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Startup equity is the equivalent to the old Foxworthy bit "You can't write me a check?" I said, "No, I -- a check? Hell yeah, I can write you a check! I though

• mgraczyk 1y ago
  It's not really, because it's finite. You don't generally dilute the options pool when you hire new employees, you give them some slice of a scarce options pool
  • achierius 1y ago
    Sure, but there's an extent to which the the board and its constitutive shareholders already expect to be giving away options for new employees, and as such will have allocated a pool for such purpose -- both for the "standard" package, and for "hard negotiators". For traditional tech startups (i.e. ones not so flush with cash as OpenAI), giving these away is far easier than giving away more real-world, honest-to-god cashflow, because that directly drains your runway, while all equity does is make your cap sheet look marginally worse.
    • mgraczyk 1y ago
      > all equity does is make your cap sheet look marginally worse But at the time the employee is negotiating this has already been decided. The company has some valuation and you are offering some known percentage of that scarce resource. You could argue that the valuation itself is the thing being manipulated (which is partially true), but that doesn't change the cost of the offer to the company in units of equity %
• paulddraper 1y ago
  My bank account says otherwise, but it depends.
  • ikiris 1y ago
    So do all the lottery winners. It doesn't really change how a lottery works, or the likely financial result.
    • mgraczyk 1y ago
      What fraction of lottery participants win, vs startup employees? It's rare and there is luck, but the quantities matter. You are much more likely to make money from a startup and it's much more under your control as an employee
      • reillyse 1y ago
        That’s an interesting thought experiment actually. If you think about the amount of money given up as a startup employee you will definitely get some winnings. For example, say as a startup employee you are earning/being compensated 80,000 a year in equity. If you bought $80,000 of lottery ticket’s each year how much would you win. Depends on the lottery but most lottery’s have a rough payout of approximately 50-70%. Let’s say it’s 50%. So you would expect to receive back $40,000 per year. Do half of all startups equity turn into cash, I think not. So probably more likely to make money from the lottery.
        • paulddraper 1y ago
          Less than half of startups have exits… But most startup people don’t work at most startups.
          • reillyse 1y ago
            I've worked at startups that have had exits and the employees got zilch. I think even in the startups with exits the probability of an employee having their equity turn into cash money is very low (also I doubt 50% of startups have exits - I hear a number of 10% more often and even that seems high, I'd imagine 10% of YC startups have an exit and they are the most likely to succeed so I imagine when you add in all the other startups that percentage gets far far lower).