3 ms·
> Better to be completely arbitrary in the number. What!? No. If you want to go that route, it's better to simply omit any discussion about it. The worst thin
by p4wnc6 11y ago
> Better to be completely arbitrary in the number.
What!?
No. If you want to go that route, it's better to simply omit any discussion about it. The worst thing is to present some arbitrary number that has priming and framing effects in the mind of the candidate. Especially if the number doesn't have a meaningful connection to the types of outcomes you might expect.
Providing a crude distribution or crude examples that imply a distribution is best. In the absence of that, providing no number at all is next best. Providing an arbitrary number is absolutely the worst.
Imagine if the chart showed an exit of 25 billion! That's also an arbitrary number, but it's clearly not legitimate if you can't back it up.
The fact that seeing 77MM doesn't hit you with the same "that's absurd" feeling that a 25 billion figure would should scare you ... because you don't have any information about whether the 77MM number is any more reasonable!
(Of course, you could just use base rates among start-ups, or start-ups in this industry ... but then you're using a distribution to justify things, so why not just actually use the distribution?)
- FireBeyond 11y agoYou could go to the other extreme, if you're framing things (as they do) of "have no expectations" and give a valuation of $100. That being said, I do see your point. It's hard to strike that balance between wanting to be more informative (and perhaps this could be separated from the offer letter) and setting expectations - it -is- important that people understand what their options may, or may not, be worth - but perhaps the offer letter isn't the place for that. Perhaps instead: "If you require any clarification, this resource can explain things, or we can give vesting examples".