Ask HN: What would you do? | Hacker News Reader

Ask HN: What would you do?

4 pointsownershipopp7 comments

If you were given the choice of having:

A. 10% ownership

B. 10% profit, increasing to 20% over the next 8 years and a clause for the same % if the company is sold.

What would you choose?

Both options would be an officer position in the company.

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I think it depends on a few factors, namely:

- The likelihood of the company selling (consider both near or long term) or going public

- The difference between 10% profit and the salary you would make with 10% ownership

- How likely profit is to increase compared to the likelihood of the company selling

In other words, it totally depends on the company and the situation. A web design company will probably never get acquired or go public, and so ownership doesn't mean much, whereas if you're working on something that interests Google or Facebook, the chances of acquisition (and the value of ownership) increase exponentially. Then again, my reasoning is based purely on monetary gain - you should probably consider the impact of ownership on the company and your personal life/career as well.

Let me add some more information which is relevant. I have been with a company for 6 years now out of 8 years in business. We have grown from a bootstrapped operation running out of a garage to a company with a solid customer base and re-occurring revenue. We have no debt and are profitable. I didn’t start the company, only helped build it, so the owner is offering me options because of the value I bring. I see benefits for both options. I wanted to hear some other opinions.

In that case, own the 10%.

I would think that option A would be far more likely to be worth more. I can imagine that the company could increase greatly in value before turning a profit.

Assuming there is profit or at least value to begin with: Profit sounds better...but only if you never want to leave or cash out for a lump sum. If you can see anything in life that os attractive beyond this company, and you think it might be nice to have income coming in without direct effort while you pursue this Other Thing, then take the stock. You can always vote yourself more pay later if you own 10% of the equity.

I don't understand. 10% ownership implies 10% of the profit and 10% of the sale. Why would A ever be better? All I can think of is capital gains tax.

The main thing I can think of is that if I was 10% owner, and wanted to leave the company, it would have greater value than option B.

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