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I find it weird that the only discussion about this seems to be coming from the founder/VC side of things. Any offer has two sides. The one who offers and the

by chasing 13y ago

I find it weird that the only discussion about this seems to be coming from the founder/VC side of things. Any offer has two sides. The one who offers and the one who accepts (or declines). And I feel like employees need to fully understand what they're getting themselves into. Then they can decide whether what they're being offered is worth it. The last time I was offered a chunk of equity to work with a start-up, I ran the math and decided it wasn't enough to compete with other opportunities. The start-up wouldn't agree to raise the equity to a point I was comfortable with, so I walked and went on to other projects. If more employees negotiated -- and negotiated seriously from a place of knowing both their value and the value of the offer -- I feel like we'd quickly get a better sense of how much equity is fair.

malandrew 13y ago
As someone who was once a founder (failure) and is now the first engineering hire at a funded startup and plans on founding something after my current gig, the issues Sam raised that are most concerning to me are all the other issues besides the size of the grant. Don't get me wrong, I wish the grants were higher, but all the other issues are more pressing since they increase the utility of the small percentage I earned without diluting anyone else. Solving those issues that increase the utility of a good limited in supply and makes the valuation of that good far less nebulous makes it much easier to more accurately determine the amount of equity an employee demands/receives. Getting a bigger percentage with unfavorable terms that might be used to limit how much upside I can get or nullify the upside entirely matters far more. I would prefer terms: * where the exercise window is long (10 years) * where the employees and the founders have the same conditions in funding rounds or acquisitions. i.e. equal dilution. equal opportunity to take money off the table if that is an option. same triggers (double, single). * protection against liquidation preferences (honestly this shouldn't even be a thing) * restricted stock instead of options, with a bonus to cover the tax on it for the year it was issued that is paid out either on the 12th month when the cliff is reached or when taxes on it are due, whichever comes first. Beyond that, a change in tax treatment for these illiquid assets would be awesome.

by chasing 13y ago

malandrew 13y ago

As someone who was once a founder (failure) and is now the first engineering hire at a funded startup and plans on founding something after my current gig, the issues Sam raised that are most concerning to me are all the other issues besides the size of the grant. Don't get me wrong, I wish the grants were higher, but all the other issues are more pressing since they increase the utility of the small percentage I earned without diluting anyone else. Solving those issues that increase the utility of a good limited in supply and makes the valuation of that good far less nebulous makes it much easier to more accurately determine the amount of equity an employee demands/receives. Getting a bigger percentage with unfavorable terms that might be used to limit how much upside I can get or nullify the upside entirely matters far more. I would prefer terms: * where the exercise window is long (10 years) * where the employees and the founders have the same conditions in funding rounds or acquisitions. i.e. equal dilution. equal opportunity to take money off the table if that is an option. same triggers (double, single). * protection against liquidation preferences (honestly this shouldn't even be a thing) * restricted stock instead of options, with a bonus to cover the tax on it for the year it was issued that is paid out either on the 12th month when the cliff is reached or when taxes on it are due, whichever comes first. Beyond that, a change in tax treatment for these illiquid assets would be awesome.