5 ms·
Yes! This advice to value shares of private companies at zero is buried deep in the article, but I think it renders the article quite misleading. The right thi
by lacker 5y ago
Yes! This advice to value shares of private companies at zero is buried deep in the article, but I think it renders the article quite misleading.
The right thing to do is to use your own judgment to estimate the value of the stock. A small stake in a promising early-stage company really is worth something. There just isn't a clean formula for how much it's worth.
When you really think hard about it, this will push you toward working for companies that are more likely to succeed. If you treat all stock offers like they are worth zero, that will push you toward working for companies that don't offer their employees stock, and that are not likely to succeed. Over time, those companies just don't attract the best coworkers. So you're really hurting your career if you decide that you don't care about the stock, even besides the direct financial hit.
- m_ke 5y agoImportant tip for people considering startups: only join ones that recently raised an A or B round from one of the top VC firms. VCs get to see all of the numbers and won't invest unless there's some sign of upside.
- kyawzazaw 5y agoIs round C or D too late?
- m_ke 5y agoAll of the rounds have shifted a bunch lately and companies are going public sooner than they used to. What I really meant was that you should join companies that are on a clear path to have a major exit within the next 2-3 years.
- rsanek 5y agoWhat companies are exiting within 2-3 years of raising a Series A, B, or even C? Strongly disagree that companies are going public sooner, if you compare when eg msft / goog went public vs airbnb / uber the market cap is radically larger and the companies are much older.
- m_ke 5y agoSeed rounds got larger and moved down a bit with a rise in "pre-seed" rounds. Thanks partially to SPACs and direct listing we've had a boom in IPOs the past two years. (https://www.wraltechwire.com/2021/10/01/biggest-ipo-boom-in-decades-gives-huge-boost-to-wall-street/ https://www.wraltechwire.com/2021/10/01/biggest-ipo-boom-in-...) Before 2018-2019 the common wisdom was to stay private as long as possible because Softbank and other late stage firms were willing to throw a lot of money around in private rounds. Now VCs are trying to throw their companies over the fence as soon as possible.
- smilekzs 5y agoYeah but after each "validation round", the stock option grant for new hires becomes 0.1x before the validation. Kinda sucks to join right after Series A, get a tiny % (say less than 0.1%) of the company even after 4 years of grinding away, and even then the company doesn't go public so your options are still worth a tiny % of... zero. Right now it only kinda makes sense when you join as a co-founder (at most seed round; definitely not post-series-A), or pre-IPO.