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Maybe add a field for salary difference vs 'expected market rate' and compute the amount of money you'd be looking at over six years investing the difference in
by siliconc0w 9y ago
Maybe add a field for salary difference vs 'expected market rate' and compute the amount of money you'd be looking at over six years investing the difference in something like a vanguard fund.
As an example - say you traded around 60k a year in cash in return for higher equity. In six years you're looking at around half a mil which means with, say .2 in a Series A, you're looking at a pretty big exit (i.e 700M) before you even have a chance of breaking even. This is obviously a terrible choice (i.e care for 20 dollars or a chance at 20 dollars)
To make it 'worth it', from an 'expected value' POV you'd need to make 2-3 million on around a 3.5B exit which are, of course, exceedingly rare.
You also have to be careful about things like options windows on exit, tricky term sheets with liquidation preferences for preferred shares, etc.
I'm going through this process now and it's shocking how most people really have no idea how this stuff works. Even with recruiters/HR/CTOs/etc who deal with this stuff day to day.