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TLDR Stock Options

tldroptions.io

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Re: TLDR Stock Options

#121

Post by xxSparkleSxx »

Pyxl101 wrote: post #90
xxSparkleSxx wrote: post #74

Earlier quoted context omitted.

I'm at a startup now. When I was looking for a job last year, I had 3 offers and this startup was the lowest in terms of compensation and while the other two offers were higher they were with large corporations. While I'm a little disappointed in my pay, I get a ridiculously flexible schedule, work from home whenever I feel like it, I put in some extra work last weekend so my boss just told me to take tomorrow off (w…

One thing to be aware of is that titles given by small and medium-sized companies are viewed differently than titles at large and well-respected, well-known companies. For example, someone who is a VP at a startup might equate to a typical Manager at a larger company. Someone who is a CTO or Chief Architect at a startup might be a Senior Engineer at a larger company. Large companies have an approximate scale in mind…

Absolutely agree. It's funny, first time my boss brought up upping my title my response was "it really doesn't make a difference, but sure that's fine."

Because of my lackadaisical response it never got changed. Couple months later my boss's boss brought it up because they needed it for some form and she asked if I wanted an even higher title than what I was offered initially. I said "sure."

I don't expect much from it, but every stupid signal helps next time I'm job searching.

Re: TLDR Stock Options

#122

Post by startupempl0ye »

blackflame7000 wrote: post #119
bagels wrote: post #112

Earlier quoted context omitted.

I had a similar offer. $0 pay and maybe 1% equity. Sent them a spreadsheet explaining how inappropriate the offer was.

Were any of you guys able to negotiate a better offer? I am in a similar position where I have been offered comparable salary but only 3% equity as the 4th member. Not sure it's worth giving up the job security without a higher stake.

It's not. If you are getting zero (or virtually zero) pay, you are a founder, not an employee. Founders usually get equal split.

Re: TLDR Stock Options

#123

Post by startupempl0ye »

mikekij wrote: post #9
eries wrote: post #3

Our goal with building this was not to be comprehensive, but to give founders and employees a way to have a more productive conversation about options and what they are worth. Too many startup employees I meet don't properly value the options they have, and too many potential hires don't negotiate for the right things, and wind up disappointed. We hope this will take a small step towards correcting this problem.

Tools like this are really helpful for startup employees. Thanks for sharing! Looks like there are some hidden assumptions about liquidation presence etc. Might be good to add a slider for that. (My employees would do pretty well at a $25M exit!)

Really? And you sure, once money is on the table, magically the priorities onto who is getting the money wouldn't change?

Re: TLDR Stock Options

#124

Post by sjg007 »

duderific wrote: post #34

I have a bunch of options in my company, but I don't know what the total number outstanding are, so I have no idea what percentage of the company I own. 1) Is this a common scenario? 2) Is there a way I can find out what the total number outstanding are?

Buy one share, ask to see the books.

Re: TLDR Stock Options

#125

Post by austenallred »

evancharles wrote: post #108
austenallred wrote: post #55

Earlier quoted context omitted.

I completely disagree. It's really not hard to find a company with great product market fit, say series B, get a bunch of equity, a decent salary, and wait a couple years for your equity to be valuable. Assuming the company is successful (of course there's risk there, but by series B a lot has been mitigated), your equity will likely be quite valuable. I actually think, risk adjusted, that's the easiest way to make a…

If this is easy for you, you should quit engineering and run a growth equity fund.

> If this is easy

If what is easy? Making a few million in a few years is never easy, but I don't know of a better way to do that on a risk-adjusted than joining startups after product/market fit.

And for what it's worth I don't build very much anymore, unfortunately

Re: TLDR Stock Options

#126

Post by sjg007 »

godelski wrote: post #72

I find a more important question is "What percent should I ask for?" The company I work for is about to get major investment and they are transitioning from an LLC. Only the 3 founders have equity currently. As engineers we have no idea how much to ask for. Because we have already been working without equity. How do we account for the years we've worked? Or that our salaries aren't that great right now.

Lol you need leverage, then ask for something reasonable.

Re: TLDR Stock Options

#127

Post by waterhouse »

ryandrake wrote: post #107
feral wrote: post #105

Earlier quoted context omitted.

I'm not sure what you mean by 'expectation of one case' here, but just to clarify: rolling a ten-sided dice, 10 times, gives a 65% chance of rolling at least one 10. So you still have a 35% chance of zero 'wins'. I can't comment on the rest of your model, but its worth keeping in mind how the binomials shake out.

Ack, you're absolutely right. Don't know where I was going with the hypothetical example but my math was totally wrong.

Actually, your statement was entirely correct. "Let's say 10% of start-ups succeed ... You would need to join 10 of these start-ups ... to have an expectation of one case [of success]."

It is a true statement that the expected number of successes after 10 tries would be 1. It is also a true statement that your chance of zero successes after 10 tries is 34.8%. (The balance comes from the outcomes that include multiple successes.) It may be that the latter is the more relevant and interesting statement to make, but your math was totally right.

;-)

Re: TLDR Stock Options

#128

Post by pmiller2 »

ryandrake wrote: post #73
orthoganol wrote: post #69

Earlier quoted context omitted.

> Joining a series B startup and waiting a couple years is the easiest, risk adjusted way to make a bunch of money. Sorry, what?

I'm glad I'm not the only one who did a double-take at that statement. The key qualifier is "risk adjusted", but that's not really meaningful from the employee's standpoint: You can only bet on one company at a time. Imagine what kind of stock investments you'd make if you were only allowed to invest in one stock at a time. Let's say 10% of start-ups succeed to the point where employee 100 makes "a bunch of money", w…

What about staying for 1-2 years per company? Then, you can diversify twice as much as if you stay 3-4 years per.

Re: TLDR Stock Options

#129

Post by countryqt30 »

bumbledraven wrote: post #33

From a purely monetary and risk-based viewpoint, whether to join a start-up depends on how much money you already have. Suppose you regard tldroptions.io's probability distributions and outcomes as correct, and the only thing you care about is maximizing the long-term rate of goal of your capital. Then the Kelly Criterion ( https://en.wikipedia.org/wiki/Kelly_criterion , a.k.a. Fortune's Formula) says that you should…

What is wrong with the traditional approach? - (Startup): 0.3 * 0.8+60.3 * 0.2 = $12.3 >> $0.9

Re: TLDR Stock Options

#130

Post by fapjacks »

bagels wrote: post #112
tsm wrote: post #103

I'll​ never forget when a startup tried to poach me to be Employee #2 or 3 and refused to even match my previous salary and suggested that I really wasn't taking their equity (.15%, I think?) seriously enough. I told them that if they had a billion dollar exit in five years it still wouldn't bring me up to what I wanted, and then they said, "Well, all the tech guys we talked to said $YOUR_COMPANY overpays by 20%. We…

I had a similar offer. $0 pay and maybe 1% equity. Sent them a spreadsheet explaining how inappropriate the offer was.

I had the very same offer. The founder made this big brouhaha about telling everyone he wanted to compensate the engineers "very well" to build his vision, and he made a point to say the compensation would be so much better than at a typical startup. The guy had a pretty big vision for a technical product/service that would need good engineers. I nibbled the bait and found out that his "amazing compensation" was $0 salary, and 1% options! Not even shares, just regular options. Yeah, let me sign right up for the "golden" handcuffs for zero dollars. It was infuriating that a veteran startup founder would make this lowball offer to employees (not even like cofounders). I've been working in startups for twenty years, so it was astonishing bullshit to me. I'm not sure how he was able to sign anybody else on. Needless to say, that company didn't make it more than eight months. The only team he could build was really heavy on the business side, and then a couple of (obviously) incredibly inexperienced developers.
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