3 ms·

Equity isn't mainly based on performance. It's based on risk. If I join as the first engineer, before any paying customers, that is in fact worth exponentially

Equity isn't mainly based on performance. It's based on risk. If I join as the first engineer, before any paying customers, that is in fact worth exponentially more than when there is some revenue, the first cease and desist is conquered, the rest of the core team is put together and working well, etc. Trusting a potentially insane one-man shop of the founder is way different than trusting a group of 5-10 people who pay rent at the end of the month as proof that the concept might work. Investors have even less to go on: the founder might be an outright crook and run off to the Bahamas.

thr0waw4y1234 2y ago
(A) I don't know who told you that equity compensation was based on risk, but it's not. A CRO hired at series C will get more equity than any IC level employee hired as employee #1. It's a compensation lever like any other. (B) I keep hearing people talk about "risk". Is this "risk" in the room with you right now? The reality is that founding engineers at many startups get competitive salary, get to work on incredible problems, and can leave after a few years having vested a bunch of equity and added a solid entry to their resume. (C) Yes, if you're currently an L6 eng at Google you'd get a pay cut working at a startup. This isn't risk, it's opportunity cost. And guess what: those people very rarely join early stage startups. Those that do negotiate hard and get bigger equity packages. Most early stage startup employees are earlier in their careers / haven't hit the Google jackpot yet. (I'll set aside the fact that many people leave big tech and join startups for non-financial reasons. Harder to draw generalization about those because the motifivations are so personal, but I know many.)