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Analysis of E(V) of working for a startup
- abbazabba 13y agoThose are the companies that were actually accepted to Y-Combinator. The Y-Combintor acceptance rate is said to be 3%. So, your odds of success are now more like 3% 7% = 0.2%* All of this hinges on the assumption: Y-combinator is a proxy for the start-up population. Even taking the optimistic Y-Combinator outcome, would you be willing to accept a 7% chance of making $400K? This is assuming you only get paid in that 1% equity while assuming the 40MM exit. If I got paid a SALARY I can accept + 1%, why wouldn't I take that chance? It is +EV. Compare this to the lottery, which carries a -EV.
- gazarsgo 13y agoI like the general tone of this piece, but how many salaries are below market rate at a startup these days? The fringe benefits are pretty insane right now too. IMO, the biggest concern for an employee is dilution. Sometimes this happens in non-obvious ways, like on exit what happens to undistributed shares allocated to the employee grant pool?