4 ms·

You could also be laid off. Downside protection is a marginal benefit nobody has ever asked for. Yeah, I join this startup because I expect it will fail!

ido 5y ago
It's legitimate to point out the potential downsides. Even if you hope the startup you join will succeed and believe in its chances, plenty of promising companies fail (sometimes simply due to circumstances). Hedging your bets (or "hope for the best but plan for the worst") is absolutely something a lot of people want/do/"ask for". Looking at the article the author bases their analysis on stock value growth of Google, Amazon, Apple, and Microsoft - which are absolutely not typical/expected.
- horsawlarway 5y ago
  At least in my eyes: The downside risk is already so high in a startup that a marginal decrease is simply not worth the loss of the upside. About 90% will fail. You should really be assuming that your options are worth basically zero. Basically zero ~= Basically zero with better downside protection. For high performing tech companies - you absolutely don't want the loss of upside in the current market. I think there is some legitimacy to this in a long-term company that experiences boom and bust cycles, though - things that come to mind for me are airlines, auto manufacturing, agriculture, etc.
- ergocoder 5y ago
  The worst is : company failing or you getting laid off. This downside protection is a crappy deal.
  - ido 5y ago
    Yeah but with a 1 year vesting instead of 4 you may be able to cash out before the bubble bursts.
    - ergocoder 5y ago
      Vesting schedule is the same. Did you think you have to wait 4y to get stock?
      - ido 5y ago
        As far as I understand the article instead of getting 1/4 the stocks each year for 4 years they get it all at once, hence after 1 year you get 100% of the stock instead of 4. Is that not what was meant?
        ergocoder 5y ago
        You get 100% of the stock worth 1y after 1y Stripe, for example, gives out around 300k-350k per year for senior AVG. Back then for 4y equity, 1y was worth around 250k initially.

ido 5y ago

It's legitimate to point out the potential downsides. Even if you hope the startup you join will succeed and believe in its chances, plenty of promising companies fail (sometimes simply due to circumstances). Hedging your bets (or "hope for the best but plan for the worst") is absolutely something a lot of people want/do/"ask for". Looking at the article the author bases their analysis on stock value growth of Google, Amazon, Apple, and Microsoft - which are absolutely not typical/expected.

horsawlarway 5y ago
At least in my eyes: The downside risk is already so high in a startup that a marginal decrease is simply not worth the loss of the upside. About 90% will fail. You should really be assuming that your options are worth basically zero. Basically zero ~= Basically zero with better downside protection. For high performing tech companies - you absolutely don't want the loss of upside in the current market. I think there is some legitimacy to this in a long-term company that experiences boom and bust cycles, though - things that come to mind for me are airlines, auto manufacturing, agriculture, etc.
ergocoder 5y ago
The worst is : company failing or you getting laid off. This downside protection is a crappy deal.
- ido 5y ago
  Yeah but with a 1 year vesting instead of 4 you may be able to cash out before the bubble bursts.
  - ergocoder 5y ago
    Vesting schedule is the same. Did you think you have to wait 4y to get stock?
    - ido 5y ago
      As far as I understand the article instead of getting 1/4 the stocks each year for 4 years they get it all at once, hence after 1 year you get 100% of the stock instead of 4. Is that not what was meant?
      - ergocoder 5y ago
        You get 100% of the stock worth 1y after 1y Stripe, for example, gives out around 300k-350k per year for senior AVG. Back then for 4y equity, 1y was worth around 250k initially.