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I think this is the wrong lesson and people are generally too extreme when valuing this. Are there risks with ISOs? Yes. Should you value them 1:1 with cash?
by fossuser 7y ago
I think this is the wrong lesson and people are generally too extreme when valuing this.
Are there risks with ISOs? Yes.
Should you value them 1:1 with cash? Probably not.
Should you value them at $0? Probably not.
People should make decisions based on the company, what they're doing, and how much they trust the board/founders.
It'd be a mistake to categorically dismiss equity since that's the best way to leverage your human capital into wealth.
It's also a mistake to think that equity is valued exactly at what the company is advertising it as when trying to hire you.
There's some risk, but engineers should consider their options.
- cbhl 7y agoI think the first thing someone should consider when looking at jobs is their risk tolerance. If you don't have two parents who are alive and healthy and own their home mortgage-free, you probably have a low risk tolerance. Go work at a FAANG; ISOs have an effective value of $0 to you. If your grandpa can afford to give you $10000 to start a startup, or if you can always move into your parents' basement when you become broke, then I would think about a startup. You can tolerate owing hundreds of thousands in taxes in the worst case, and the higher expected value (and higher personal growth, in the early years) is worthwhile.