3 ms·
This guy might be a VC that I can actually like. His point on terrible equity allocations is spot-on. If you're giving a dime and a half (0.15%) to your first
by michaelochurch 13y ago
This guy might be a VC that I can actually like.
His point on terrible equity allocations is spot-on. If you're giving a dime and a half (0.15%) to your first employee engineer, at a valuation of $5 million, you're not going to get someone good.
If you account for equity at-valuation, bad people become cheaper if you're a startup but good people become more expensive (i.e. you'd have to offer $75k per year of equity to make up for a $40k salary drop).
- infinite8s 13y agoThe difference between good and bad is only 40k?
- deleted 13y ago[deleted]
- michaelochurch 13y agoThat's not what I said (although the salary differences between good and bad engineers are small, in comparison to the differences of output). A good, senior engineer (10-15 years experience) is typically going to get $150k at a large company and drop to $110k at a startup. But it would take at least $75k/year in equity, for a savvy person, for that drop to be worth it. A stock that is correlated to your employer should be worth less to you than one at zero correlation. Moreover, it's an illiquid stock. Furthermore, VCs are buying preferred stock while you have the common kind, and that can easily be a factor of 2 (or 4, or 8+) of difference in fair value.