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The focus of this piece is on VC-funded startups (and larger companies) in the Valley. In the earliest stage startups with which I work, it is overwhelmingly th
by grellas 16y ago
The focus of this piece is on VC-funded startups (and larger companies) in the Valley. In the earliest stage startups with which I work, it is overwhelmingly the norm for founders and others to work for equity and often for equity alone. Such early-stage equity can be valuable if the company succeeds and is to be sharply distinguished from the "one-tenth of one percent" option grants that come later, after funding.
So, yes, at the early stages, the Valley remains enamored with "options" and perhaps more so than ever in the 25+ years I have been doing startups. Beyond the early stage, the lack of an IPO market has taken the luster away from the equity grants that used to excite so many in Silicon Valley and the article makes a good point that a noticeable change has occurred at that level.
- ghshephard 16y agoInteresting. I always wondered whether my Post-Series A option grant was typical. It was _precisely_ one-tenth of one percent. :-) And yes, I'm now starting to see (potentially) RSUs in bonus packages. (First time I've seen RSUs in 14 years)
- guelo 16y agoI can see how VCs and lawyers can make money from equity consistently by spreading their bets around but the reality for startup workers is very few people in the whole valley strike it big in a good year. An event like the creation of youtube or faceebok happens exceedingly rarely. It's a lottery, a ticket isn't worth very much.
- wlievens 16y agoGenuine question: does that depend on what "striking it big" means? If you consider making, say, an amount that's a <10 multiple of what you would have made with an ordinary job in your league, does that consistute "striking it big"? It would for me, but do you include that measure?
- aaronblohowiak 16y agoNo, the risk-adjusted value of <10x return is worse.
- arethuza 16y agoThat's the question though - what is the process for calculating the net present value of startup options given the risks involved. I would be nice to have a online tool that did all of these calculations for you - e.g. given estimates of market size, distribution of the sizes of exits etc.