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Questions to Ask Before Joining a Startup

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Re: Questions to Ask Before Joining a Startup

#121

Post by pound »

jasode wrote: post #54
PacifyFish wrote: post #34

Earlier quoted context omitted.

I disagree. The most common way to predict payout is to compare to other companies' exit valuations. E.g. "Oh, company X got acquired for $250 million. We do something similar. If I own .025% of the company, I'd make $62,500 if we exited at that valuation. Cool." It's important to be aware of dilution events so that you realize when you accept the offer that your .025% will be more like .008% if you're lucky enough t…

>It's important to be aware of dilution events so that you realize when you accept the offer that your .025% will be more like .008% But you're repeating the same error of prioritizing the wrong thing: dilution. What employees ultimately care about is their wealth calculation: shares_multiplied_by_price . Example of the type of math people actually care about: 0.008% (because dilutions) a $1 billion company is $80k 0…

Could you also add two lines: 0.008% of a $100 million company and 0.025% of a $1 billion company?

When you join early stage start-up you know only how much %% of a company is offered to you at the moment, not the future exit value.

Re: Questions to Ask Before Joining a Startup

#122

Post by XCSme »

seibelj wrote: post #42

The only valid reasons for working at a seed-stage / series A startup: You are a founder. They are working with a technology or in an industry that you specifically want to work with and it is very hard to work on it professionally, and doing side projects are infeasible. You need experience and you have no other option to get experience. You are getting a significant title bump that moves your career forwards. Inval…

Stability is bad yes, but work life balance can definitely be good in a start-up.

Re: Questions to Ask Before Joining a Startup

#123

Post by jiveturkey »

lazerwalker wrote: post #32
maddening wrote: post #28

I believe that equity is mostly SF thing. One of my friends works in a startup in Berlin where he was offered equity as one of the founders (10th engender or sth like that). Chances that he will be able to liquidate them in foreseeable future is non existing. Nobody else that I know was offered an equity, even though quite a lot of my friends work for well funded startups. I worked in some and nobody offered me anyth…

FWIW, Germany specifically has complicated tax laws that make equity tricky. Namely: if your equity ever increases in value — e.g. if your startup raises a round of funding and gets a higher valuation — you owe capital gains taxes on the increase, even if the equity itself isn't liquid (which it might very well never be). There are workarounds, but they're a hassle. None of this is an issue in the US, where you're on…

> None of this is an issue in the US, where you're only taxed when you sell.

Nope. In the US, you may be taxed when you exercise, and will be taxed again (against the new basis) when you sell. Whether or not you are taxed at exercise is a very complicated matter.

Keep in mind, when you are granted stock options, you don't actually have any equity. You have an /option/ to acquire equity. The taxable events are the acquisition of that equity and the subsequent liquidation of it.

Re: Questions to Ask Before Joining a Startup

#124

Post by freewilly1040 »

jiveturkey wrote: post #118
seibelj wrote: post #42

The only valid reasons for working at a seed-stage / series A startup: You are a founder. They are working with a technology or in an industry that you specifically want to work with and it is very hard to work on it professionally, and doing side projects are infeasible. You need experience and you have no other option to get experience. You are getting a significant title bump that moves your career forwards. Inval…

valid: you do not enjoy big company politics. (you’d rather have small company politics) valid: you want a sense of ownership and responsibility. if you don’t perform, there is a noticeable effect on the company. valid: you want to be in an environment where others are just as committed as you to the success of the company. you want to treat your work as an endeavor, not as a means to a paycheck.

I think the implicit point is that if you are NOT a cofounder those feelings of ownership are unlikely to be matched by reality. As a non-founder you do not have the input and upside of an owner.

Re: Questions to Ask Before Joining a Startup

#125

Post by balibebas »

Here's some advice. Don't feign passion. If you could give to shits about the product wait for a better opportunity. Next. Your coworkers are competition. Treat them as such. Next. Ask for at least 20% more than you'd settle for but only after you receive an offer. Last. Don't become a JAP. You're welcome.

Re: Questions to Ask Before Joining a Startup

#127

Post by jiveturkey »

> This could be a difficult choice for someone who doesn’t have much cash on hand.

This is a vast oversimplification. The entire section on equity is very, very deficient and should just be disregarded.

This article is a fine start, but it still needs lots of work.

Re: Questions to Ask Before Joining a Startup

#128

Post by samblr »

jakecodes wrote: post #116
seibelj wrote: post #42

The only valid reasons for working at a seed-stage / series A startup: You are a founder. They are working with a technology or in an industry that you specifically want to work with and it is very hard to work on it professionally, and doing side projects are infeasible. You need experience and you have no other option to get experience. You are getting a significant title bump that moves your career forwards. Inval…

I joined GitLab as #29. My work life balance has never been this good. I've been working here for ~3 years, my benefits have been excellent, I have learned so much. GitLab may be an anomaly and YMMV, but it has been the best company I've ever worked for, period. Nothing has comes close. In the end I love what I do. I don't agree with this post.

would you mind sharing how much equity was granted at gitlab ?

Re: Questions to Ask Before Joining a Startup

#129

Post by Judgmentality »

jakecodes wrote: post #116
seibelj wrote: post #42

The only valid reasons for working at a seed-stage / series A startup: You are a founder. They are working with a technology or in an industry that you specifically want to work with and it is very hard to work on it professionally, and doing side projects are infeasible. You need experience and you have no other option to get experience. You are getting a significant title bump that moves your career forwards. Inval…

I joined GitLab as #29. My work life balance has never been this good. I've been working here for ~3 years, my benefits have been excellent, I have learned so much. GitLab may be an anomaly and YMMV, but it has been the best company I've ever worked for, period. Nothing has comes close. In the end I love what I do. I don't agree with this post.

> GitLab may be an anomaly and YMMV

I think this is the crux of his argument. Of course there are outliers, but 90% of the time (I don't know the actual percentage, but I'd venture it's around there - if we're only talking about money I'd say 99.9%) someone will be happier if they go to a more established company.

And people are often disillusioned when their equity becomes worthless, because for years they were told that would be worth millions and they accepted low salaries because of it.

Of course sometimes it does work out great, and I'm happy that it did for you! But statistically, you are incredibly lucky.

Re: Questions to Ask Before Joining a Startup

#130

Post by mbesto »

ummonk wrote: post #119
mbesto wrote: post #113

Earlier quoted context omitted.

> You are getting a significant title bump that moves your career forwards. To add to this. The title of "early member of " holds a lot of weight in SV circles. Whether or not you legitimately helped those companies in the early days, it's a strong signal that you are valuable. And those doesn't have to be a company that necessarily had a huge exit or has a strong economic reputation. For example - early engineer of…

The fraction of startups that achieve that level of name recognition is even more miniscule than the fraction of startups that achieve successful exits and let you break even financially.

100% agree - which is part of my point...it's a very irrational view that more often than not doesn't net a high return.
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