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Understanding Startup Offers

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Re: Understanding Startup Offers

#111

Post by alfiedotwtf »

qqtt wrote: post #3

It would be interesting to see some analysis comparing pre-IPO offers versus standard FAANG-style engineering offers and see what the monetary difference actually is. In the not-so-distant past, start ups were pretty much the only avenue to secure a multiple-million dollar personal liquidity event, in the off chance you join a successful start up, work your tail off, and the company gets to a point where that exit ha…

> It seems the only reasons to work at a start up these days are if you really really love building products, want to wear many different hats, are frustrated by the pace of big companies, and are stifled by the big company processes that dominate the day to day life working at these companies.

I can't believe this paragraph was written with a dismissive negative tone

Re: Understanding Startup Offers

#112

Post by wilsynet »

mcgingras wrote: post #23

I have an offer that vests over 6 years with a 1.5 year cliff. Is that normal? I'm used to 4 years 1 year cliff, but the CEO said that 1.5/6 are common for companies that "want employees who care about the long term"

And 1/4 is for companies that care about compensating employees fairly, while adhering to market norms.

Run away. This CEO wants to hold your equity hostage.

Re: Understanding Startup Offers

#113

Post by throwawaysea »

enra wrote: post #7
qqtt wrote: post #6

Earlier quoted context omitted.

With things like dilution mattering and stock options being popular vehicles for early stage start up it would be really interesting and elucidating to have practical examples to compare against. It's easy to understand a FAANG style offer in this context. You join Google in 2017, you get RSUs pegged at 800$ a share valuation, about 150k$ a year vesting, by 2021 those shares are worth 2800$ so you've earned about 2.1…

Yeah I wish YC or someone could provide some anonymized data on this across companies. And it's true that out of all startups, only probably 1% make it big. But the markets are growing fast and just this year there has been ~200 IPO which I think mostly are $1B+. From a tax perspective, RSU are probably worst. They are taxed on your W-2, effectively a bonus. If you make a lot, you pay max bracket federally and in you…

As someone entirely unfamiliar with the tax options and strategies here, is there a good guide you would recommend around all this?

Re: Understanding Startup Offers

#114

Post by throwawaysea »

keeptrying wrote: post #2

These set of questions are very thorough and will help you avoid 80% or more of the bad situations. I had to figure out all thsi on my own and most startups won’t answer these questions even after getting an offer. Some more question you might want to ask: - is there a double trigger clause? (If not then the founder can restart your vesting after an acquisition and do other nasty things.) - can I exercise my options…

What does “beating” mean here? Was that a typo, maybe for “vesting”?

Re: Understanding Startup Offers

#115

Post by keeptrying »

throwawaysea wrote: post #114
keeptrying wrote: post #2

These set of questions are very thorough and will help you avoid 80% or more of the bad situations. I had to figure out all thsi on my own and most startups won’t answer these questions even after getting an offer. Some more question you might want to ask: - is there a double trigger clause? (If not then the founder can restart your vesting after an acquisition and do other nasty things.) - can I exercise my options…

What does “beating” mean here? Was that a typo, maybe for “vesting”?

Yes :)

Re: Understanding Startup Offers

#116

Post by michaelcampbell »

mcgingras wrote: post #23

I have an offer that vests over 6 years with a 1.5 year cliff. Is that normal? I'm used to 4 years 1 year cliff, but the CEO said that 1.5/6 are common for companies that "want employees who care about the long term"

> "want employees who care about the long term"

Run away. Next thing they'll start in on how they're a family.

Re: Understanding Startup Offers

#117

Post by fatnoah »

mattnewton wrote: post #71
hinkley wrote: post #42

Earlier quoted context omitted.

I learned long ago that the most successful tech company I know is probably not the one I work for. Also that layoffs tend to follow drops in the stock price. I don’t buy shares on margin, so why would I want my nest egg invested in the company I work for? If I get laid off I’m poor twice over.

That's a great argument for working somewhere where the equity is liquid IMO. You can just sell public company RSU's as they vest and put them wherever else to diversify.

Yes, I sell everything on vest and save/invest the money instead.

Re: Understanding Startup Offers

#118

Post by cco »

onion2k wrote: post #110
cco wrote: post #108

Earlier quoted context omitted.

I'm aware of support agents at startups that are/were pulling down $300-400k/year in total comp in pre-IPO numbers. Presuming a happy path towards IPO, that total comp could end up being more like $600-800k, none of these people are Google L8 caliber but they will make money in that same ballpark. No idea what engineers were making, but probably much more than 2x a support agent.

Presuming a happy path towards IPO.. That's a big presumption. There were 407 IPOs in the US in 2020. That's not in tech, but in all industries. If you're pinning your hopes of 50% of your comp coming from an IPO event then you must be very happy with risk.

Right, its a risk, but are you aware of FANGs paying $200-300k/year for technical support staff? I'm sure there are some openings, but low six figures in cash and a chance at 3 to 8x at a startup seems quite attractive.

Re: Understanding Startup Offers

#119

Post by noodle »

nostrademons wrote: post #60
noodle wrote: post #54

Earlier quoted context omitted.

I think it's true if you add the caveat "only avenue for an average person". Not everyone gets the big liquidity event in the startup game, but also very few people actually get multimillion dollar comp packages at well established post-IPO companies despite how much it seems to get discussed here.

The startups that succeed do not generally have average early employees. Remember that founding a startup and successfully taking it to a large exit is a decidedly non-average outcome; the average startup fails miserably. I think that if you're seeking non-average wealth you should first strive to be non-average. There are a number of pathways to exceptional wealth, but all of them require being exceptional in some w…

Eh, I've been an early employee at several startups with successful exists. Each one had average early employees where the only thing they did that was truly exceptional was believe/commit in the cause early and stick it out. They helped the company get from point A to point B when others wouldn't. And they got great outcomes when liquidity arrived.

Being non-average definitely has better results, of course. But if you aren't, I do think there are still pathways for you at startups, while there generally speaking aren't at FAANG level companies.

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