Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

How to Choose a Startup to Work for by Thinking Like an Investor

triplebyte.com

Post reply on HN
Print view View original

51–60 of 154 posts

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#51

Post by dawhizkid »

icedchai wrote: post #39
dawhizkid wrote: post #38

Earlier quoted context omitted.

unless you are a founding engineer, that is not out of the norm even for the earliest employees (unfortunately) nothing is "very very risky" unless you are taking your entire salary in equity. if you are making a competitive base I think you'll survive any misstep choosing the wrong early stage co in the long run.

I was employee #5 at a startup and I got 0.5%. Another startup offered me 0.1% and a mediocre salary. I had to put the phone on mute while I laughed.

I wouldn't pick an early stage co to join just based on the % of the company they offered. 0.5% in something worthless is still 0.

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#52

Post by dragonwriter »

joshe wrote: post #49
dawhizkid wrote: post #30

Earlier quoted context omitted.

That is not true. You keep whatever you vest (i.e. typically stay at a company at least 1 year). That is the same for stock options. Typically companies that offer RSUs have achieved scale (your Ubers and Stripes of the world), so yes the upside is lower, but the "pros" are that it's more obvious to you what the value of the grants are and you don't have any cost to exercise them like with options. These companies kn…

Sorry have to delete these, not comfortable with these comments sitting on the internet forever.

> Nope, the "stock units" that you "vest" will expire after a few years.

When they vest, you either get (1) actual shares, (2) the cash equivalent (I think that option may only be available for publicly traded stock), or (3) at your option, retain the RSU for conversion at a later date.

Unconverted deferred vested RSUs might expire (and vested stock options definitely expire), but—unlike options—there’s almost never a reason not to convert an RSU (deferring for later conversion may make sense, but it's essentially always better to convert before expiration.)

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#53

Post by icedchai »

dawhizkid wrote: post #51
icedchai wrote: post #39

Earlier quoted context omitted.

I was employee #5 at a startup and I got 0.5%. Another startup offered me 0.1% and a mediocre salary. I had to put the phone on mute while I laughed.

I wouldn't pick an early stage co to join just based on the % of the company they offered. 0.5% in something worthless is still 0.

I wouldn't either... The team was good and the product was technically interesting.

(The startup that offered me the 0.1% didn't have either of these qualities.)

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#54

Post by arachnids »

OiNG wrote: post #14
arachnids wrote: post #4

Earlier quoted context omitted.

Hrm, the parallel feels really forced to me. You can invest money in multiple startups at the same time, to hedge your bets. You can't do that with your time if you plan on working full-time.

Its not even about hedging but about diversification. If you are in a position where you can't diversify fully, you should require a higher return on investment in order to take on the risk. For example. If you could bet on a coin flip 100k times at $1 a bet, you might be willing to accept getting paid $1.01 per win. But if you had to bet $100k on a single coin flip, you would likely need the payout to be much greate…

Both are viable strategies. You diversify when you spend time working for startups across different sectors in the hope that some might succeed in their own area. You hedge when you work for several competitors in the same area in the hope that one of them will win in the end.

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#55

Post by dawhizkid »

sulam wrote: post #43
dawhizkid wrote: post #35

Earlier quoted context omitted.

Even with (a) it's tough. If you're employee 1-13 you're getting maybe 10-20bps. At a unicorn valuation that is $1-$2m before you take into account dilution, liquidation preferences, taxes, etc etc etc.

If you're employee 1, you should be getting 1% or north of that. If you're employee 13 you're probably getting 25-50 bps if you negotiate.

Outside of a very senior employee #1, I think the point is that even achieving a unicorn valuation does not guarantee extremely early employees much wealth, at least more than you'd get going down a more traditional big co path.

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#56

Post by mrnobody_67 »

Best risk-reward is VP or SVP level at Series C or D company which gets you options for 1-2% of the company... switch every 18 months to diversify and build a portfolio but negotiate 10 year exercise window on your options when you leave rather than the standard 90 days.

Thousands of execs doing that around Silicon Valley working through Daversa and other executive recruiters (who themselves get $85K-$100K per executive hire).

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#57

Post by Epenthesis »

dawhizkid wrote: post #35
ryandrake wrote: post #29

Earlier quoted context omitted.

And really, only a) offers a meaningful shot at “getting rich”. A late stage growth company is not going to 100X its equity value in 5 years. No rank and file employees are getting f-you money there. If there’s one thing I’ve learned after two decades in the industry it’s if you care about earning good money, you can either 1) gamble on the 0.01% chance that you picked the right startup or 2) get on to the Senior Exe…

Even with (a) it's tough. If you're employee 1-13 you're getting maybe 10-20bps. At a unicorn valuation that is $1-$2m before you take into account dilution, liquidation preferences, taxes, etc etc etc.

Only a single data point, but I was #13 at a (now) unicorn and was offered 45 bps for a new grad role. This was 7 years ago, though, so maybe the market's changed.

(I, in my infinite wisdom, traded it down to 25 bps for 15 k$/yr more in salary. Whoops)

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#58

Post by joshe »

joshe wrote: post #28
dawhizkid wrote: post #19

Earlier quoted context omitted.

IMO there's only two paths that really makes sense now when considering a private co. Either a) join super early (e.g. penny strike price) with a meaningful % of total company (at least 10 bps) OR b) join late stage growth co that offers RSUs over options (e.g. "Softbank" stage cos). Joining a "middle" stage co where you are offered expensive options is the worst, since you've missed out on the early upside and you t…

Sorry have to delete these, not comfortable with these comments sitting on the internet forever.

Sorry have to delete these, not comfortable with these sitting on the internet forever.

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#59

Post by kelp »

kbutler wrote: post #16

By working at twenty of them, expecting 15 to fail, 4 to not completely fail, and one to go big?

This is about my career. 8 startups, earlish employee at 6. 1 mediocre IPO, and 1 very successful IPO.

The rest basically failures or zombies that made me no extra money.

Probably a little more lucky than most.

Re: How to Choose a Startup to Work for by Thinking Like an Investor

#60

Post by maxxxxx »

wolco wrote: post #21
davidw wrote: post #9

Earlier quoted context omitted.

How likely is it that you as a potential employee get to see the books and know what's going on like that these days? Honest question; seems like it's a tougher thing to get access to than for a VC, but maybe I'm wrong.

They (founders),are use to showing investors so it has never been an issue. Don't try the same with a small business. You will probably get kicked out.

I have asked several companies about financials and they never gave any meaningful information. I got the impression that as an employee you aren't supposed to ask any questions. This is acceptable only for investors and upper management.
Post reply on HN