> they're like lottery tickets that are only mostly, but not completely, up to chance > if you know some quantitative finance [...] > a simpler approach is to

> they're like lottery tickets that are only mostly, but not completely, up to chance > if you know some quantitative finance [...] > a simpler approach is to do a rough back-of-the-envelope calculation [...] You're looking at this as if you're calculating the odds of winning the lottery and doing backwards math to figure out the viability. That's only half of the picture. There are a lot of circumstances that do happen and can't be put into a math equation. 1) If a company is striking gold and you have significant options they can fire you before the rest of your options vest to get more stock back into the pool. See: Zynga 2) If the company needs to grow fast but doesn't have enough stock to offer new employees they can ask you to relinquish stock back into the pool to help hire more employees. If you refuse, go back to #1. There was a good post on HN where someone was being strong armed like this. 3) Dilution will happen. You can't account for how founders and investors will dilute things because there's a lot of tricks that can happen here. 4) At the end of the day, you're counting on the company to go public or be sold. The problem is that founders turn down huge acquisitions all the time, only to have the company -- and your stock -- become worthless. See: Digg and the would-be-millionaire employees that ended up with fat debt from exercising. There's plenty of ways that your stock can go bottom-up that have nothing to do with the success of a company.