4 ms·

The percentage really doesn't matter. Assume that you could get a $150K cash/stock at a public company (meaning concrete valuation). A startup offers you $80K

by pzb 11y ago

The percentage really doesn't matter. Assume that you could get a $150K cash/stock at a public company (meaning concrete valuation). A startup offers you $80K and says "here is equity to make up the difference". If you assume three years and a 10% chance of them being worth something that means you need RSUs worth at least $2.1M to meet expected loss of salary. I highly doubt you are getting that.

harryh 11y ago
Startups aren't a roll of the dice where they are all the same with equal probabilities of success. Make good decisions. Join the right team.
- dman 11y ago
  If youre great at identifying the right team, why not work as a VC rather than working as an employee :) .
  - harryh 11y ago
    Because I like making things and working with other people and don't really like meetings or traveling.
    - dman 11y ago
      The biggest downward ticks to my personal net worth have been due to me relying on skills that I dont exercise often. Over time I have calibrated my judgement to mark the value of infrequently exercised skills to zero even though I might think I am a natural at them.
  - MCRed 11y ago
    VCs are terrible at this. I can't tell you how many times in the past 20 years I've heard VCs say things like "you should move into [tangentially related area that we can't add value to that just had a big exit]" For instance, when youtube got bought, VCs were all interested in investing in online video companies. At that point, though, Youtube had already been bought! They were like 5 years too late.
    - dman 11y ago
      That might well be true, the point I was trying to make was that as an employee its dangerous to make decisions based on the belief that you are great at picking winning teams / companies. Sure VC's are bad it too, but theyre sensible enough to do it with other peoples money.
- MCRed 11y ago
  Here's what 20 years of experience working for startups has taught me: -- Either be a founder if you want to be there in the early days. -- Or join a "sure thing". EG: Google, Twitter, Facebook about a couple years before they went public were already household names and really well known. I don't know how much upside you get joining a sure thing like that, but that's how you make sure your options will come into money. Being employee number 5-100 of the average Silicon Valley startups is a losing proposition because the risk adjusted value of your options will never compensate you for your lost salary. (especially if you have to live in California- you're better off working for a startup in Austin than California due to the cost of living and tax situation. The higher salaries in California don't cover the difference.) And yes, blame me, I turned down being employee number 13 at what became a $6B enterprise software company. Would have been CTO or way up in the executive team because they were a bunch of biz guys who needed a hacker. Instead I worked for just a year for a small business (not really a startup this was before "startups") But it's damn hard to tell the difference at those early stages. And when questions like "what's the total number of shares outstanding on a fully diluted basis?" (back when companies would say "You'll get 10,000 shares!!!!111!!") are met with "sorry that's confidential" during the hiring process, it is a bit difficult to do proper due diligence.
  - ryandrake 11y ago
    This seems like good advice. There's definitely a "valley" where low (but not "Founder-low") employee numbers get all the risk and disproportional reward. But, I wonder, really how much someone hired at Google, Twitter or Facebook a couple of years before IPO _really_ got. We're still probably talking "nice bonus" money rather than "life changing windfall" money. And, for "nice bonus" money, it makes more sense to go for the security of a public BigCorp.
    - harryh 11y ago
      If you were at Google as a mid level engineer in 2002 (2 years before the IPO) you DEFINITELY made life changing windfall money. DEFINITELY. Take whatever guess you seem have in your head and multiply it by 10. Probably more than that. (I started at Google in 2004 and did pretty well.)

by pzb 11y ago

harryh 11y ago

Startups aren't a roll of the dice where they are all the same with equal probabilities of success. Make good decisions. Join the right team.

dman 11y ago
If youre great at identifying the right team, why not work as a VC rather than working as an employee :) .
- harryh 11y ago
  Because I like making things and working with other people and don't really like meetings or traveling.
  - dman 11y ago
    The biggest downward ticks to my personal net worth have been due to me relying on skills that I dont exercise often. Over time I have calibrated my judgement to mark the value of infrequently exercised skills to zero even though I might think I am a natural at them.
- MCRed 11y ago
  VCs are terrible at this. I can't tell you how many times in the past 20 years I've heard VCs say things like "you should move into [tangentially related area that we can't add value to that just had a big exit]" For instance, when youtube got bought, VCs were all interested in investing in online video companies. At that point, though, Youtube had already been bought! They were like 5 years too late.
  - dman 11y ago
    That might well be true, the point I was trying to make was that as an employee its dangerous to make decisions based on the belief that you are great at picking winning teams / companies. Sure VC's are bad it too, but theyre sensible enough to do it with other peoples money.
MCRed 11y ago
Here's what 20 years of experience working for startups has taught me: -- Either be a founder if you want to be there in the early days. -- Or join a "sure thing". EG: Google, Twitter, Facebook about a couple years before they went public were already household names and really well known. I don't know how much upside you get joining a sure thing like that, but that's how you make sure your options will come into money. Being employee number 5-100 of the average Silicon Valley startups is a losing proposition because the risk adjusted value of your options will never compensate you for your lost salary. (especially if you have to live in California- you're better off working for a startup in Austin than California due to the cost of living and tax situation. The higher salaries in California don't cover the difference.) And yes, blame me, I turned down being employee number 13 at what became a $6B enterprise software company. Would have been CTO or way up in the executive team because they were a bunch of biz guys who needed a hacker. Instead I worked for just a year for a small business (not really a startup this was before "startups") But it's damn hard to tell the difference at those early stages. And when questions like "what's the total number of shares outstanding on a fully diluted basis?" (back when companies would say "You'll get 10,000 shares!!!!111!!") are met with "sorry that's confidential" during the hiring process, it is a bit difficult to do proper due diligence.
- ryandrake 11y ago
  This seems like good advice. There's definitely a "valley" where low (but not "Founder-low") employee numbers get all the risk and disproportional reward. But, I wonder, really how much someone hired at Google, Twitter or Facebook a couple of years before IPO _really_ got. We're still probably talking "nice bonus" money rather than "life changing windfall" money. And, for "nice bonus" money, it makes more sense to go for the security of a public BigCorp.
  - harryh 11y ago
    If you were at Google as a mid level engineer in 2002 (2 years before the IPO) you DEFINITELY made life changing windfall money. DEFINITELY. Take whatever guess you seem have in your head and multiply it by 10. Probably more than that. (I started at Google in 2004 and did pretty well.)