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Short answer from someone in the startup space for over 12 years... no. They are lottery tickets and I treat them as such. I was a c level at my last position

Short answer from someone in the startup space for over 12 years... no. They are lottery tickets and I treat them as such. I was a c level at my last position and had a percentage ownership... no difference. I treat salary and bonus as my only comp, equity is just a lottery ticket of x size.

fatnoah 7y ago
I've got about 15 years of experience at 3 startups, two with Director/VP roles. Two were acquired, and one reached it's 15 birthday after only having a seed round. All were fairly small. Net benefit to me from options is a $500 long term capital loss. The main benefit was experience (and that is a very valuable benefit!) and, eventually, retention cash from an acquiring company.
- lonelappde 7y ago
  I'm curious how big were the eng teams at the two companies upthread from this comment. So many startups have CTOs of 5 person eng teams.
  - mharroun 7y ago
    Ive lead teams in the 15-25 person range in companies as small as 50 and as large as 300.
udayrddy 7y ago
This shook me. Obviously, I was on the opposite side of the opinion. I never had the experience working in a funded startup, I prepared my mind to join one (I already chose, a seed funded, likely to join in 2020) after the current company was acquired in January - Now, I'm confused. Of course, I understand the equity as a lottery ticket - I'm confident on the startup I chose will grow big, I'm interested to hear the negative side of your 12 year experience, especially the climax. Honestly, I'm in a opinion of cashing a 300K at the least after Series D or Acquisition, in 3-5 years.
- JohnFen 7y ago
  > I'm confident on the startup I chose will grow big Just a word from hard-earned experience here... Most startups will fail and any options you get will be worthless. It's just a cold fact of life. Be optimistic, be hopeful, be excited about the possible future of the startup you're in -- but do not arrange your life or plans so they depend on the success of the startup. It might be the next big thing for sure, but the odds are much larger that it won't.
- shsjxjbsbs 7y ago
  300k in 3-5 years? You can get that much in RSUs from a publicly traded company, and you can sell those for cash every quarter and buy a house before the 4 years are up. For me to work for a startup, the upside scenario needs to be an 7 figure payoff to be worth giving up the sure thing of bigco stock. And even then, the utility function from money is logarithmic so I’d still go with bigco.
- madamelic 7y ago
  > I understand the equity as a lottery ticket - I'm confident on the startup I chose will grow big... I know you already got a response, but I wanted to offer my experience. Your immediate concern shouldn't be whether the company grows or not. Your immediate concern should be what happens to your options when your employment is terminated. All jobs end in two ways: you are either terminated (fired, laid off, etc) or you terminate yourself. What you need to understand is what happens. - Will you be able to afford exercising your options? Not a huge deal most of the time, especially for engineers. It might cost a few thousand. In extreme cases, you're on the wrong side of the golden handcuffs. Once you exercise, you are chained to that company's future unless a secondary market is available. - What's the window for doing so (typical is 90 days!)? Further questions to ask before spending too much time: - What are the founders' beliefs about VC (Growth-only, money-hungry, what)? Every dollar that is invested post-hire potentially means your options are worth less. - What are the founders' beliefs about revenue? Do they want to make their product "free"? Do they have a business plan? - How open are they about finances? If they aren't, just don't. If they spin some BS about not being able to legally disclose company finances to employees, run. Having $1MM worth of equity means nothing if you can't exercise them or if the founders' crash the company into a cliff being dumb.

fatnoah 7y ago

I've got about 15 years of experience at 3 startups, two with Director/VP roles. Two were acquired, and one reached it's 15 birthday after only having a seed round. All were fairly small. Net benefit to me from options is a $500 long term capital loss. The main benefit was experience (and that is a very valuable benefit!) and, eventually, retention cash from an acquiring company.

lonelappde 7y ago
I'm curious how big were the eng teams at the two companies upthread from this comment. So many startups have CTOs of 5 person eng teams.
- mharroun 7y ago
  Ive lead teams in the 15-25 person range in companies as small as 50 and as large as 300.

udayrddy 7y ago

This shook me. Obviously, I was on the opposite side of the opinion. I never had the experience working in a funded startup, I prepared my mind to join one (I already chose, a seed funded, likely to join in 2020) after the current company was acquired in January - Now, I'm confused. Of course, I understand the equity as a lottery ticket - I'm confident on the startup I chose will grow big, I'm interested to hear the negative side of your 12 year experience, especially the climax. Honestly, I'm in a opinion of cashing a 300K at the least after Series D or Acquisition, in 3-5 years.

JohnFen 7y ago
> I'm confident on the startup I chose will grow big Just a word from hard-earned experience here... Most startups will fail and any options you get will be worthless. It's just a cold fact of life. Be optimistic, be hopeful, be excited about the possible future of the startup you're in -- but do not arrange your life or plans so they depend on the success of the startup. It might be the next big thing for sure, but the odds are much larger that it won't.
shsjxjbsbs 7y ago
300k in 3-5 years? You can get that much in RSUs from a publicly traded company, and you can sell those for cash every quarter and buy a house before the 4 years are up. For me to work for a startup, the upside scenario needs to be an 7 figure payoff to be worth giving up the sure thing of bigco stock. And even then, the utility function from money is logarithmic so I’d still go with bigco.
madamelic 7y ago
> I understand the equity as a lottery ticket - I'm confident on the startup I chose will grow big... I know you already got a response, but I wanted to offer my experience. Your immediate concern shouldn't be whether the company grows or not. Your immediate concern should be what happens to your options when your employment is terminated. All jobs end in two ways: you are either terminated (fired, laid off, etc) or you terminate yourself. What you need to understand is what happens. - Will you be able to afford exercising your options? Not a huge deal most of the time, especially for engineers. It might cost a few thousand. In extreme cases, you're on the wrong side of the golden handcuffs. Once you exercise, you are chained to that company's future unless a secondary market is available. - What's the window for doing so (typical is 90 days!)? Further questions to ask before spending too much time: - What are the founders' beliefs about VC (Growth-only, money-hungry, what)? Every dollar that is invested post-hire potentially means your options are worth less. - What are the founders' beliefs about revenue? Do they want to make their product "free"? Do they have a business plan? - How open are they about finances? If they aren't, just don't. If they spin some BS about not being able to legally disclose company finances to employees, run. Having $1MM worth of equity means nothing if you can't exercise them or if the founders' crash the company into a cliff being dumb.