to situations where the VC's and founders make tons of money and employees get nothing. http://www.businessinsider.com/how-liquidation-preferences-work-2014-3 http://www.businessinsider.com/how-liquidation-preferences-w...

tomknight 11y ago
I've never seen a founder end up with preferred shares. Lots of shares, sure, but not preferred.

geofft 11y ago

First, there's a huge difference between the value of 10-100% of a company's equity and the value of 0.1% of a company's equity. You can make up the expected value of 0.1% of a company via a very meager increase in salary. Second, if I'm starting my own company and taking venture funding, I'm going to be paying myself and my cofounders a healthy salary out of that funding, enough that we're not constantly wondering why we're not taking a well-paying industry job. If I'm not taking venture funding, I'm doing this because I enjoy it more than I enjoy salary, because I have enough personal funds to cover the venture being unprofitable. Any profit is a bonus, but not the primary motivator. If I'm working for someone else, profit is my primary motivator.