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#2 is wrong. I know it's fun to say it that way, but it's wrong. If you work at a startup try going to your boss and saying "I'll give up all my equity for a $
by harryh 11y ago
#2 is wrong.
I know it's fun to say it that way, but it's wrong. If you work at a startup try going to your boss and saying "I'll give up all my equity for a $100/year raise." They will say yes (modulo a conversation with you about how that's a really bad idea for you).
It would be fair to say that a lot of people overestimate the value of equity a lot of the time. But that's not the same thing as what the author says.
- sokoloff 11y agoAgree. > suggest to trade the equity portion of the offer for the cash value of the options (in addition to the advertised salary). Good luck. I was explicitly given that choice (in three packages, high/med/low options count in exchange for offsetting increase in starting salary). Being "smart", I took the salary and low options and that was a poor choice in retrospect, given that we IPO'd 2.5 years later and my salary now would surely be the same regardless of the initial choice. I don't know how common it is, but it's absolutely doable and done. (I suppose you could argue whether the company I joined was early-stage or not.)
- geofft 11y agoYou can get a $100/year raise just for the asking. In tech, salaries are just not negotiated at the $100/year granularity. Imagine saying "I'm also considering an offer from this company, can you offer more" and the HR department coming back with "Sure, we can give you $100/year more." If you can get a $100/year raise just for the asking, and you can also get a $100/year raise in exchange for equity, then simple arithmetic indicates that the equity has zero value.
- lordsper 11y agoOr it means: you value your equity at $0 a year, and your HR guys get a bonus for reducing expenses.
- graeme 11y agoThis is trivially wrong. You could get a $100 raise once, and possibly several times. But at some point, the boss would say "alright, no more raises". At that point, you could say "I'll give up all my equity for another $100", at which point the boss would jump to agree.
- ChuckMcM 11y agoSlowly a strategy emerges ... ;-)
- bkeroack 11y ago> But at some point, the boss would say "alright, no more raises". Not because $100 is too much, but because you've annoyed her by asking too many times. $100 is still trivial in value to the business.
- graeme 11y agoThis still is refusing to consider the marginal case, which is what the OP was asking about. At some point, even if asked the first time, a boss might refuse a $100 raise. They would still take the $100 for equity deal. The point was just a thought experiment to show that equity has more than 0 value.
- gaius 11y agoWhat about a deal where you give me half your salary and I buy you a lottery ticket every payday?
- harryh 11y agoThat would be a bad deal for me. But it has no relevance to the point I was trying to make.