3 ms·

I've worked at several small startups, in the range of seed to C-rounds. Except for the one that I've was co-founder, I never knew when/how to ask or negotiate

by tibbon 10y ago

I've worked at several small startups, in the range of seed to C-rounds. Except for the one that I've was co-founder, I never knew when/how to ask or negotiate options things. It always felt like something that was supposed to happen at 'other companies' and not the one I was applying/negotiating to work at. I know I should in theory ask to see the cap table, but it seems awkward and if shown it right then I'm not sure I'd entirely know how to read it properly (along with the terms), or how to immediately negotiate from it. Stock options have been frequently presented to me as just a standard piece of paper offered, and not a thing for negotiation. It feels easier and less scary to haggle on salary (which I do quite well at generally). Is it even reasonable to ask for twice as many options when I'm negotiating? Or is that like asking for double the salary and not reasonable? Is it reasonable to ask for a bonus (at an A-round startup) in terms of options after being there for a year?

mikemac 10y ago
I really doubt any startup would let you see the cap table as a prospective employee, ahead of being hired full time. It's better to ask what percentage of the company your X amount of shares would be. Company A could offer 1,000 shares and Company B could offer 10,000 shares but you have no idea what amount of ownership that actually is for either of them.
- erichurkman 10y ago
  Our waterfall / payout / fully diluted ownership / strike price / last round price is part of our offer package. I can't imagine joining a company without that information.
  - mikemac 10y ago
    That's awesome, and pretty cool that you all eat your own dogfood. Think it sends a nice statement considering your product and hope more companies offer that to employees in the future. I'm a customer and big fan.
    - erichurkman 10y ago
      https://blog.esharesinc.com/a-better-offer-letter/ https://blog.esharesinc.com/a-better-offer-letter/ - and it's public. It's a _fantastic_ recruiting tool.
- tibbon 10y ago
  I've always assumed an investor would want to see the cap table prior to investing (is this true?), but thought it odd that such is hidden from prospective employees. Both are investing, just in different ways.
  - dahart 10y ago
    Yes, investors ask for cap tables. Always, in my experience.
Eridrus 10y ago
I've managed to negotiate options by just saying I wanted more, but the company was pretty keen on hiring me, so it worked. People have been sketchier about showing me a cap table. I didn't think of it at the time, but maybe asking for an anonymized one would have helped since it felt like some of the resistance was because it would have names attached. I ended up just asking if there were more liquidation preferences in there for investors and getting an answer that there weren't, but in hindsight I'm sceptical that there wasn't at least a 1x preference in there. In terms of reasonableness; companies/founders will have some idea of how much they value options at; it will almost certainly be higher than you value them at, after all paying you more $$ from the investment money is cheaper than diluting themselves. You can probably get a sense for how valuable they see them by just asking them about the possibility of trading off salary vs equity. In my experience, startup owners vastly over-estimate the value of their equity since they do not price any risk into it. [EDIT]: I was looking for a job recently and a startup gave me a ridiculously small offer in two variants and they saw 35k of options over 4 years (i.e. 8.75k options/yr) as equivalent to 15k in salary. I'm sure that felt right to the founders since they're growing, etc, but that's a clear over-valuation in their head.

by tibbon 10y ago

mikemac 10y ago

I really doubt any startup would let you see the cap table as a prospective employee, ahead of being hired full time. It's better to ask what percentage of the company your X amount of shares would be. Company A could offer 1,000 shares and Company B could offer 10,000 shares but you have no idea what amount of ownership that actually is for either of them.

erichurkman 10y ago
Our waterfall / payout / fully diluted ownership / strike price / last round price is part of our offer package. I can't imagine joining a company without that information.
- mikemac 10y ago
  That's awesome, and pretty cool that you all eat your own dogfood. Think it sends a nice statement considering your product and hope more companies offer that to employees in the future. I'm a customer and big fan.
  - erichurkman 10y ago
    https://blog.esharesinc.com/a-better-offer-letter/ https://blog.esharesinc.com/a-better-offer-letter/ - and it's public. It's a _fantastic_ recruiting tool.
tibbon 10y ago
I've always assumed an investor would want to see the cap table prior to investing (is this true?), but thought it odd that such is hidden from prospective employees. Both are investing, just in different ways.
- dahart 10y ago
  Yes, investors ask for cap tables. Always, in my experience.

Eridrus 10y ago

I've managed to negotiate options by just saying I wanted more, but the company was pretty keen on hiring me, so it worked. People have been sketchier about showing me a cap table. I didn't think of it at the time, but maybe asking for an anonymized one would have helped since it felt like some of the resistance was because it would have names attached. I ended up just asking if there were more liquidation preferences in there for investors and getting an answer that there weren't, but in hindsight I'm sceptical that there wasn't at least a 1x preference in there. In terms of reasonableness; companies/founders will have some idea of how much they value options at; it will almost certainly be higher than you value them at, after all paying you more $$ from the investment money is cheaper than diluting themselves. You can probably get a sense for how valuable they see them by just asking them about the possibility of trading off salary vs equity. In my experience, startup owners vastly over-estimate the value of their equity since they do not price any risk into it. [EDIT]: I was looking for a job recently and a startup gave me a ridiculously small offer in two variants and they saw 35k of options over 4 years (i.e. 8.75k options/yr) as equivalent to 15k in salary. I'm sure that felt right to the founders since they're growing, etc, but that's a clear over-valuation in their head.