9 ms·

Could anyone translate this into “The early employees will get wealthy from this” or “they’ll get slightly more than they would’ve gotten from getting a job at

Could anyone translate this into “The early employees will get wealthy from this” or “they’ll get slightly more than they would’ve gotten from getting a job at BigCo over 4 years”? My problem with equity grants is that everyone treats them like they’re so valuable, when in fact the EV is usually close to zero. That wouldn’t be so bad if the upside was really good, but dealing with nonsense like this makes them even less attractive. The whole point of working at a startup — of working very hard, instead of coasting — is to increase your standing in life. Some people care about skill set (you learn a lot more in a startup) but you end up a lot more stressed. Stripe’s early employees are in the best possible scenario, short of winning the lottery: they joined a unicorn early. If they don’t come out of it with lots of after-tax cash, then that calls into question why to even work at one. Unless you really love hard work without proportional reward, logically you wouldn’t choose that path — pg said as much in many of his essays.

zamnos 4y ago
couldn't some of them have cashed out with the Shopify thing? https://finbold.com/shopify-reportedly-buys-over-350-million-stake-in-payment-giant-stripe/ https://finbold.com/shopify-reportedly-buys-over-350-million...
vorpalhex 4y ago
There are a whole bunch of conditionals here. If you excised your options as soon as you could (and constantly paid small amounts) then you own a good amount of shares.. but don't have anyone to sell to. I have heard that the average equity grant is ~40k of value. I suspect the median is in a very weird place towards the low end though, if that number is true to begin with. Options are complicated and timing is crucial. They carry real and meaningful risk.
- alasdair_ 4y ago
  >I have heard that the average equity grant is ~40k of value. levels.fyi is pretty accurate. A staff engineer at Stripe gets around 260k base, 55k bonus and 360k in stock per year. I strongly doubt 40k is the average - $200k RSUs a year seems a lot more likely (unless they count commission-only sales people in the average, which would be weird).
notyourwork 4y ago
> of working very hard, instead of coasting I work at a FAANG, not coasting and make a lot of money and have made a lot of money every year for nearly a decade. I'll continue to make a lot of money and not worry about whether my startup will or won't succeed.
- koromak 4y ago
  That is the definition of coasting
  - versteegen 4y ago
    My reading of GP is that by working at a BigCo you remove the worry of whether your company will go under. Regardless of how hard you work.
  - smarmgoblin 4y ago
    Most definitions of coasting would involve not working hard.
- deleted 4y ago
  [deleted]
- sillysaurusx 4y ago
  I think I misread your comment, so I deleted my earlier one. Sorry. You’re right: if you’re going to work hard, you may as well choose the path with the highest rewards. If Stripe can’t make it worthwhile, is there a good reason to trade away what you’d get at FAANG? So the hard workers have a lucrative path (FAANG), and the ones who want to spend more time away from work have a more lucrative path (BigCo). That doesn’t leave a lot of reasons to choose to be an early startup employee.
  - Godel_unicode 4y ago
    First, for some people front loading their earnings is important so they can enjoy more of life. Second, as another thread goes into, the risk-adjusted picture of startup vs established tech company is quite different.
nugget 4y ago
Based on internal data I have from similar companies my guess would be the first 50 employees average about $15-20m each and the next 100 average about $5-10m each just from their initial 4 year grants, with a lot of variation based on team and seniority. Stripe options have probably grown about 100x in value since the Series B so if you were an engineer who joined around that time, received $100k in RSUs, and left upon fully vesting then you'd be looking at around $10m in value today.
- sillysaurusx 4y ago
  Stripe employee #130 made $5m (after taxes) from 4 years of options? Is there any data to support that? It sounds mistaken, but exponential curves are hard to reason about. 50 x $15m + 100 x $5m = 1.25B post-tax, so probably north of $1.7B pre tax. Stripe had a post-money valuation of $10B+ in March 2021, so that’s around 15% of the company. I guess that’s in the right ballpark. Hmm. Thank you for the concrete numbers. That’s a nice payoff for four years of work, even if you do have to wait ten years for it. Happy to hear the startup reward structure still makes sense in 2023. In that case, it might be a good idea to join one that seems promising. The payoff is rare, but it’s a lot less rare than the lottery: there have been n YC startups, so the odds are around 10 in n. And I think n is something like 2k to 5k. (Edit: yeah, 4k according to Wikipedia.) 1 in 400 chance of $5m is still pretty low odds, though. But you do learn a lot, and you meet a lot of people that have a higher than average chance of being a future founder, so the benefits still seem to make sense. Interesting.
  - kgwgk 4y ago
    > Happy to hear the startup reward structure still makes sense in 2023. At least for people who joined a successful one ten years ago.
  - nl 4y ago
    Also worth noting that in today's market a company like Stripe isn't paying significantly below market rates, so there's not huge downside in that regard.
jjav 4y ago
> If they don’t come out of it with lots of after-tax cash, then that calls into question why to even work at one. When joining any early startup, you really want to be able to do an early exercise of your options immediately when you join. If this is not possible for whatever reason, I consider it too risky to join. When joining a startup one already knows it can fail the traditional way (bankrupcy), so that's the risk we take. But getting stuck in the position of having hit it big on paper but you can never leave the company because there is no liquidity, or having them expire.. just too painful.
gitfan86 4y ago
After the 2000 dotcom bubble equity for employees became a lottery. If you got really lucky your shares were priced at a 50k market cap and the company ended up only diluting those down by 50% and the company went public making your shares worth 800k. But now that situation is rare. The investors and founders and bankers ensure that they take the vast majority of the upside when going public. If you are joining a company and taking less than 1% of equity in the company the best way to think about the equity is "This may end up being a yearly bonus of 50-150k, but probably will be worth nothing"
- matthewowen 4y ago
  I don’t really buy this, but that’s largely based on own fairly positive experience of stock compensation at private companies. I will say that I think these conversations tend to be a little distorted because people who have had positive experiences feel awkward about saying “i made $xxMM from employee stock” but people who haven’t seem comfortable saying “stock based compensation was worthless”. Also tbh a lot of people are just really bad at judging companies and wind up working at startups that are obviously going to fail. You really do have to make an honest assessment of if you are good at picking winners.
  - Retric 4y ago
    Sure people may not want to talk about it, but a big part of this is so few people make $xxMM from employee stock. Yes, if you where one of the first 50 employees at Google you probably made low $xxMM, but it’s a long wait until IPO and the overwhelming majority of people at Google didn’t get anything close to that much. Worse the overwhelming majority of companies aren’t Google style success stories. Also, don’t forget nobody at Stripe has gotten to cash out yet. Your looking for very early employees, at wildly successful startups, who started 10+ years ago, and are still poking around online forms, and willing to talk about it.
    - rcme 4y ago
      I think Google employees did alright. Let's say you joined in Sep. 2013 (random date). 4 years later, the stock was up 200%. So if you got a $500K grant over 4 years, you'd have 1.5 million. After taxes, that'd be around $1 mm.

zamnos 4y ago

couldn't some of them have cashed out with the Shopify thing? https://finbold.com/shopify-reportedly-buys-over-350-million-stake-in-payment-giant-stripe/ https://finbold.com/shopify-reportedly-buys-over-350-million...

vorpalhex 4y ago

There are a whole bunch of conditionals here. If you excised your options as soon as you could (and constantly paid small amounts) then you own a good amount of shares.. but don't have anyone to sell to. I have heard that the average equity grant is ~40k of value. I suspect the median is in a very weird place towards the low end though, if that number is true to begin with. Options are complicated and timing is crucial. They carry real and meaningful risk.

alasdair_ 4y ago
>I have heard that the average equity grant is ~40k of value. levels.fyi is pretty accurate. A staff engineer at Stripe gets around 260k base, 55k bonus and 360k in stock per year. I strongly doubt 40k is the average - $200k RSUs a year seems a lot more likely (unless they count commission-only sales people in the average, which would be weird).

notyourwork 4y ago

> of working very hard, instead of coasting I work at a FAANG, not coasting and make a lot of money and have made a lot of money every year for nearly a decade. I'll continue to make a lot of money and not worry about whether my startup will or won't succeed.

koromak 4y ago
That is the definition of coasting
- versteegen 4y ago
  My reading of GP is that by working at a BigCo you remove the worry of whether your company will go under. Regardless of how hard you work.
- smarmgoblin 4y ago
  Most definitions of coasting would involve not working hard.
deleted 4y ago
[deleted]
sillysaurusx 4y ago
I think I misread your comment, so I deleted my earlier one. Sorry. You’re right: if you’re going to work hard, you may as well choose the path with the highest rewards. If Stripe can’t make it worthwhile, is there a good reason to trade away what you’d get at FAANG? So the hard workers have a lucrative path (FAANG), and the ones who want to spend more time away from work have a more lucrative path (BigCo). That doesn’t leave a lot of reasons to choose to be an early startup employee.
- Godel_unicode 4y ago
  First, for some people front loading their earnings is important so they can enjoy more of life. Second, as another thread goes into, the risk-adjusted picture of startup vs established tech company is quite different.

nugget 4y ago

Based on internal data I have from similar companies my guess would be the first 50 employees average about $15-20m each and the next 100 average about $5-10m each just from their initial 4 year grants, with a lot of variation based on team and seniority. Stripe options have probably grown about 100x in value since the Series B so if you were an engineer who joined around that time, received $100k in RSUs, and left upon fully vesting then you'd be looking at around $10m in value today.

sillysaurusx 4y ago
Stripe employee #130 made $5m (after taxes) from 4 years of options? Is there any data to support that? It sounds mistaken, but exponential curves are hard to reason about. 50 x $15m + 100 x $5m = 1.25B post-tax, so probably north of $1.7B pre tax. Stripe had a post-money valuation of $10B+ in March 2021, so that’s around 15% of the company. I guess that’s in the right ballpark. Hmm. Thank you for the concrete numbers. That’s a nice payoff for four years of work, even if you do have to wait ten years for it. Happy to hear the startup reward structure still makes sense in 2023. In that case, it might be a good idea to join one that seems promising. The payoff is rare, but it’s a lot less rare than the lottery: there have been n YC startups, so the odds are around 10 in n. And I think n is something like 2k to 5k. (Edit: yeah, 4k according to Wikipedia.) 1 in 400 chance of $5m is still pretty low odds, though. But you do learn a lot, and you meet a lot of people that have a higher than average chance of being a future founder, so the benefits still seem to make sense. Interesting.
- kgwgk 4y ago
  > Happy to hear the startup reward structure still makes sense in 2023. At least for people who joined a successful one ten years ago.
- nl 4y ago
  Also worth noting that in today's market a company like Stripe isn't paying significantly below market rates, so there's not huge downside in that regard.

jjav 4y ago

> If they don’t come out of it with lots of after-tax cash, then that calls into question why to even work at one. When joining any early startup, you really want to be able to do an early exercise of your options immediately when you join. If this is not possible for whatever reason, I consider it too risky to join. When joining a startup one already knows it can fail the traditional way (bankrupcy), so that's the risk we take. But getting stuck in the position of having hit it big on paper but you can never leave the company because there is no liquidity, or having them expire.. just too painful.

gitfan86 4y ago

After the 2000 dotcom bubble equity for employees became a lottery. If you got really lucky your shares were priced at a 50k market cap and the company ended up only diluting those down by 50% and the company went public making your shares worth 800k. But now that situation is rare. The investors and founders and bankers ensure that they take the vast majority of the upside when going public. If you are joining a company and taking less than 1% of equity in the company the best way to think about the equity is "This may end up being a yearly bonus of 50-150k, but probably will be worth nothing"

matthewowen 4y ago
I don’t really buy this, but that’s largely based on own fairly positive experience of stock compensation at private companies. I will say that I think these conversations tend to be a little distorted because people who have had positive experiences feel awkward about saying “i made $xxMM from employee stock” but people who haven’t seem comfortable saying “stock based compensation was worthless”. Also tbh a lot of people are just really bad at judging companies and wind up working at startups that are obviously going to fail. You really do have to make an honest assessment of if you are good at picking winners.
- Retric 4y ago
  Sure people may not want to talk about it, but a big part of this is so few people make $xxMM from employee stock. Yes, if you where one of the first 50 employees at Google you probably made low $xxMM, but it’s a long wait until IPO and the overwhelming majority of people at Google didn’t get anything close to that much. Worse the overwhelming majority of companies aren’t Google style success stories. Also, don’t forget nobody at Stripe has gotten to cash out yet. Your looking for very early employees, at wildly successful startups, who started 10+ years ago, and are still poking around online forms, and willing to talk about it.
  - rcme 4y ago
    I think Google employees did alright. Let's say you joined in Sep. 2013 (random date). 4 years later, the stock was up 200%. So if you got a $500K grant over 4 years, you'd have 1.5 million. After taxes, that'd be around $1 mm.