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Maybe. But just looking at expected value ignores risk. Most people are risk averse, especially at the amounts of money we're talking about here.
by spacehome 13y ago
Maybe.
But just looking at expected value ignores risk. Most people are risk averse, especially at the amounts of money we're talking about here.
- svachalek 13y agoExpected value is not $millions. Expected value is a few hundred $k (usually, if you are realistic about the potential of the business and your tiny share as an employee) MULTIPLIED by the relatively small chance of hitting that exit, say 1%. In short, a few thousand dollars, which is approximately what you get by multiplying out the strike price. IMHO it takes risk into account in a very sobering way.
- spacehome 13y ago> Expected value is not $millions. Speak for yourself.