TLDR Stock Options
tldroptions.io
tldroptions.io
If you can accept the risk great, but again assume you’ll never see a penny from options or far far less than you might think (as the calculator highlights nicely).
If things go well you’ll get a nice bonus. Not life changing for the vast majority of people, but a nice financial surprise.
The mistake most people make is accepting far too little cash comp on the grounds that their options may be worth something some day. When they turn out not to be they get burned twice. First on not getting that money period, and second on not having higher cash comp all along which means they also missed out on compound savings or investment with that money.
Net net see options for what they are in most companies—-a way to “pay” people when the company can’t really afford to pay people.
A "reasonable person", or a more commonly used "rational agent", is an idealized notion that doesn't actually exist in a real world. Actual humans are not expected-utility-maximizers. See e.g.[1].
Also importantly, the scenario (evaluating the value of option-based compensation) is not like "guaranteed $1000 or a 10% chance of a $1 million" scenario you're describing. Rather, it's like "pay $50-100k/year in opportunity cost for entry to the lottery in which you can win some unknown prize that's almost surely below $5M, at even more unknown probability". Even an expected-utility-maximizer, a "reasonable person", cannot really make a reasonable calculation of the expected utility.
[1] - https://sci-hub.tw/https://www.sciencedirect.com/science/art...
In fact, that's exactly what it is, whenever you're taking stock options into account for compensation be sure to consider how big of an investment (in loss of salary) it is and whether the potential payout and the risk seem logical. If you think that making that big of an investment is too risky for your well being (even if, in the average, it'd pay out better over a lot of plays) then don't take it.
We exist for a limited amount of time and large games of chance like this (even if they have an expected return) are not irrational to decline.
Turning down an offer can be perfectly rational. I do not know why I am being accused of advocating for always taking options. All I'm claiming is that they aren't always worth zero, and assuming such is an irrational decision. And it's an entirely avoidable irrational decision that can be addressed by considering your own risk preferences, foregone salary, tax consequences, expected company outcomes, professional development, &c.
It's a nice bonus that _might_ pay something out. It's not a replacement for a proper salary.
That said, I can appreciate the desire to get skin in the game. Would love to see research on how necessary that is, though.
Actually, even then, i'd just take the cash comp instead and invest it into FAANG options. You can do that on almost any brokerage.
That's a strange assumption to make. If anything, I'd argue that people who think they are somehow smarter than others because they're an engineer/programmer/whatever are more likely to put too much faith in their intelligence and make financial mistakes.
> His advise is the rational approach
Being smart is orthogonal to being rational.
Only if you know 1. The Cap Table 2. Your founders' and boards' predilections for exits 3. Potential future rounds 4. Where the market will go
When you don't know these, you can still create a probability distribution, but price will likely be zero because the inputs have to have massive brackets for potential values.
>"Only if you know 1 The Cap Table
Are candidates or regular employees ever privy to the cap table? I have asked about it many times when a recruiter has tried to sell me on the joys of options in lieu of pay. Even after accepting a job I have routinely been rebuffed on getting a response to inquiries about the cap table.
Let's change it to make it slightly more realistic - on offer are options which have a 1% (at best) chance of being worth 1 million in 10 years or a guaranteed higher salary over 10 years worth 300k more. It's not quite so clear cut in that case, and depends greatly on the circumstances and judgement of the person making that call with very limited information.
I think it's more reasonable to assume they are worth 0, as the majority of options end up at 0, and the probability of making more through options than salary is nowhere near that in your example.
I also don’t think it’s really comparable to the lottery. It’s like playing the lottery if you could easily afford to have a 1-5% chance of winning... in which case it wouldn’t be such a bad idea to play for many people.
Different strokes for different folks and all that, but I do think it’s wrong to imply that it’s always wrong to take a calculated risk like this when given the opportunity.
Really? Roulette has odds of 37:1 for a single number which is about a 2.7% chance. Would you take $300k that you could otherwise earn in salary and place it all on a single number? The payout would be 10.5 million which far more than anyone I know expects to get from their stock options even with a pretty good outcome. You'd still be insane to walk into a casino in Vegas and make that bet.
- I could pay off the 300k over the next 8 years.
- The loss would be tax-deductible.
- I could somehow know for sure I'd have a job where I'd still net at least 120k per year during that period (after the loss).
- It would somehow grant me multiple years-worth of extremely valuable skills and experience, new friends and connections, and the chance to be intellectually challenged and satisfied.
I think that would definitely be the most popular roulette wheel in Vegas!
For a lot of good software engineers, it's more like:
Option A: $1.5mm (5 years total comp at FANG)
Option B: $0.5mm (5 years startup salary) + 0-10% chance of $0-20mm.
Given all the unknowns in B, I'd definitely take A.
I can't speak for Facebook, Google, but I did work at Amazon for about 5 years (and take this with a grain of salt because this was 2003 through 2008 on the ops side (supply chain specifically)). And you learn the Amazon way of building software. You use Amazon tools, frameworks, and style. And while some of that knowledge is definitely applicable to other jobs I've held, most of it is not. It is a little bit more now because of AWS (similarity between internal tools and AWS offerings).
So yeah...with Option B you might not hit the lottery. But the skills I learned from multiple attempts at Option B are more applicable in my opinion. And that's worth something.
Obviously speaking from my own experience, but this hits the nail on the head. The things I learned at startups were parlayed into jobs at the bigger companies later in life.
Also, on the original topic. I've been a part of three startups. One with trivial equity, one with options worth about 0.1% of the company, and finally one with options worth 1% of the company.
The second company is still going and is a lifestyle business, so those options were basically worthless since the owner may not sell for many, many years. The first and third companies were acquired, but at values that made the options worthless, so I got a long term capital loss for the first company and nothing for the third.
For the third, I was an executive, so I got a stock/cash package from the acquiring company for (very) low seven figures, but the stock itself was worth nothing.
So, I'm 3 for 3 on "successful" startups, but 0 for 3 on actually cashing in on any equity.
- Was it basically an acqui-hire?
- How much was it sold for?
- How much was raised totally?
- How much was the cumulative compensation package above the stock price given to key employees such as yourself?
Thanks
"I took the one [road] less travelled by, and that has made all the difference" ;-) It doesn't matter which way you go, years from now you'll end up thinking the decision was an important one.
When they have monthly expenses, or understand the power of compounding interest? A reasonable person would take the guaranteed.
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Even if you make your example less hyperbolic (for an employee):
$100k vs $90k + a 5% chance of making $50k in 5 years.
Where, the higher and guaranteed salary also has 3% annual COLA (or further freedom to job switch) raises, has a 4% 401k match; The wise person would take the guaranteed income.
The reality is that in business as an employee you’re ability to project the odds is limited at best. You simply don’t have the information to make that calculation.
Obviously there’s a spectrum of risk, which is why most people don’t work for minimum wage plus options. But it’s pretty clear that in a world that hasn’t seen a tech recession in a long time, employees without the perspective of living through 2000 may not appreciate what can happen, and will happen again.
Money has diminishing returns and when you're potentially going to be below water when it comes to mortgage, food, utility, even the occasional vacation for sanity - then a smaller guaranteed sum can be more valuable than a larger expected sum.
However, some options grants are not transferable in that fashion.
The reasonable person can then calculate the range of payouts for each option as [$1k..$1k], ev $1k, for the cash option, and [$0..$1M], ev $100k, for the gambling option. Not all gamblers only use expected value as their only metric. Some people also use the minimum return. Those people would take the guaranteed $1k, in cash, and walk.
Even if the gambling option had a minimum payout of $1000, thus making it the strictly superior option on paper, just by those metrics, it might also only pay off 3 days from now, when the $1000 on the spot, could be used right now, possibly in some other psychologist's thought experiment on gambling behaviors.
If you look at early stage startups, I think it's pretty clear that the EV[startup options] < EV[invested market value salary delta]. This holds true over nearly all startups, and nearly all people who have the option of early stage options. There are outliers, sure - but to a 1st approximation you aren't in them.
So you have to fall back on "how much more fun/cool is this startup job than other things I can do". And realistically, getting rich off a startup isn't a rational plan for nearly all people. Asking yourself, "what are the odds I recoup most of the lost salary?" is a more like it. And for typical seed round start up, that break even is going to be a few percent, dilute as needed to look at different rounds.
Of course this doesn't help you choose between two different under market salaries with options, either...
So assuming the options are worthless is not all that unreasonable. Options are bonus, not part of the real compensation. Unless the company is already successful or your share in the company is large enough that it really is worth the risk.
But if in the most optimistic scenario your options end up being worth $1 million, but it's going to be years before they're worth that much, the chance they're going to end up worth that much is small, and in the mean time you're severely underpaid, then it's probably not such a good idea.
Can this reasonable person afford to pay this month's bills?
Many young startup employees I talk to are under the impression that they own .x% of the company because their options have vested. That is not true.
After exercising your options the company could shut down or it can be acquired with a valuation less than what your options and strike price were based on. In both of these cases you would be losing money.
From looking at tldroptions.io, it's just taking an empirical approach to guess the P(X) value.
But that easy thing leads to:
a. Having no basis to negotiate your options. (X% of $0 is always $0 regardless of X)
b. Your comp will always look like crap compared to a publicly traded company.
FAANG companies aren't paying that much because they get so much more value out of employees: they are paying that much more because that's how much extra they have to pay to convince people to take the jobs they are offering.
*I'm putting FANG into T1, the next tier down of liquid companies into T2, large pre-IPO companies into T3, and everyone else into T4 -- the interesting part obviously is that company salary tiers can and do obviously change if/as companies grow successfully.
I’m not against options, but if what you will make over the next X years based on liquid comp is not something you are totally OK walking away with as your total comp over that period then one is probably making a bad choice.
b) If you're at a pre-ipo company with options, your comp is crap compared to a publicly traded company. If you're counting your lottery tickets as real money, you're a fool. You can't even sell them on Sharespost for the valuation the company tells you.
It’s like saying lottery tickets are a bad investment idea. It’s true for far more people than it isn’t.
I'd bet if you picked a promising company (say Series B+ on the breakout list) your likelihood of a positive outcomes is >=10%.
Not high, but very different than lottery tickets.
Regardless, at least a lottery's odds are fixed. For a startup not only do you have a direct impact on the outcome, but there's near-infinite number of internal and external factors that can make a company fail, or, very rarely, succeed.
I think that's one of the big selling points on options: It's a lottery ticket but you are directly capable of affecting your odds. Theoretically if a group of 100 people all feel that way, they should be able to do some amazing things!
Don't be Jack from Jack and the Beanstalk -- don't trade your cow for magic beans if you need to eat. Only make the trade if you won't be worse off if those beans don't turn out to be magic.
As a general rule of thumb, I'd recommend taking the valuation of the company's last financing round and halve it. Then, multiple this valuation by your projected vested ownership percentage (and subtract any impact from exercise price).
The biggest reasons you want to discount the company's last private valuation are liquid preference and risk intolerance.
This rule of thumb is most effective if the last private valuation was recent and completed on standard terms.
Edit: I see a lot of people recommending that people value their options at $0. Imo, this is an irrational approach for most tech employees who have a non-zero tolerance to risk. Yes, options are like a lottery ticket but that doesn't make the ticket worthless, and you need to know how to properly value the ticket when a company offers you an option between shares and salary.
The problem is, there is no reliable way to value the options in most cases. Valuations are not very realistic, especially for young companies or companies that are overhyped. Your ownership percentage might also get diluted as a result of future financing rounds.
Besides all of that, the chance that your options will end up being worth zero is the most likely outcome at most startups.
As an employee, you don't have statistics on your side, so you have one shot at being right.
Further, many VCs are managing OPM other people's money (OPM). You are investing your own money.
If you have options from before the current valuation, or if you were offered RSUs, or underpriced options, you could use the valuation as a guess of the value, sure.
In my experience, an order of magnitude just happens when the company is at a very early stage (e.g. post seed). By the time the company is at Series C/D, the 409A valuation is typically between 1/2 and 1/3 of the last preferred round, or higher.
huh? You go on to describe exactly how it's helpful.
"IPO" is just shorthand for the price at which your options become liquid. There are many spreadsheets you can find to calculate this, round-by-round so that you can run scenarios. Just search for 'cap table excel' or 'cap table example'.
The beauty of this tool is the interactive slider. Of course it's very simplified for the sake of ease of use, but it is fun and helpful. And they do a great job being crystal clear about the oversimplification, and point you to resources to learn a lot more! It's really great.
Could it be better? sure. But then it'd start encroaching on the author's commercial tool (captable.io)
But ultimately, it should be done objectively based on the reality of the company and the options presented.
A lot of people play the lottery, the prize is millions and the price is a buck or two. If your income is ~100k and you're valuing your options at a buck or two then it sounds like you're pretty much joining the view that options are worthless.
I will have to say though getting a check worth 5 figures and cashing that bitch felt great!
The largest sign-on bonus I've personally seen was one that I myself received in an offer from an hedge fund in NYC: $150k (I didn't take the job anyway since I hate the cold weather, very stupid of me).
my second startup i've worked at just got acquired and my options are about enough to buy a new iphone :)
we went through multiple rounds of funding so shares got diluted...However we fucking made it , which is nuts.
Intuitively, I would imagine being #2 in a company that ends up being worth 8 digits would at least be a solid start towards real wealth, far above the $60k range.
I have a friend who made about 3x that in a FTSE 100 company over the same timeframe a 5 year share save (paid a lot less tax as well)
I did enjoy at one point in the first dot com boom being a dollar millionaire along with the rest of the poptel coop.
Now at 28, I would still say experience was worth it. However again im' not the CS degree 4.0 straight to FAANG guy who can make 100/yr (or whatever it is) straight from college. I had to hustle a bit to gain the codebro skillz & then find a job. I didnt have FAANG kissing my ass to pay me out the wazoo to 'change the world' with 'machine learning and AI'. News flash, yall are just selling shit , you aint changing the world. You just make really large paychecks and get pampered :p
For my situation , it was pretty amazing. I'm not on the standard path of CS degree + working at FAANG. I'm a DIY-er , self taught. Given where I am now, 23 year old self would be fucking amazed. We built and sold a digital company from nothing to some mega corporate suit bros worth billions of dollars!
Glad you have a good head on your shoulders. Still, that must have been tough.
I feel most people will overestimate their chances of success which will give them an unrealistic number.
The uncertainty of startup equity makes it impossible to do the same probable value calculations you can do on lottery tickets.
If im offered a job that comes with options but pays $1000/yr less than I’m making now, I have to ask myself: why not just keep my current job and spend that $1000/yr on an investment with similar risk/reward profile? If I’m willing to do that then I should just keep my job and buy that investment. If I’m not willing to do that, than I shouldn’t take the job, because that’s in essence what it would mean. In either case I shouldn’t take the job.
When you select a new funding round of a company: "Seed", "Series A", etc. Can you keep the same IPO amount? As it is right now the IPO amount slider will keep the same position, not amount, so if your not paying attention to the IPO amount it makes it seem like 0.01% in a Seed round is worth less then in a Series A round.
Where by clean I mean: the acquiring company acquires the shares of your company for the stated acquisition value.
These days, it seems like acquisitions often end up using retention packages for key employees, and letting the rest go. The actual per-share purchase price is low compared with the total acquisition value, so even if you're fully vested, not that diluted, etc. -- of a $1B acquisition, very little will go to the actual common stockholders.
In such a scenario, why would investors ever want to put money in a company if the bulk of the value came via retention packages (which they can't tap into), as opposed to the per-share purchase price (which they can tap into)? I am talking about investors who put money in "clean deals", so 1X liquidation preferences, non-participating, which from what I've seen in the Bay Area is fairly standard.
If the terms are clean (assumption above), common holders not making any money on a $1B acquisition would just mean that investors will at best recoup all their original capital, without any meaningful return, so why bother?
I understand that the investors have a lot of money to play with and can afford to lose a good chunk of it, but in the scenario you are picturing they would get screwed even when the company itself becomes a massive success (as defined by the $1B acquisition), which is exactly the needle in the haystack they look for.
Am I missing something? Are there some obvious ways through which investors with 1X preferences can make a lot of money while wiping out common holders?
But I'm not saying "common holders make no money" in literal terms. A $1B acquisition might look like $100-500M stock consideration, certainly not nothing.
It happens because, these days, founders often retain control of shares and board even all the way up to billion-dollar acquisitions, and their incentive to share all (or even most) of that acquisition money with their investors is, frankly, not that high -- the investors would rather a deal go through than the company fail, and they don't have enough control to dictate terms.
The acquiring company cares most about the product (often) and about retaining key talent, not how much the investors get.
So, in a founder-controlled startup, no one who has power over an acquisition has a strong incentive to reward shareholders. Perhaps this is an inevitable result of founder control, and will cause the pendulum to swing back the other way?
Anyway, it's worth noting that this doesn't apply to IPOs.
That's the part I was missing. I know of a few companies currently valued at > $500M, and for all of them the founders still own about ~15-20% (together), and the investors across all rounds (usually they are at a Series D stage) have enough equity (50%+) and voting seats to basically not just let the founders do whatever they want, and these companies are very healthy business wise. It's just the standard cost of taking every new round with a 15-20% dilution, it really doesn't take that much to lose the majority.
I assume that in order to raise money at terms much more favorable than these, the company must be doing incredibly well, to the point where the investors are going to think "well, this company is going to get so big that I'll make big bucks anyway". Not all companies that sell in the high 9 figures can command such privileged treatment from investors, in my opinion. And in some cases, the investors-founders relationship is not necessarily adversarial, several seasoned entrepreneurs raise money from investors with whom they've been cultivating deep business relationships over the years, so they definitely have a "common goal" even if technically one could screw the other. Of course this might not happen with a more naive 20-something startup founder, who might get eaten alive by investors.
But I take your data point as very interesting, and something I hadn't considered.
Really my point is that ultimately there's a level of good faith action required on the part of both founders and investors in order for even the best case scenarios to yield money for common stockholders. It's one reason why reputation is so important in business.
No employment contract you sign with an employer is ever "ironclad", so you do your best to make sure they're reasonable people who understand the value of reputation and that business is "iterative" -- in the game theory sense!
Of course I would have an information advantage as an employee, and also perhaps a possibility to slightly effect the outcome. But at the same time I'm locked up at the startup, and putting my salary and equity in the same basket.
(Maybe this has been covered in other comments, but couldn't find it)
That or taking the people who fail to get FANG offers / naive jrs.
Not saying that the employees are to blame but I'm sure there's plenty of good ideas out there that just don't have the right people trying to implement it.
Or that's such a small amount that it really doesn't contribute.
Really just wondering what that number is.
If you are a startup that just raised 10M$, you just can't go around and pay a few good engineers $500k a year in cash compensation (which is what they would make at FAANG, since the RSU portion of the compensation is basically cash-equivalent, perhaps discounted at 80% if you want to be conservative), even if "a few" is a very small group.
You'll have to settle with offering them $180k base + stock options that on paper might bring their compensation to $500k, 5-10 years down the road, and any reasonable good engineer should value them at 10% of their pitched value, if not less.
It just really never makes sense to join a startup for financial reasons, and I say this as a person who was lucky enough to have a ~1M$ windfall from stock options of a former startup employer: amortized over the amount of time I spent at that company (4 years), I'd have been much better off financially had I been at FAANG the whole entire time (which is where I am now btw, completely done with the startup bs).
Startups & VCs started getting a lot of money in the global search for yield as interest rates dropped to 0 and QE started printing money and giving it to banks who would invest it. The google/apple/etc wage collusion lawsuit increased the amount of competition for engineers. FANG was losing engineers who would rather do their own thing for a little bit less. The H1B lottery system limited the supply. Housing started getting even more expensive in the SFBA. And as you said, FANG prints money so they can afford to keep on going up in the bidding wars.
Compensation started going up in this competitive system as a result until we are at the point we are today, where startups are definitely not competitive comp wise to being at FANG.
That's the truth about startups. Now I don't work at a startup, I make butt loads more money, and have much less fun.
I noticed that an employee getting 1% options in a seed stage company doesn’t seem to get anything unless the exit is > $35M. Not sure that applies to most seed stage companies. Employees of a company I know well would start seeing proceeds after an exit >$5M.
It's because their model assumes "$41 million" was invested into the hypothetical seed company over 4 rounds. Therefore, the company has to exit for more than $41m for the employees' common stock to be worth something.
You have to click on the "How We Guesstimate" button to see their underlying financial assumptions.
In my opinion, this type of "what if?" calculator would be easier to understand if they explicitly showed the intermediate calculation steps in the user interface. A more obvious "show your work" would educate people and preemptively answer questions such as yours about why a $5 million exit nets $0 for employees.
This tool might spark someone's curiosity, but we purposefully built it for a group that didn't want to have to learn about venture finance and still wanted to work at a startup.
But I agree with the premise that the UI for this tool has to be super simple.
Thanks for building this!
Rather than complicating the model here to try to illustrate the difference between exiting at this stage versus raising another round, we went with an approach that demonstrates how preferences work. Even if the number is lower for a Seed company that exits at Series A or higher if it exits at Series C, there is still a number under which you'll get nothing even if the company has a profitable exit.
The information you actually need is the # of issued shares, which is some fraction of # of authorized shares. You will have to make an assumption as to what that fraction is. From personal experience running several startups, I would recommend using 70%.
So, you need to:
1) Find out what state your employer's corporation is registered in
2) Request annual report from state's entity search website (e.g. https://icis.corp.delaware.gov/Ecorp/EntitySearch/NameSearch...)
3) Calculate issued shares based on some assumed fraction of authorized shares.
Given that, I tend to join the group that value options in an early stage private company as "worthless". If the cash comp doesn't work for me, it's unlikely the options will move the needle as I'll probably need to be there 5-9 years to actually see a positive event and I'll need to do that 5-10 times to have a solid chance of a couple of meaningful wins. Of course, some of the failures you can drop out after a year or two, but it's still many decades to have a reasonable possibility of a return from options.
It's hard enough for VCs who do this for a living and can make 10-50 simultaneous bets to come out well ahead - and the good ones have access to insane deal flow and all the docs during due diligence. Good luck being confident that you will beat that serially with limited deal flow and limited due diligence access.
To be clear, a certain proportion of people here DID beat that and are doing great with stock options, but the odds are not in your favor . . .
Really if you are in the bay area and consider only the financial aspect, working for FAANG for the low 200s is almost certainly better than a startup for the mid 100s plus equity.
Note, I choose to work for a non-FAANG company for non-financial reasons. I therefore don't work in the bay area for financial reasons (I was able to find a non-FAANG job for mid 100s somewhere that is ~40k a year cheaper for a mortgage).
That said, I like that it's conservative so you'll undervalue your options - it's very likely that they'll be worth nothing.
Truth is, niche companies with small burn rates can yield nice payoffs to investors even if the exit is $20 million. And cash-hungry dream-chasers can yield almost nothing to insiders even with a $80m to $100m valuation.
I'd like this model more if it had a second slider that let you move between "thrifty bootstrap" and "costly moonshot." Over the years, I've seen friends get surprised on both sides of the supposed $50m divider.
Really?
The scenario assumes the startup raised ~40M from investors, which is realistic.
So in that case yes, you can own 99.9% of the equity the company, but if it sells for less than the total amount raised, the investors will exercise their liquidation preference rights (typically 1X for clean deals), meaning that they will wipe you out completely and keep the 40M for themselves.
If the startup sells for 50M, the investors can then decide to either exercise their liquidation preference rights and get their 40M (leaving you with 10M, assuming non-participating rights), or they can decide to convert their equity to common and thus get 0.1% of 50M, and you take the 99.9%. They'll take whatever is the most convenient for them, which typically means they'll exercise their liquidation preference rights unless the company sells for more than what they valued it at during their round of investment.
On the other hand, there are some advantages that may make later companies less risky: the timeline to exit may be shorter (though that is less true in the case of an early M&A, which ~23% of the cohort found). The nature of the risks may change in ways that make it easier to evaluate. And cash salaries usually rise in the later stages, reducing the marginal cost to employees.
There was no stage at which venture-backed companies stopped being a risk, but that's also true of public companies that grant options: it is always possible that the share price goes down and the options are worth nothing. I think the takeaway is that in this 2006-2008 cohort, earlier startups were less at risk of running out of money that most people would assume.
However I agree that most cases stock option is worthless in early ages, especially if it needs VC money to keep the ship from sinking.
Some do grant RSUs (restricted stock units), which are usually taxable as income when you receive them.
So the standard is to hand out options with a strike price equal to the current fair market value. The employee eventually gets the upside, but not the downside.
As an employee, you want RSUs, not options.
Your startup RSUs won't trigger until there's a liquidity event, at which point _you_ are responsible for taxes. The RSU value will be taxable as ordinary income.
With options, the "bargain element" is only taxable as AMT income. For options for early stage companies, this improved tax treatment _generally_ makes them better.
Of course, there's probably also "participating preferred shares." I don't think it's possible to really understand that without putting on a blue pinstripe suit and bringing your $700/hr lawyer to the meeting. tl;dr it's like the Blues Brothers' rubber biscuit. "You Go Hungry Baaaow Baaaow Baaaow."
Don't forget: when you work for stock options / restricted stock / equity , you are an investor in the company. You buy your investment with your scarcest resource, your time. (The VCs buy their investments with a resource that is NOT scarce for them, money.)
Smart investors ask questions. Honest founders answer them clearly. This web site might be a really good starting place for your questions.
If the founders balk at your questions, don't invest. Seriously.
Gold is worthless in a famine.