3 ms·

A model that assumes every engineering hire is given 1% of the company but also ignores the risk of dilution would seem to only apply to a very small part of pa

• rwilson4 7y ago
  It also seems to ignore strike price and the scenario of an acquisition where only the VC and founders get paid.
  • jefftk 7y ago
    Footnote 1: "You may be asking yourself, 'what about the strike price'? The answer is that, because almost all of the expected value of the options comes from a very small fraction of scenarios in which you exercise them, the strike price doesn’t contribute very much to the expected value."
• TAForObvReasons 7y ago
  This is the biggest point. There are so many ways to devalue the options specifically issued to employees, and you sometimes see more overt behavior like with Zynga back in 2011 https://www.wsj.com/articles/SB10001424052970204621904577018373223480802 https://www.wsj.com/articles/SB10001424052970204621904577018... It is a fool's errand, given everything that has happened in the space, to treat options as having any serious value. Unless there's a secondary market you can immediately sell your options on, treat them like lottery tickets