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This. Your salary should ALWAYS be the highest possible salary the market can support. Equity or options compensation at a startup should be used to defray th

This. Your salary should ALWAYS be the highest possible salary the market can support. Equity or options compensation at a startup should be used to defray the risk of the company failing in the near and midterm. So if Google is offering you $100k, then you should be asking Startup X for $100k plus equity.

CalChris 9y ago
As an early employee, I have taken less than market (like a third less) along with a 0.1% equity option. That aligned my interests with those of the company. If starting a company I would offer the same.
- azinman2 9y ago
  0.1% isn’t much. You’d need a billion dollar exit to make that 0.1% turn into something super significant.
  - deleted 9y ago
    [deleted]
  - CalChris 9y ago
    At .1% you're roughly employee 100. Yes, everyone involved at that point should be looking for a billion dollar exit.
- s73ver_ 9y ago
  Would you offer those as preferred shares, with a non-dilution clause in there? Otherwise I don't see how that's just pushing risk onto the employee for no gain.
  - CalChris 9y ago
    Neither founders nor employees ever get an anti-dilution clause, or at least, I've never heard of this. VCs would simply hate it. Founders and employees get common and are last on the liquidation preference list. Anti-dilution is usually for A or B rounds against a possible later round. A cap (I hate caps) is a form of anti-dilution. None of this is available to employees at least that I've ever heard of. As a founder I'd never expect it from a VC nor would I ever give it to employees. Founders can get something called Series FF that grants them a supermajority of voting which allows them to retain control even as they give up their majority. You have to do really well in the seed round to get it in A. I think Larry+Sergey got this.
    - s73ver_ 9y ago
      "VCs would simply hate it. Founders and employees get common and are last on the liquidation preference list." That's what should be changed, especially if you're asking someone to take a below market salary for something that, statistically won't make it. "As a founder I'd never expect it from a VC nor would I ever give it to employees." Why? Why should the people who are actually doing the work not receive that protection? Why should the value of their compensation go down over time, while the value of what they're doing goes up?
      - CalChris 9y ago
        For your first question, there's a market out there. Startups aren't for everyone and ISO + less money isn't for everyone. But startups competing on price with Google+Facebook isn't going to work. Consequently this isn't done. So startups attract a certain sort of person and established companies attract another. About anti-dilution clauses, imagine yourself as a founder. You have a patent on a hyperistor which will make transistors look like warmed over MySpace. Awesome. You and a couple of grad school buddies raise a $3M Series Seed round and run through that. Damn! It works! You've proved your thesis and now you need to scale. For that you need more money, another funding round. This is where everyone wants to be. This is a success scenario but it is not success. You need more money, say $20M to scale your technology. Someone has to give you that $20M and they will want something. If the founders+employees all had anti-dilution clauses, the VC who wrote the Seed term sheet would have to suffer. A lot. A lot a lot. So they would never agree to this in the first place. Instead, everyone, founders, employees and VC, all dilute but then the company also gets the $20M. Anti-dilution clauses show up when a startup really needs money and the VC can force them to accept it as a term. It's not a good sign. Sharing dilution is in its way, very equitable. This is in fact, the way things work. Startups are about risk and anything structural which you attempt to engineer out that risk will come back and bite you.
        s73ver_ 9y ago
        Startups may be about risk, but your scheme puts a disproportionate amount of that risk on the employee. And, quite frankly, if you're not willing to imagine yourself as an employee that is getting their hard earned equity diluted to hell and back, I'm not interested in what it's like for founders.
- jsjohnst 9y ago
  Define "early employee"? If you are in the first ten or so employees, as others have said, 0.1% is below market as an equity offering.

CalChris 9y ago

As an early employee, I have taken less than market (like a third less) along with a 0.1% equity option. That aligned my interests with those of the company. If starting a company I would offer the same.

azinman2 9y ago
0.1% isn’t much. You’d need a billion dollar exit to make that 0.1% turn into something super significant.
- deleted 9y ago
  [deleted]
- CalChris 9y ago
  At .1% you're roughly employee 100. Yes, everyone involved at that point should be looking for a billion dollar exit.
s73ver_ 9y ago
Would you offer those as preferred shares, with a non-dilution clause in there? Otherwise I don't see how that's just pushing risk onto the employee for no gain.
- CalChris 9y ago
  Neither founders nor employees ever get an anti-dilution clause, or at least, I've never heard of this. VCs would simply hate it. Founders and employees get common and are last on the liquidation preference list. Anti-dilution is usually for A or B rounds against a possible later round. A cap (I hate caps) is a form of anti-dilution. None of this is available to employees at least that I've ever heard of. As a founder I'd never expect it from a VC nor would I ever give it to employees. Founders can get something called Series FF that grants them a supermajority of voting which allows them to retain control even as they give up their majority. You have to do really well in the seed round to get it in A. I think Larry+Sergey got this.
  - s73ver_ 9y ago
    "VCs would simply hate it. Founders and employees get common and are last on the liquidation preference list." That's what should be changed, especially if you're asking someone to take a below market salary for something that, statistically won't make it. "As a founder I'd never expect it from a VC nor would I ever give it to employees." Why? Why should the people who are actually doing the work not receive that protection? Why should the value of their compensation go down over time, while the value of what they're doing goes up?
    - CalChris 9y ago
      For your first question, there's a market out there. Startups aren't for everyone and ISO + less money isn't for everyone. But startups competing on price with Google+Facebook isn't going to work. Consequently this isn't done. So startups attract a certain sort of person and established companies attract another. About anti-dilution clauses, imagine yourself as a founder. You have a patent on a hyperistor which will make transistors look like warmed over MySpace. Awesome. You and a couple of grad school buddies raise a $3M Series Seed round and run through that. Damn! It works! You've proved your thesis and now you need to scale. For that you need more money, another funding round. This is where everyone wants to be. This is a success scenario but it is not success. You need more money, say $20M to scale your technology. Someone has to give you that $20M and they will want something. If the founders+employees all had anti-dilution clauses, the VC who wrote the Seed term sheet would have to suffer. A lot. A lot a lot. So they would never agree to this in the first place. Instead, everyone, founders, employees and VC, all dilute but then the company also gets the $20M. Anti-dilution clauses show up when a startup really needs money and the VC can force them to accept it as a term. It's not a good sign. Sharing dilution is in its way, very equitable. This is in fact, the way things work. Startups are about risk and anything structural which you attempt to engineer out that risk will come back and bite you.
      - s73ver_ 9y ago
        Startups may be about risk, but your scheme puts a disproportionate amount of that risk on the employee. And, quite frankly, if you're not willing to imagine yourself as an employee that is getting their hard earned equity diluted to hell and back, I'm not interested in what it's like for founders.
jsjohnst 9y ago
Define "early employee"? If you are in the first ten or so employees, as others have said, 0.1% is below market as an equity offering.