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Agreed - there was an old thread on this here: https://news.ycombinator.com/item?id=24438641 https://news.ycombinator.com/item?id=24438641 Basically if you're

Agreed - there was an old thread on this here: https://news.ycombinator.com/item?id=24438641 https://news.ycombinator.com/item?id=24438641 Basically if you're in college and reading this on HN don't listen to HN comments that discount equity or value it at zero. Know that it's hard to value, but that isn't the same as zero. It could be worth millions, it could be worth nothing, it could be worth somewhere in between. There are lots of angel investors in the bay area because of exits that netted them 2-5M or higher ($10-20M) as regular employees. This feedback loop is part of the reason the bay area generates so many companies. It's a bet like anything else, try and judge what kind of people the founders are and how solid the business is. Learn about ISOs and what questions to ask/how the basics work (things like the linked article here). It's an investment - owning equity in a good company is the quickest way to get real wealth if you don't already have a lot of money. Ignore a lot of the people that make over-confident statements about it being worthless, consider the risk, value the company and founders, decide for yourself. --- Today Stripe seems like a good choice to get a good equity return as an employee on IPO, Roblox and Robinhood are others. It's not obvious how things will turn out, but it's not impossible to make a good guess.

sam0x17 6y ago
Also don't be afraid to insist on learning the current valuation and anticipated future valuation from stakeholders if they are trying to give you an equity grant. You have a right to know!
jedberg 6y ago
> There are lots of angel investors in the bay area because of exits that netted them 2-5M or higher ($10-20M) as regular employees. But that happened back in the day when an early employee got a good cut of the stock. VCs have been perfecting their process, especially since the early 2010s. The contracts are different now -- the founders and the VCs get pretty much all the equity now. Look at even the biggest IPOs this year. Look at how much equity was in the employee stock pools. Not nearly as much as it used to be. > Today Stripe seems like a good choice to get a good equity return as an employee on IPO That's highly unlikely. The company is doing well, but a new employee will get a tiny fraction of the equity.
chris11 6y ago
I heard a rumor that Stripe recently changed their initial RSU grant. Now the value is fixed, you get $x worth of stock every year. So new hires lose out on a lot of the upside from stock growth.
- throwawaygulf 6y ago
  I don't believe that's how RSUs work at Stripe (or anywhere). On hiring, you get 5000 RSUs (or whatever the number), and after time vesting, they convert into stock. New hires gain a lot of the upside from stock growth, even with RSUs.
whakim 6y ago
Stripe was founded in 2010. Robinhood in 2013. Roblox in 2004 (!). If you were an early employee at one of these companies, stayed two years, and were considering whether to buy your options, you'd have to spend a large sum of your own money (plus the taxes - oh god, the taxes!) for a potential (unlikely) payoff occurring on average a decade down the line. Additionally, given this incredibly high amount of uncertainty, would you really be motivated to work that little bit harder considering such a distant liquidity event? Hindsight is 20/20, it's easy to pick the success stories after the fact. Can you pick the 3 companies most likely to IPO in ~2030, and would you stake money on that? > It's a bet like anything else, try and judge what kind of people the founders are and how solid the business is. Learn about ISOs and what questions to ask/how the basics work (things like the linked article here). It's an investment - owning equity in a good company is the quickest way to get real wealth if you don't already have a lot of money. Sure, it's the quickest way to get real wealth if you get very lucky. For most people it's a losing proposition.
- fossuser 6y ago
  There is no tax on exercise unless there’s a spread. Companies are taking longer to IPO, that doesn’t make them a bad bet but the time horizon is longer because of all the private money available (in part from people making money via equity). FB started in 2003 and went public in 2012. You could have joined in 2010 and your equity today would be in the seven figures. I’d bet on stripe being similar (though I don’t know the specifics of their offer letters). I think Robinhood is a good bet too. For a smaller, less known company - I’d pick cloud kitchens. > “ Sure, it's the quickest way to get real wealth if you get very lucky. For most people it's a losing proposition.” People on HN can keep repeating this to feel better about themselves, but those that ignore it are the ones that’ll make seven figure (or higher) returns. Edit: SpaceX (Starlink) are other bets I’d be happy to make.
  - whakim 6y ago
    Why wouldn't there be a spread? You're an early employee at a company; by the time you choose to exercise, the company is presumably valued at a significantly greater amount than when you joined? > FB started in 2003 and went public in 2012. You could have joined in 2010 and your equity today would be in the seven figures. Feel free to prove me wrong, but I have my doubts that you would receive anywhere near enough stock as a regular employee that late in the day to make it worth millions of dollars after IPO. Same with Stripe. (Note that appreciation in the value of Facebook stock between 2012 and 2020 doesn't matter at all. Anyone could have bought Facebook stock in 2012 and seen those gains).

sam0x17 6y ago

Also don't be afraid to insist on learning the current valuation and anticipated future valuation from stakeholders if they are trying to give you an equity grant. You have a right to know!

jedberg 6y ago

> There are lots of angel investors in the bay area because of exits that netted them 2-5M or higher ($10-20M) as regular employees. But that happened back in the day when an early employee got a good cut of the stock. VCs have been perfecting their process, especially since the early 2010s. The contracts are different now -- the founders and the VCs get pretty much all the equity now. Look at even the biggest IPOs this year. Look at how much equity was in the employee stock pools. Not nearly as much as it used to be. > Today Stripe seems like a good choice to get a good equity return as an employee on IPO That's highly unlikely. The company is doing well, but a new employee will get a tiny fraction of the equity.

chris11 6y ago

I heard a rumor that Stripe recently changed their initial RSU grant. Now the value is fixed, you get $x worth of stock every year. So new hires lose out on a lot of the upside from stock growth.

throwawaygulf 6y ago
I don't believe that's how RSUs work at Stripe (or anywhere). On hiring, you get 5000 RSUs (or whatever the number), and after time vesting, they convert into stock. New hires gain a lot of the upside from stock growth, even with RSUs.

whakim 6y ago

Stripe was founded in 2010. Robinhood in 2013. Roblox in 2004 (!). If you were an early employee at one of these companies, stayed two years, and were considering whether to buy your options, you'd have to spend a large sum of your own money (plus the taxes - oh god, the taxes!) for a potential (unlikely) payoff occurring on average a decade down the line. Additionally, given this incredibly high amount of uncertainty, would you really be motivated to work that little bit harder considering such a distant liquidity event? Hindsight is 20/20, it's easy to pick the success stories after the fact. Can you pick the 3 companies most likely to IPO in ~2030, and would you stake money on that? > It's a bet like anything else, try and judge what kind of people the founders are and how solid the business is. Learn about ISOs and what questions to ask/how the basics work (things like the linked article here). It's an investment - owning equity in a good company is the quickest way to get real wealth if you don't already have a lot of money. Sure, it's the quickest way to get real wealth if you get very lucky. For most people it's a losing proposition.

fossuser 6y ago
There is no tax on exercise unless there’s a spread. Companies are taking longer to IPO, that doesn’t make them a bad bet but the time horizon is longer because of all the private money available (in part from people making money via equity). FB started in 2003 and went public in 2012. You could have joined in 2010 and your equity today would be in the seven figures. I’d bet on stripe being similar (though I don’t know the specifics of their offer letters). I think Robinhood is a good bet too. For a smaller, less known company - I’d pick cloud kitchens. > “ Sure, it's the quickest way to get real wealth if you get very lucky. For most people it's a losing proposition.” People on HN can keep repeating this to feel better about themselves, but those that ignore it are the ones that’ll make seven figure (or higher) returns. Edit: SpaceX (Starlink) are other bets I’d be happy to make.
- whakim 6y ago
  Why wouldn't there be a spread? You're an early employee at a company; by the time you choose to exercise, the company is presumably valued at a significantly greater amount than when you joined? > FB started in 2003 and went public in 2012. You could have joined in 2010 and your equity today would be in the seven figures. Feel free to prove me wrong, but I have my doubts that you would receive anywhere near enough stock as a regular employee that late in the day to make it worth millions of dollars after IPO. Same with Stripe. (Note that appreciation in the value of Facebook stock between 2012 and 2020 doesn't matter at all. Anyone could have bought Facebook stock in 2012 and seen those gains).