4 ms·

I agree. It's easy for Matt Cutts to say that you should take more equity, because he has only seen massive success. I've been in the Bay Area exactly as long

by steven2012 12y ago

I agree. It's easy for Matt Cutts to say that you should take more equity, because he has only seen massive success. I've been in the Bay Area exactly as long as he has, and I've had 1 company out of 6 where my options actually made me money. The rest were all worthless.

nikcub 12y ago
If you're exchanging salary for equity you have to look at taking a job at a startup like an investment decision. I don't know what the broader startup stats are now, but 1 in 6 sounds about average. It means you should negotiate down vesting periods and try and spend a few years at each startup before figuring out if it will succeed or not. My anecdotal opinion is that more startups are cashing out for at least something because of acquihires and low-end mergers. I had a friend whose startup ran out of money, he accepted a few points of another startup in exchange for the assets of his failed startup and that startup that bought his assets ended up selling for $100M+ after less than a year earning him a decent return. On another note - it would be pretty cool if someone did the equivalent of an index fund but for employee options. Get together with 5-6 of your friends at different startups and exchange options with each other to hedge the risk. Another way to diversify your exposure is to get advisory roles at startups and pick up 25-100 b.p from 4-5 different companies for helping them out. This has worked out pretty well for myself. There are some VCs who will also invest a small slice on your behalf if you introduce them to a deal they end up investing in, which can also work out pretty well if you are able to spot good investment deals, know the founders, etc. For a culture where stock options, M&A and investing is so prevalent there really isn't much information out there in terms of making the right investment decisions and how to handle and work with money.
- ryandrake 12y ago
  > On another note - it would be pretty cool if someone did the equivalent of an index fund but for employee options. Get together with 5-6 of your friends at different startups and exchange options with each other to hedge the risk. This is a pretty cool idea, but you'll have to find a lot of friends for it to work. Chances are, your 5-6 friends' options will also end up worthless. Then again, if we're talking about a pool of maybe 1,000 start-ups, then you need to believe that a diverse bundle of start-ups will outperform the S&P500 on average, otherwise it's pointless.
  - nikcub 12y ago
    or create a web-based matchmaking market. I think the reason why it may not have happen already is because of regulations shrug - i'll ask the next time i'm speaking to a lawyer
Matt_Cutts 12y ago
You're completely right that I was very fortunate. All I'm saying is that if your goal is financial independence, it can be hard to get there on a straight salary, and that trying to get some sliver of equity can radically increase your odds of financial success. With that specific piece of advice, I'm trying to catch folks in Nebraska or Cleveland who are thinking about accepting a 9-5 job, not folks who are already in the Bay Area and familiar with buying a ticket in the startup lottery.
- walshemj 12y ago
  It does depend even in mature boring companies you can make a nice return I made a fair bit on BT.A and REL (Elsevier) Of course when I worked for poptel (.5%) I would have been able to retire if we had been brought out by the co-op BTW in the UK BT 's latest employee 5 year share save returned £60k tax free and that is a scheme available to every one.

nikcub 12y ago

If you're exchanging salary for equity you have to look at taking a job at a startup like an investment decision. I don't know what the broader startup stats are now, but 1 in 6 sounds about average. It means you should negotiate down vesting periods and try and spend a few years at each startup before figuring out if it will succeed or not. My anecdotal opinion is that more startups are cashing out for at least something because of acquihires and low-end mergers. I had a friend whose startup ran out of money, he accepted a few points of another startup in exchange for the assets of his failed startup and that startup that bought his assets ended up selling for $100M+ after less than a year earning him a decent return. On another note - it would be pretty cool if someone did the equivalent of an index fund but for employee options. Get together with 5-6 of your friends at different startups and exchange options with each other to hedge the risk. Another way to diversify your exposure is to get advisory roles at startups and pick up 25-100 b.p from 4-5 different companies for helping them out. This has worked out pretty well for myself. There are some VCs who will also invest a small slice on your behalf if you introduce them to a deal they end up investing in, which can also work out pretty well if you are able to spot good investment deals, know the founders, etc. For a culture where stock options, M&A and investing is so prevalent there really isn't much information out there in terms of making the right investment decisions and how to handle and work with money.

ryandrake 12y ago
> On another note - it would be pretty cool if someone did the equivalent of an index fund but for employee options. Get together with 5-6 of your friends at different startups and exchange options with each other to hedge the risk. This is a pretty cool idea, but you'll have to find a lot of friends for it to work. Chances are, your 5-6 friends' options will also end up worthless. Then again, if we're talking about a pool of maybe 1,000 start-ups, then you need to believe that a diverse bundle of start-ups will outperform the S&P500 on average, otherwise it's pointless.
- nikcub 12y ago
  or create a web-based matchmaking market. I think the reason why it may not have happen already is because of regulations shrug - i'll ask the next time i'm speaking to a lawyer

Matt_Cutts 12y ago

You're completely right that I was very fortunate. All I'm saying is that if your goal is financial independence, it can be hard to get there on a straight salary, and that trying to get some sliver of equity can radically increase your odds of financial success. With that specific piece of advice, I'm trying to catch folks in Nebraska or Cleveland who are thinking about accepting a 9-5 job, not folks who are already in the Bay Area and familiar with buying a ticket in the startup lottery.

walshemj 12y ago
It does depend even in mature boring companies you can make a nice return I made a fair bit on BT.A and REL (Elsevier) Of course when I worked for poptel (.5%) I would have been able to retire if we had been brought out by the co-op BTW in the UK BT 's latest employee 5 year share save returned £60k tax free and that is a scheme available to every one.