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There's some valuable information here, but a lot of detail is lacking. For instance, the post does not distinguish between incentive stock options (ISOs) and n

There's some valuable information here, but a lot of detail is lacking. For instance, the post does not distinguish between incentive stock options (ISOs) and non-qualified stock options. The tax treatment is quite different. More importantly, technical details aside, I think it's important for a prospective employee to make some strategic decisions about equity up front. The author writes: > If the company seems reluctant to answer these questions, keep pressing and don’t take ‘no’ for an answer. If you’re going to factor in your options into any compensation considerations, you deserve to know what percentage of the company you’re getting, and its value. And in the next paragraph he writes: > I’d be wary of compromising on salary for shares, unless you’re one of the first few employees or founders. It’s often a red flag if the founders are willing to give up a large percentage of their company when they could otherwise afford to pay you. Sometimes you can negotiate a tiered offer, and decide what ratio of salary to equity is right for you. You can't have it both ways. If you focus on equity (by demanding that the company divulge detailed information about its share structure), you are sending the signal that equity is just as important or more important than salary, and thus opening the door to a negotiation that contemplates a trade of equity for salary. Precisely the thing that you want to avoid! Unless equity is expected to be liquid in the near future (i.e. you're at a company expected to go public in the near future), an equity-focused negotiation is more likely to benefit the prospective employer than employee.

tptacek 13y ago
I think you make a valid point but may have picked the wrong hill to fight for here, because there is no way to evaluate an equity grant without knowing the percentage associated with the grant. Even if you don't care much about equity, if you care about it at all you should be able to get that information.
- 7Figures2Commas 13y ago
  > ...because there is no way to evaluate an equity grant without knowing the percentage associated with the grant. Even if you don't care much about equity, if you care about it at all you should be able to get that information. 1. Calculating a true percentage associated with a grant can be difficult. You can identify the number of shares of stock outstanding across all classes, the number of currently authorized shares, and the size of the option pool. But you don't know how much of the option pool will actually be used, how many options will vest, etc. 2. Unless you're an executive hire or unicorn, most companies will not give you all of the data necessary to meaningfully evaluate the equity grant. You can ask for it, as so many suggest, but asking for something that a) you almost certainly won't receive and b) that you're not trying to focus on (for the reasons I originally gave) is not very strategic. 3. At an early-stage, venture-backed startup (my comments are not intended to address late-stage, liquidity-all-but-certain scenarios), the equity structure of the company is likely to change considerably and perhaps unpredictably, rendering your initial evaluation all but useless. 4. If an early-stage startup is capable of offering you a satisfactory salary (at market or, these days, above market), you are far better off trying to ascertain what the company's runway is. Your biggest risk at a startup is not that you're going to join the next Facebook as an early employee and walk away with next to nothing but rather that the company is going to run out of cash.
  - tptacek 13y ago
    These all seem like really good points. I'm going to keep my part of this conversation very narrow and just re-assert that if you ask for the percentage corresponding to your grant, you should get it, without much trouble. Not getting it is a very bad sign. I'd say the same thing about current liquidation preferences. You're absolutely right that nothing your employer tells you at the time you're hired is going to be controlling once a new round of funding is taken. If the company is going gangbusters when it takes a new round, the new round probably won't hurt you at all. If it's a slog when you go for more money, it could totally ruin your returns.

tptacek 13y ago

I think you make a valid point but may have picked the wrong hill to fight for here, because there is no way to evaluate an equity grant without knowing the percentage associated with the grant. Even if you don't care much about equity, if you care about it at all you should be able to get that information.

7Figures2Commas 13y ago
> ...because there is no way to evaluate an equity grant without knowing the percentage associated with the grant. Even if you don't care much about equity, if you care about it at all you should be able to get that information. 1. Calculating a true percentage associated with a grant can be difficult. You can identify the number of shares of stock outstanding across all classes, the number of currently authorized shares, and the size of the option pool. But you don't know how much of the option pool will actually be used, how many options will vest, etc. 2. Unless you're an executive hire or unicorn, most companies will not give you all of the data necessary to meaningfully evaluate the equity grant. You can ask for it, as so many suggest, but asking for something that a) you almost certainly won't receive and b) that you're not trying to focus on (for the reasons I originally gave) is not very strategic. 3. At an early-stage, venture-backed startup (my comments are not intended to address late-stage, liquidity-all-but-certain scenarios), the equity structure of the company is likely to change considerably and perhaps unpredictably, rendering your initial evaluation all but useless. 4. If an early-stage startup is capable of offering you a satisfactory salary (at market or, these days, above market), you are far better off trying to ascertain what the company's runway is. Your biggest risk at a startup is not that you're going to join the next Facebook as an early employee and walk away with next to nothing but rather that the company is going to run out of cash.
- tptacek 13y ago
  These all seem like really good points. I'm going to keep my part of this conversation very narrow and just re-assert that if you ask for the percentage corresponding to your grant, you should get it, without much trouble. Not getting it is a very bad sign. I'd say the same thing about current liquidation preferences. You're absolutely right that nothing your employer tells you at the time you're hired is going to be controlling once a new round of funding is taken. If the company is going gangbusters when it takes a new round, the new round probably won't hurt you at all. If it's a slog when you go for more money, it could totally ruin your returns.