What this analysis shows is the flaw of trying to reason with percentage: the modeling is too difficult and littered with assumptions. An alternative model: sa

What this analysis shows is the flaw of trying to reason with percentage: the modeling is too difficult and littered with assumptions. An alternative model: say you're offered $100/yr with 10k options a year with a nominal value of $5 and a strike price of $1. Superficially the offer is worth $140/yr. The startup's valuation is still important, because you can ask yourself questions about how likely they are to double it. It's much easier to project if the company can double to 10x it's value than what their exit is going to be. Say that startup is worth $1mm. If they can double it to $2mm you're going to be netting $100 + 10k(10-1) = $190k. But can they double it? Up to your impression of their business. That's a much simpler question than wondering about their exit many years down the line. (their competitors generally are the strongest signals) Observations: this is computed with options per year; most startups would put this as giving you 40k options over four years * the options companies give you generally have expirations and very poor liquidity so using their face value is generous. [1] * but on the other hand, options can potentially increase in value, so it's not wholly unreasonable to equate them to their face value * this approach cuts out nearly all early stage startups which give below-market salaries and weak equity grants. Getting 50bp of a $10mm startup over four years is $12.5k/yr face value. If market salary is $100 and they're offering $75 you're netting around $87.5. That's a pretty stiff cut. * dilution isn't relevant (assuming you have options on reasonable stock) * if the startup is doing well (say, after a year doubles their valuation) it's difficult to negotiate another grant because you're now paid quite a bit better. Conversely, if the startup is doing poorly time to ask for more. * you may be okay with the pay cut because of externalities (more interesting work, good for the resume, better commute, etc.) (ps. I normalized all salaries to $100k because it's easy to do percentages off of. Adjust by industry and specialization.) [1]: That said, if you have reasonable timing you can use this computation to negotiate comp when changing companies so you're not completely handcuffed. (basically converting your equity from one company to another)