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This post is short-sighted and simplistic. Worst in what sense? The decrease in equity is countered by the increased stability because the company has money in

by diego 14y ago

This post is short-sighted and simplistic. Worst in what sense? The decrease in equity is countered by the increased stability because the company has money in the bank. There are people whose risk profiles make it unacceptable for them to join a company before it reaches a certain degree of stability. For those people, the second the company has closed a VC round might be the best time to join. I've hired people in that exact situation; they only made the leap to a startup when I was able to guarantee that we'd have enough money to pay them for a while.

rdl 14y ago
He's arguing that there's a discontinuity. It's better to join just before a major funding event vs. just after. It becomes steadily better as time passes after the funding event (assuming the company makes progress at the right pace), until the next funding event. Joining right before the series B is probably better than right after the A, from an equity maximization perspective, weighted for risk. Of course, being an early hire right after the A makes it more likely you'd be in a senior role, or at least get a lot of great work done before the B, but your equity grant is not likely to increase.
- dllthomas 14y ago
  Joining a company right before it closes a series A is much better than joining the same company right after, but what about joining a similar company that is trying to raise a series A but never manages to? As risks suddenly drop, so does reward - unsurprising. They may be incommensurate, but they're at least moving in the right direction.
- flyinRyan 14y ago
  I would have expected the worst time to join to be right before a funding round because of your value getting horribly diluted. I know there was lots of talk of this some months back (and scumbag companies like Zynga trying to one up the evil) and assumed this practice would get even worse. Has that not happened?
  - ry0ohki 14y ago
    In absolute terms, but the comparison is not what you personally gain and lost before the VC, it's a comparison of what you have now and what the next person hired will get.
kelnos 14y ago
His point is that the drop in equity grants post Series A is not proportional to the drop in risk. Certainly I get that some people can't handle the risk of joining a company before Series A, or can't handle a subsistence salary. But that's not the point he's trying to make.

by diego 14y ago

rdl 14y ago

He's arguing that there's a discontinuity. It's better to join just before a major funding event vs. just after. It becomes steadily better as time passes after the funding event (assuming the company makes progress at the right pace), until the next funding event. Joining right before the series B is probably better than right after the A, from an equity maximization perspective, weighted for risk. Of course, being an early hire right after the A makes it more likely you'd be in a senior role, or at least get a lot of great work done before the B, but your equity grant is not likely to increase.

dllthomas 14y ago
Joining a company right before it closes a series A is much better than joining the same company right after, but what about joining a similar company that is trying to raise a series A but never manages to? As risks suddenly drop, so does reward - unsurprising. They may be incommensurate, but they're at least moving in the right direction.
flyinRyan 14y ago
I would have expected the worst time to join to be right before a funding round because of your value getting horribly diluted. I know there was lots of talk of this some months back (and scumbag companies like Zynga trying to one up the evil) and assumed this practice would get even worse. Has that not happened?
- ry0ohki 14y ago
  In absolute terms, but the comparison is not what you personally gain and lost before the VC, it's a comparison of what you have now and what the next person hired will get.

kelnos 14y ago

His point is that the drop in equity grants post Series A is not proportional to the drop in risk. Certainly I get that some people can't handle the risk of joining a company before Series A, or can't handle a subsistence salary. But that's not the point he's trying to make.