Ask HN: My employee equity? • Hacker News Board

Re: Ask HN: My employee equity?

#21

Post by poof131 » Wed, Feb 03, 2016, 7:56 PM UTC

1. A promise of equity is a red flag. A professional startup puts this in writing. If things don’t work out, that’s what vesting is for.

2. Wearing all the hats and the only technical hat initially puts you a lot closer to founder status.

3. “landing projects” doesn’t sound like a startup, sounds like a consultancy. Taking reduced market salary here for equity doesn’t seem right, the equity will never likely payoff to justify it.

Step 1. Interview at big companies. Figure out how much you could earn (total comp: salary, bonus, and guaranteed equity). Also to get a BATNA.

Step 2. Value the startup. Account for professional investors, market size, likelihood of success, etc. Don't just go off what the founders tell you. Look at comparable startups and their exits.

Step 3. Figure out how much the money you gave up is worth. Multiply it by 4 (last year plus the next 3) then figure out the percent of the company. Would also probably double it for the risk you are taking. (Note: You should immediately vest the prior year and have no cliff for the three remaining).

Step 4. Negotiate from a higher starting point (I’m a sucker for putting out what I think is fair and having it cut). Be ready to walk with your BATNA. 5-10 percent might not be unreasonable with what you are bringing to the table, especially if this is more of a lifestyle business than a professionally backed startup.

Good luck and don't be afraid to move.

Re: Ask HN: My employee equity?

#22

Post by icedchai » Thu, Feb 04, 2016, 1:06 AM UTC

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…

All those investors are getting preferred stock, liquidation preferences, etc. Not all equity is treated the same and common stock is generally last in line.

For a 6 person startup where someone has made significant contributions, will continue to make them, and has taken a pay cut (in an economy with full employment), 5% does not seem unreasonable to me. If he's taken a pay cut, they probably don't even have funding yet, which means he should ask for more since it's going to be diluted massively later anyway.

Obviously if you don't ask for it, you won't get it. If you don't think you're worth 5%, why would they?

Re: Ask HN: My employee equity?

#23

Post by LifeQuestioner » Thu, Feb 04, 2016, 10:02 PM UTC

Also, ask for a pay rise it's been a year dammit.

Re: Ask HN: My employee equity?

#24

Post by rajacombinator » Fri, Feb 05, 2016, 11:24 AM UTC

Just get out. They're exploiting you. Leave, start your own consultancy, poach their clients. You'll probably be surprised how much they're willing to pay.