Who pays when startup employees keep their equity? • Hacker News Board

Re: Who pays when startup employees keep their equity?

#241

Post by marssaxman » Thu, Jul 07, 2016, 10:05 PM UTC

shon wrote: post #31

It's interesting to see the popular response to this thread being one where people think employees are better off with salary over options. This seems crazy to me as I have watched many close friends cash out options from companies including Google, Yelp, Apple and Pandora and buy houses (some with cash), start companies, become investors and/or take long sabbaticals with the proceeds from their options. With salary…

My experience has been that you never get enough influence over the company's success to make a significant difference, and the options don't pay off frequently enough to rely on.

For my own part, I've been at this for over 20 years and I've never come close to making any significant amount of money from options. They have lost all incentive power. Pay me cash money now, and I'll invest it however I please.

Re: Who pays when startup employees keep their equity?

#242

Post by marssaxman » Thu, Jul 07, 2016, 10:06 PM UTC

Artemis2 wrote: post #171

morgante wrote: post #142

Earlier quoted context omitted.

The odds for startups are a lot closer to a lottery than they are to blackjack.

Of course, but it's about control over your chances of winning big

You have no control unless you are part of the core management team and even then you don't have very much. Startup options really are a lottery, and just because other people sometimes win doesn't mean you can actually count on getting there yourself.

Re: Who pays when startup employees keep their equity?

#243

Post by 21echoes » Fri, Jul 08, 2016, 3:09 AM UTC

danieltillett wrote: post #206

21echoes wrote: post #205

Earlier quoted context omitted.

Because startups are, effectively by definition, equity rich and cash poor. Trading $100k/yr in ISOs for $100k/yr in cash across 10 employees increases your cash burn by $1M/year, which is make-or-break for a lot of startups.

But this doesn’t work if the employees doesn’t value the ISOs. If I want to hire you to come and work at my startup and you will only come if I pay you $200K then I either have to give you $200K cash or cash and some number of ISOs that you value at 200K as a package. If you don’t value the ISOs and I offer you 100K cash and ISOs that I consider are worth 100K then I have just offered you 100K. My value does not equa…

Of course, no one is saying that companies and employees have to value ISOs the same, but no one is saying employees who value ISOs at zero should be working at a startup either