Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Ask HN: My employee equity?

news.ycombinator.com

Post reply on HN
Print view View original

11–20 of 24 posts

Re: Ask HN: My employee equity?

#11

Post by fokker »

meric wrote: post #8
NhanH wrote: post #7

Earlier quoted context omitted.

This is good advice. However, realistically you will have to rely on their kindness in the end. No matter how much equity you will negotiate right now, in the next 5-6 years there are ten of thousands things that will dilute/ make it obsolete. You should ask for your equity right now. But take note that if the negotiation doesn't go well, whatever you got might not be of any value, act accordingly.

>> This is good advice. However, realistically you will have to rely on their kindness in the end. I agree. Maybe one way to go about it, organise a one-to-one coffee, talk about what you've been through, basically what you've told us, and tell them how you feel about equity, and what you're worried about. This will build the rapport that will make it easier for them to be kind.

Absolutely aware of dilution and all - it's more a matter of principle. I've worked my ass off and surely should have some entitlement to the company of helped build.

I was originally offered stock options in a staff pool - but I'm not happy with that. That will dilute so much and be worth nothing eventually. They're aware of this which is why we're discussing equity.

So hard..

Re: Ask HN: My employee equity?

#12

Post by icedchai »

fokker wrote: post #9
kasey_junk wrote: post #5

It sounds like you are the first employee? If so 1-2% seems to be the norm.

Ok cool, this is roughly what I had in mind. Yes, first employee.

1% is way too low as a first employee, unless this is something that's literally going to be worth 50 to 100 million USD.

Ask for 10%. Accept 5%. Walk away at 1%.

Re: Ask HN: My employee equity?

#13

Post by meric »

fokker wrote: post #11
meric wrote: post #8

Earlier quoted context omitted.

>> This is good advice. However, realistically you will have to rely on their kindness in the end. I agree. Maybe one way to go about it, organise a one-to-one coffee, talk about what you've been through, basically what you've told us, and tell them how you feel about equity, and what you're worried about. This will build the rapport that will make it easier for them to be kind.

Absolutely aware of dilution and all - it's more a matter of principle. I've worked my ass off and surely should have some entitlement to the company of helped build. I was originally offered stock options in a staff pool - but I'm not happy with that. That will dilute so much and be worth nothing eventually. They're aware of this which is why we're discussing equity. So hard..

Yes, you have more leverage before you sign the contract to join the company than after...Use it or lose it...Your contract is your entitlement.

Re: Ask HN: My employee equity?

#14

Post by kasey_junk »

icedchai wrote: post #12
fokker wrote: post #9

Earlier quoted context omitted.

Ok cool, this is roughly what I had in mind. Yes, first employee.

1% is way too low as a first employee, unless this is something that's literally going to be worth 50 to 100 million USD. Ask for 10%. Accept 5%. Walk away at 1%.

This doesn't seem to jibe with reality^. Most of the literature [0] [1] [2] suggests that the first 10 employees split 10% of the equity (with founders receiving 50% and the rest left over for VC and later employee pools). Y Combinator for instance only takes 6%. Sequoia is said to take 30%. Suggesting that an employee (any employee) is worth the same as YC to the markets seems like a hard sell.

[0] http://themacro.com/articles/2015/12/splitting-equity-among-...

[1] https://gist.github.com/isaacsanders/1653078

[2] http://blog.samaltman.com/employee-equity

^ I'm no expert on equity and am a "get paid with american dollars" kind of guy...

Re: Ask HN: My employee equity?

#15

Post by bobby_9x »

You are replacable. You can try to give them an ultimatium and threaten to leave. But they may just show you the door.

Even if they don’t now, when things get better, they will probably be thinking about ways to reeuce their risks by replacing you or dividing your responsibilities.

Most people in your position don‘t get much equity. Even if you do, it‘s usually diluted down to nothing with rounds of funding or you never see anything when the company crashes and burns.

I’ve been there more than once. It’s much better to just work for a salary that you are worth and forget about equity.

It’s a carrot used to prevent you from leaving when things get bad.

Re: Ask HN: My employee equity?

#16

Post by paulcole »

fokker wrote: post #10
paulcole wrote: post #6

Your only leverage is getting a new job and/or straight up quitting. Unless you're willing to do either of those, they're going to keep dangling that carrot. Force their hand and say you'll have to seriously consider other offers unless there's an equity package coming from them within a week. Only do this, however, if you're willing to have your bluff called. If you're not, you have no negotiating power and will be…

I do have some upper-hand in that they simply cannot afford to replace me - they'd need to employ 2-3 new people plus all overheads of getting them up-to-speed with our process, adjusting to team dynamics etc.. Thanks for the advice.

How many people have you worked with who have required 2+ people to replace them when they left? Personally, in about 10 years "professional" experience, I've worked with 0.

I'm willing to accept that perhaps I've worked with non-exceptional people (I am one myself). But really consider whether your employer would actually hire 2+ people to replace you. Your domain knowledge is worth something and the cost of switching is high, but if your employer is paying below market, would they really pay below market for 2+ new people?

What I'm trying to get at is the fact that your perception of your value might be significantly different from your employer's perception. And if that's the case, you really don't have much leverage.

Re: Ask HN: My employee equity?

#17

Post by AznHisoka »

fokker wrote: post #10
paulcole wrote: post #6

Your only leverage is getting a new job and/or straight up quitting. Unless you're willing to do either of those, they're going to keep dangling that carrot. Force their hand and say you'll have to seriously consider other offers unless there's an equity package coming from them within a week. Only do this, however, if you're willing to have your bluff called. If you're not, you have no negotiating power and will be…

I do have some upper-hand in that they simply cannot afford to replace me - they'd need to employ 2-3 new people plus all overheads of getting them up-to-speed with our process, adjusting to team dynamics etc.. Thanks for the advice.

You only have the upper hand if they can't replace you. If push comes to shove, and they can 3 people to replace you, that's not as strong a hand.

Re: Ask HN: My employee equity?

#18

Post by [deleted] »

fokker wrote: post #10
paulcole wrote: post #6

Your only leverage is getting a new job and/or straight up quitting. Unless you're willing to do either of those, they're going to keep dangling that carrot. Force their hand and say you'll have to seriously consider other offers unless there's an equity package coming from them within a week. Only do this, however, if you're willing to have your bluff called. If you're not, you have no negotiating power and will be…

I do have some upper-hand in that they simply cannot afford to replace me - they'd need to employ 2-3 new people plus all overheads of getting them up-to-speed with our process, adjusting to team dynamics etc.. Thanks for the advice.

[deleted]

Re: Ask HN: My employee equity?

#19

Post by JSeymourATL »

> I have poured my heart and soul in to the company.

First-- take out the emotional aspect of your contribution (I know this is difficult).

Can you calculate your impact on the bottom line? How did you help them save money/make money?

Breakdown all of your job deliverables-- compare & contrast difference with what they would likely pay at market rates. Based on your brief description, you might easily be the equivalent of a $200K/year guy and a full-partner in the business.

Assuming they agree conceptually-- and recognize your contributions have been vital to the teams success. Give them options (not ultimatums) on moving forward from here.

Re: Ask HN: My employee equity?

#20

Post by poof131 »

kasey_junk wrote: post #14
icedchai wrote: post #12

Earlier quoted context omitted.

1% is way too low as a first employee, unless this is something that's literally going to be worth 50 to 100 million USD. Ask for 10%. Accept 5%. Walk away at 1%.

This doesn't seem to jibe with reality^. Most of the literature [0] [1] [2] suggests that the first 10 employees split 10% of the equity (with founders receiving 50% and the rest left over for VC and later employee pools). Y Combinator for instance only takes 6%. Sequoia is said to take 30%. Suggesting that an employee (any employee) is worth the same as YC to the markets seems like a hard sell. [0] http://themacro.c…

Saying there should be a standard number for the first employee is like saying there should be a standard valuation for every startup. Sure, YC throws out a fairly generous standard valuation, but they are choosing top notch startups and trying to cultivate an entrepreneur first mindset.

To roll into any random startup and say, “I guess 1 percent seems fair” is silly. 1-3 percent is fairly standard for the first employee of a well-backed (YC / VC / Quality Angel) startup, where professionals are taking a calculated risk because the payout could be huge. They are really overvaluing every startup, but know that 1 out of 10 will pay off enough to make it up.

One percent probably isn’t fair for someone taking a reduced salary at a “startup” financed by someone’s uncle targeting a niche market. The limited upside will never pay enough to justify the money lost. If the startup isn’t financed by professionals, I don’t see 1-3 percent and reduced market as reasonable. Even then, I think it’s questionable and really depends on the product, market, founders, how far along things are, and what you bring to the table.

Certainly the value you provide and what you can negotiate are the critical parts, but I feel that a lot of startup pay is exploitative, taking advantage of younger workers who don’t understand what is going on, that the real payday in a startup is the equity and they probably aren’t getting a large enough percent to justify the risk. Why do startups payout so handsomely for founders and investors, but employees are supposed to be learning and doing it for the love?

Post reply on HN