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Given the offers I've heard people getting from early stage startups (engineer 2-5), I don't really get why someone would join them. Below market rate salary? 0
by jamesaguilar 13y ago
Given the offers I've heard people getting from early stage startups (engineer 2-5), I don't really get why someone would join them. Below market rate salary? 0.1% of a company that's going to exit at $80M with a 10% chance and $0 with a 90% chance? That comes out to $80k over four years of work, before taxes, in the typical successful case, which is itself atypical. And for what amounts to a relatively small bonus, I'd be expected to work 50-70 hour weeks? Sign me up!
- Matt_Mickiewicz 13y agoNet Present Value is always an interesting calculation... You can run the math on YC companies relatively easily: http://www.businessinsider.com/startup-odds-of-success-2013-5 http://www.businessinsider.com/startup-odds-of-success-2013-... "37 of the 511 companies that have gone through the Y Combinator program over the past 5 years have either sold for, or are now worth, more than $40 million."
- ryandrake 13y agoYou forgot to include the probability of success in your calculation, for Expected Value: EV = $80M exit x 0.1% equity x 10% success rate / 4 years = $2K That awesome 0.1% equity is worth $2,000 a year. Less, because of time value of money, and the fact that you won't be cashing out yearly.
- jamesaguilar 13y agoThanks for the correction, but I did not forget it. I explicitly called out that the $80k total was only in the successful case, which is atypical, and had not been divided by time yet. That could have been worded better, I admit, but you and I are in violent agreement.
- mattmanser 13y agoAnd that's before dilution, so you're talking much less in reality.