5 ms·

Ask HN: 1% equity vested over 4 years, is it okay for first employee?

• joeldidit 13y ago
  As employee number 1 ask for 2-5%. Or more.
• DevX101 13y ago
  I feel like you've already answered your question.
• foobarbazqux 13y ago
  If you are willing to quit anyway, it's a good opportunity to practice negotiation. Tell them that either they give you a good percentage or you leave, but make sure you leave if they refuse.
  • hemezh 13y ago
    Nice perspective. Will definitely do that.
• rywalker 13y ago
  1) Definitely ask for more, they're low-balling you. 2) Take it as a lesson learned. The earlier you nailed this down, the better your negotiation position is.
• tagabek 13y ago
  I don't like the technology stack they are working on and more than anything I hate the city they are based in. You will resent your work and you will be unhappy with where you are geographically.
  • thetrb 13y ago
    I assume by this line he meant the "big company".
• brudgers 13y ago
  Here's an F.U. money calculator: http://www.kludgecode.com/index.php/a-crude-f-u-money-calculator/ http://www.kludgecode.com/index.php/a-crude-f-u-money-calcul...
• tptacek 13y ago
  1% does not sound like a lowball offer for a salaried employee, but why take a job you know you don't want?
  • hemezh 13y ago
    The only advantage I can think of is experience of working at a startup. This will greatly help me as I wish to startup something of my own in near future.
  • NhanH 13y ago
    I'm not sure if this is an appropriate question to ask, but you're the only one in the comments (so far) that say 1% is a reasonable number for the 1st employee. As someone who know nothing about the norm, do you mind explaining why it is so (or simply why 1% is not unreasonable would be great too!)? I saw an answer to a similar quora question here: http://qr.ae/I9ZWz http://qr.ae/I9ZWz . What do you think about the answer? Edit: I was once told that the rate for CEO hires is normally ~ 5%, with that number, it seems to me that employees, even the early one should be in the range of .1-.5% . Of course, it could just mean that even 5% for CEO is just too low?
    • tptacek 13y ago
      Joel gives a better answer than I do; note that his plan gives 4 developers 2.5% of the company each, but 1%-5% seems like a typical range. The commenter says they were only able to improve their salary by ~20% by taking a BigCo job, so the rest of comp doesn't seem to be too far off the market. I don't think it's an amazing offer, but then, amazing offers can be red flags too. http://answers.onstartups.com/questions/6949/forming-a-new-software-startup-how-do-i-allocate-ownership-fairly http://answers.onstartups.com/questions/6949/forming-a-new-s...
      • NhanH 13y ago
        Thanks, the answer is great. However, with that plan, wouldn't the first layer employee has ~ 100-200 times more equity than the last layer? Would this cause some sort of division within the employees in the company?
• mcv 13y ago
  I honestly have no idea whether 1% is good or bad, but which depends on a lot of factors: What's the chance that this company is going to make it? 1% of nothing is nothing. If they make it, how big are they going to be? 1% of $1 million isn't all that much either. But if they get bigger than that, it very quickly becomes very worthwhile. How much salary do you get? Equity can make up for low salary, but if your salary is okay, any equity is bonus.
  • hemezh 13y ago
    Chances are pretty good that the company will make it. Huge market(real estate) and very less competition in this market in India. As I have said in description, I turned down an offer of 20% more than my current salary for the experience of working at a startup + equity but I know I can easily get a job of upto 70-80% more.
• brianchu 13y ago
  1. Agreed with tptacek. 1% is within the "standard" range of equity from what I've heard in SV. But that range is highly variable: 1-5%, but even 0.1-10% might be justified. But we have nowhere near enough information to judge whether that kind of an offer is a good offer for your specific, individualized case. Some questions to consider: What kind of salary are you making? What salary could you make at a BigCorp? When was their last round of funding, how much did they raise, who did they raise from, and what was the valuation? What kind of shares were issues to the investors (preferred, participating preferred, bla bla bla etc.) 2. Approach this like an investor. You are "investing" a below-market salary (and, if you are going to be working longer hours than at a BigCorp, you have to factor that into your calculations), and in return you are getting equity. The easiest way to calculate the dollar value of your equity is valuation * equity (then divide by four since this is vested over four years), and that is the rough cash equivalent of your equity). But depending on what kind of stock your investors got (preferred stock vs. the common stock or stock options you get), you might want to discount this valuation by 10-20%. 3. Valuing startup equity is a huge topic, there are entire HN threads dedicated to this: search HN for "startup equity." Here are some good articles: http://mba-mondays.pandamian.com/tableofcontents/ http://mba-mondays.pandamian.com/tableofcontents/ (read the Employee Equity sections), pg's essay on this (http://www.paulgraham.com/equity.html http://www.paulgraham.com/equity.html), an article on someone's negotiation process (https://keen.io/blog/29904565692/how-i-negotiated-my-startup-compensation https://keen.io/blog/29904565692/how-i-negotiated-my-startup...), and another summary article (http://www.payne.org/index.php/Startup_Equity_For_Employees http://www.payne.org/index.php/Startup_Equity_For_Employees).