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Just how much is that 2% really worth?

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Re: Just how much is that 2% really worth?

#101

Post by dreese »

imrank1 wrote: post #84
birken wrote: post #64

Earlier quoted context omitted.

Equity clearly has some value though, based on the fact that in any successful startup investors pay a lot of money for it. If you are considering taking equity, you should treat it like a potential investor would. Ask hard questions. Look at the balance sheet. Look at the company deck. Look at the previous funding rounds. Research the backgrounds of your potential coworkers. (If the company wont share this informati…

In my experience companies won't share what the percentage is of the stock you are getting. They just say you are getting X number of shares and won't tell you anything else. How do you verify what they are saying is correct?

Telling you total outstanding number of shares is required before you can have any idea what level of equity you are receiving. If they can't tell you that, then you have one problem. If they won't tell you, then you have another. Either way, I would be concerned.

Re: Just how much is that 2% really worth?

#102

Post by wahsd »

onion2k wrote: post #7

My advice to people who want to work in a startup is always very simple: Ignore any equity. If you'd take the job without any equity then take the job. If the equity is part of your reason for taking the job, you probably shouldn't take it. Base rate neglect[1] means we are terrible at evaluating the probability of equity being valuable. For every story about someone making millions out of their equity when the start…

It has always struck me as little more than a fraud when employees are hired with promises of equity and then additional rounds or other trickery simply dilute their share and contributions to approaching zero and they walk away having put their work, effort, and innovation into making the parasites of our society wealthy just for investing.

Re: Just how much is that 2% really worth?

#103

Post by Domenic_S »

georgemcbay wrote: post #89
eloff wrote: post #82

Earlier quoted context omitted.

I know you're not being serious about the bank thing, but I just want to say, if you're a programmer and you love what you do, and you're good enough to be choosy, don't work for anyone (especially banks!) whose main job is not software. There are a few exceptional companies, but mostly it's a good rule of thumb. Working for Dilbert's pointy haired boss is just not a recipe for happiness - who cares if it pays well.…

Well onion2k's premise was that you wanted to make millions in software. If that is your #1 priority, then working in finance is probably your best bet (unfortunately, IMO). Working for a "pure" software company is great advice if you are optimizing for overall happiness, but not so much for maximizing your income.

Like every industry, "finance" spans a wide gamut of jobs both low and high paying.

Re: Just how much is that 2% really worth?

#104

Post by adrianhoward »

eloff wrote: post #82
onion2k wrote: post #7

My advice to people who want to work in a startup is always very simple: Ignore any equity. If you'd take the job without any equity then take the job. If the equity is part of your reason for taking the job, you probably shouldn't take it. Base rate neglect[1] means we are terrible at evaluating the probability of equity being valuable. For every story about someone making millions out of their equity when the start…

I know you're not being serious about the bank thing, but I just want to say, if you're a programmer and you love what you do, and you're good enough to be choosy, don't work for anyone (especially banks!) whose main job is not software. There are a few exceptional companies, but mostly it's a good rule of thumb. Working for Dilbert's pointy haired boss is just not a recipe for happiness - who cares if it pays well.…

"I know you're not being serious about the bank thing, but I just want to say, if you're a programmer and you love what you do, and you're good enough to be choosy, don't work for anyone (especially banks!) whose main job is not software. "

I'd disagree with that. Some of the most entertaining bits of work I've ever done were for companies whose main job wasn't software.

The problem isn't companies who aren't focussed on software. The problem is companies that don't value the great things that software-oriented folk can produce. Unfortunately there are plenty of the latter in the software-focused end of the spectrum too.

Don't work anywhere that treats you badly. Sure. Don't work anywhere that doesn't value you. Sure. Don't work anywhere you don't enjoy yourself. Sure.

But I know some folk who are having excellent fun at banks. Solving stupidly hard problems that fascinate 'em, fostered by great management, and being compensated very well for their trouble.. I know others who have worked at large tech focussed companies that have had bloody awful stories of management idiocy. Hell — I've got more than enough horror stories from smaller tech-focused organisations.

Re: Just how much is that 2% really worth?

#105

Post by georgemcbay »

Domenic_S wrote: post #103
georgemcbay wrote: post #89

Earlier quoted context omitted.

Well onion2k's premise was that you wanted to make millions in software. If that is your #1 priority, then working in finance is probably your best bet (unfortunately, IMO). Working for a "pure" software company is great advice if you are optimizing for overall happiness, but not so much for maximizing your income.

Like every industry, "finance" spans a wide gamut of jobs both low and high paying.

Well, to be more specific, when I say "finance" I basically mean doing HFT/quant software development. High stress, high burnout, but also really high reward/bonuses on success when compared to most software jobs.

Re: Just how much is that 2% really worth?

#106

Post by rhizome »

dreese wrote: post #38
onion2k wrote: post #7

My advice to people who want to work in a startup is always very simple: Ignore any equity. If you'd take the job without any equity then take the job. If the equity is part of your reason for taking the job, you probably shouldn't take it. Base rate neglect[1] means we are terrible at evaluating the probability of equity being valuable. For every story about someone making millions out of their equity when the start…

I think about startup employee equity like this: Salary = compensation for doing the job Equity = compensation for taking the risk of working at a company with a high chance of failure Therefore, in the future, an employee with lots of equity should still be paid a normal salary/raise/bonus because the equity isn't "current" compensation for doing the job, but a reward for taking a risk long ago. But ignoring equity…

I had a job offer once that gave me two options to choose from, which was really cool.

In which they suckered you into a false dilemma. You should always reply to those stupid negotiating tactics with "Both. Higher salary and more options."

Re: Just how much is that 2% really worth?

#108

Post by dasil003 »

IgorPartola wrote: post #81
diego wrote: post #70

Earlier quoted context omitted.

My former employees from IndexTank would differ. Our acquisition was life-changing to them. They didn't value equity at all when they joined, yet it worked out really well. You can think of employee equity as insurance against "I joined Facebook early and all I got was this lousy t-shirt."

That is really good for you and your employees (no sarcasm intended at all; it really is a good thing). However, this case is an outlier. The percentage of startups that straight up fail or at least don't get sold is huge. The percentage of startups that succeed and make it to a sale/IPO but don't get a high valuation at this point is huge. The percentage of startups that get sold/go public but don't pay out or don't…

I think people who equate startup equity with lottery tickets don't really belong in startups to begin with. The whole point of working at a startup is that you go there and you make it succeed. Now of course there is still luck involved, and you shouldn't be so naive as to blindly take every founder's change-the-world pitch at face value, but whether you are a founder or early employee you have to believe that you can make it work.

Re: Just how much is that 2% really worth?

#110

Post by Afton »

wahsd wrote: post #102
onion2k wrote: post #7

My advice to people who want to work in a startup is always very simple: Ignore any equity. If you'd take the job without any equity then take the job. If the equity is part of your reason for taking the job, you probably shouldn't take it. Base rate neglect[1] means we are terrible at evaluating the probability of equity being valuable. For every story about someone making millions out of their equity when the start…

It has always struck me as little more than a fraud when employees are hired with promises of equity and then additional rounds or other trickery simply dilute their share and contributions to approaching zero and they walk away having put their work, effort, and innovation into making the parasites of our society wealthy just for investing.

> making the parasites of our society wealthy just for investing.

Are they less parasitic if they just sit on their money, or are they parasites just for having the money in the first place?

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