141–150 of 158 posts
I.e. if a founder can expect a payout of $X for working 16 hrs a day he shouldn't be surprised if an employee; who can expect 1/100 of that, only feels motivated to work 8 hours a day.
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That's not really much different than the standard one year cliff.
Of course it is. All things being equal, if you're still employed a year later your stock vests. In his situation he'd have to start negotiations about his equity. That's a huge difference.
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Of course it is. All things being equal, if you're still employed a year later your stock vests. In his situation he'd have to start negotiations about his equity. That's a huge difference.
I don't agree. If he's indispensable he'd have an easy time getting equity after a year. If he's underperforming he'll be let go in just under a year to avoid the cliff...
The employee is the one getting the work done. And he's got to watch out for his bottom line like everyone else. If you're being promised equity without a written agreement, then take that into account- assume it's not even part of the equation and negotiate better pay or move on.
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I don't agree. If he's indispensable he'd have an easy time getting equity after a year. If he's underperforming he'll be let go in just under a year to avoid the cliff...
The biggest problem in his situation is there's not contract in place to keep the employer honest. There's nothing to prevent them denying they ever offered equity, nor to prevent them starting the clock on vesting at the time the option agreement is signed. "Here's a meager salary for now, and you'll have to trust us to do The Right Thing later." The employee is the one getting the work done. And he's got to watch o…
If you don't trust the employer, don't work there.
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.…
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So why the hell do startups bother offering equity? It seems like for the founders there are only downsides in offering it, while for the employees there is no upside at all. Perhaps a better model for a two founder startup looking for a first employee is to just find a third partner who will only take equity (that is in double digit percentages), then actually start paying only salaries to person 4+.
it's like a lottery ticket. odds are it probably won't be worth anything, might be worth a lot.
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I got an offer last year from a company who offered me a 25% salary cut from my current salary and some negligible equity percentage, and then got all huffy when I tried to negotiate the salary. In their mind, the equity was worth so much money, they could pay me peanuts and I should still take the job. It was a huge turn-off. The guy basically told me to go off. "Why bother with startups, then?" he says. Completely…
Also, if the equity is worth so much money, why are they even offering it to you in the first place? You'd think they'd want to keep it all for themselves.
Me: I'd rather be paid, say, $250k to do the work in a year and zero equity
Guy: But if the equity will be worth, say, $4 million in a year, why wouldn't you do the work for $25k?
Me: If the equity will be worth $4 million, why are you arguing over it - wouldn't it be better for you to pay me the $250k and pocket the remaining $3.75 million?
Guy: But the $4 million isn't guaranteed! That mightn't happen.
Me: My fucking point exactly!
And even after saying that himself, he STILL couldn't understand why I would turn down the equity...
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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?
to me, that's a red flag on multiple levels.
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…
This is actually a very good piece of advice.