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Ask HN: How much equity should an early employee get?

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Re: Ask HN: How much equity should an early employee get?

#11

Post by javert »

grammarnazzzi wrote: post #7
relaunched wrote: post #4

If they are getting a salary, that's probably right. The general rule is the first hire gets about 1% and it goes gown from there. But, the range for 1-10 employees is about 1-0.1%. It doesn't sound like much, but think about it this way. 0.1 percent, when the company goes IPO at a 10 billion market cap is probably 40-50 million dollars. If you aren't getting a salary, but are working, you're a co-founder and the equ…

How much is the company worth today? That will tell you what the percentage points are worth.

In the $35 to $70 million range. I don't want to be exact, so as to not identify the company.

Re: Ask HN: How much equity should an early employee get?

#12

Post by javert »

2009mobile wrote: post #5

It depends on how much job experience your friend has (among other things already mentioned). It could range from around .1-.2% for a new grad to 1-2% for someone with 10+ years of experience in a more senior IC engineering role.

Thanks. He's a few years more senior than a "new grad."

Re: Ask HN: How much equity should an early employee get?

#13

Post by javert »

sp332 wrote: post #6
relaunched wrote: post #4

If they are getting a salary, that's probably right. The general rule is the first hire gets about 1% and it goes gown from there. But, the range for 1-10 employees is about 1-0.1%. It doesn't sound like much, but think about it this way. 0.1 percent, when the company goes IPO at a 10 billion market cap is probably 40-50 million dollars. If you aren't getting a salary, but are working, you're a co-founder and the equ…

Isn't there going to be a lot of further dilution between when a startup hires its 10th employee and when it goes public at $10B? Getting 0.1% to begin with is going to be a lot smaller when the money comes in.

Yes, I'm curious about this too. How much dilution should be expected? Is there a way to think about this? (OP here.)

Re: Ask HN: How much equity should an early employee get?

#14

Post by teryyy »

javert wrote: post #11
grammarnazzzi wrote: post #7

Earlier quoted context omitted.

How much is the company worth today? That will tell you what the percentage points are worth.

In the $35 to $70 million range. I don't want to be exact, so as to not identify the company.

0.2% of this would be $70k - $140k, which is a tad low for 4 years (especially for more senior employees) but isn't a rip-off IMO

Re: Ask HN: How much equity should an early employee get?

#16

Post by singron »

javert wrote: post #13
sp332 wrote: post #6

Earlier quoted context omitted.

Isn't there going to be a lot of further dilution between when a startup hires its 10th employee and when it goes public at $10B? Getting 0.1% to begin with is going to be a lot smaller when the money comes in.

Yes, I'm curious about this too. How much dilution should be expected? Is there a way to think about this? (OP here.)

I've heard 10-20% dilution each round (assuming the company is doing well), and probably 3-6 rounds before liquidity or indefinite illiquidity. Obviously there are circumstances outside of that, but that already ranges from barely any cumulative dilution to having a third of you original stake.

If the company isn't doing well, then dilution can be worse, and your valuation will also be lower, so you will own a smaller piece of a smaller pie.

Re: Ask HN: How much equity should an early employee get?

#17

Post by closeparen »

javert wrote: post #10
relaunched wrote: post #4

If they are getting a salary, that's probably right. The general rule is the first hire gets about 1% and it goes gown from there. But, the range for 1-10 employees is about 1-0.1%. It doesn't sound like much, but think about it this way. 0.1 percent, when the company goes IPO at a 10 billion market cap is probably 40-50 million dollars. If you aren't getting a salary, but are working, you're a co-founder and the equ…

.1% of $10 billion is $10 million. His share would be .2%, so $20 million. But that's not factoring in any potential dilution.

Now supposing it takes 8-12 years to see liquidity, compare to what you could make in a FAANG career… perhaps $4-5 million? Whole lotta risk for maybe 5x upside.

Re: Ask HN: How much equity should an early employee get?

#18

Post by [deleted] »

closeparen wrote: post #17
javert wrote: post #10

Earlier quoted context omitted.

.1% of $10 billion is $10 million. His share would be .2%, so $20 million. But that's not factoring in any potential dilution.

Now supposing it takes 8-12 years to see liquidity, compare to what you could make in a FAANG career… perhaps $4-5 million? Whole lotta risk for maybe 5x upside.

[deleted]

Re: Ask HN: How much equity should an early employee get?

#19

Post by relaunched »

javert wrote: post #10
relaunched wrote: post #4

If they are getting a salary, that's probably right. The general rule is the first hire gets about 1% and it goes gown from there. But, the range for 1-10 employees is about 1-0.1%. It doesn't sound like much, but think about it this way. 0.1 percent, when the company goes IPO at a 10 billion market cap is probably 40-50 million dollars. If you aren't getting a salary, but are working, you're a co-founder and the equ…

.1% of $10 billion is $10 million. His share would be .2%, so $20 million. But that's not factoring in any potential dilution.

I was doing quick math and was off by a factor of 10, inclusive of dilution. Sorry.
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