Don't just accept promises. Ask for the 409A valuation, liquidation preferences, and pay bands. If a company won’t provide transparency, that’s your signal.
Equity is a lottery ticket. Salary is money in the bank.
My equity from 4 years ( employee ~60, grew to over 500 ): worthless. No one is able to exercise any options. They also readjusted when the valuation came below the total raised, making the value of my vested shares ~$13k ( down from ~$200,000 ) . They 'made us whole' by giving more shares with a new 4 year vesting schedule.
Startups have found ways to fuck everyone but the investors with equity. It's confederate dollars; funny money. Maybe some people get great deals, I don't know. From my limited experience at very successful startups, the only people who made real money were those able to parley huge bonuses or base salaries.
I am also convinced that investors believe it's the C Suite's responsibility to tear away any equity from employees to leave the largest pot for investors.
Terms and phrases I've heard verbatim from investors and/or founders:
"There's a thousand ways to screw minority shareholdeers."
"Cram-down" (repeatedly, like it is an ordinary thing to do, effectively repudiating or diluting away entire classes of debt and/or equity)
"I hate to lie, but you often have to." (said as if there is no choice in the matter)
"You have to screw the other guy before he screws you."
"If there's a problem in a joint venture and you put out the resources to fix it, you're the chump."
It is a good idea to not do business with people who say these kinds of things.
It is delusional to think you will be the special one who they actually treat fairly and not be targeted by their greed and lack of ethics.
If you are really lucky, you will escape and find an attny willing to take your case and win a lawsuit and still get to chase them for the judgement.
The only winning move is to not play.
(Not to say there are no honest ones, but it is really getting scarce, and many honest ones have left the biz.)
Work for good people with a history of moral dealing. A family member just had a life-changing payout because leadership was generous. A friend walked away from a company pre-pivot without equity for what became one of the decade's biggest acquisitions.
This stuff is lottery tickets, but real ones. You need to be smart about who you make your limited bets on.
And agreed, big cautionary note here shows that Windsurf having "founder-friendly" investors does NOT mean employee-friendly ones.
I had the option to sell some equity recently but it would have only been like $16K USD so I held... I had about $9K taken out of my salary to pay for those so it doesn't make sense to sell given the massive growth the app and not that much dilution... The financial gain barely covers the inflation.
It feels like both revenue and profits have been kept artificially low. $6.5 million per year revenue, still growing steadily, with a loyal customer base with 10% profit seems really good... A valuation of $8 million seems ridiculously low... Not even 2x revenue, for a tech platform with good lock-in factor (they sell a lot of licenses to schools)!
It's kind of amazing how bad a deal it is to work for someone else as an employee. Even if the founder is good and generous in many ways and the business side (which you have little control over as a developer) happens to work out pretty well, they can still pull all sorts of levers to make the deal bad. With this one, I'm going to wait it out 20 years if I must. A lot of the game is just timing, you gotta wait it out, sell at the top... Some people see a peak opportunity to cash-in multiple times in their lives, some people never see it! In my case, I haven't seen the top yet.
I never had any opportunity to make serious money ever. Never had an opportunity to pull the trigger and make even $100K. The best I ever got was in crypto, my crypto was worth $100K but I was earning like 100% annual yield and required a 1-month unlock period. So I made more than that by holding it for 3 years anyway...
I think my career story so far is quite interesting. Probably more interesting than 99% of the classic SV startup stories (at least what they say publicly). I've done some things nobody else has done. Made money in truly adverse environments where a lot of people hated my guts. I've seen people behave in strange ways. At times, I felt like I was almost breaking through the membrane of 'the matrix'; almost transcending my social class. But all I got for it was 3 years of passive income. I never had the opportunity to cash out big.
It's tough out there, so tough, it often feels fake/artificial. Often, it feels like you have to be 'chosen' and that's all that matters. Your work doesn't matter, how talented you are doesn't matter, how lucky you get doesn't matter (besides the luck of 'being chosen').
At the end of the day, money is like a river and people upstream from you get to decide whether or not the river will flow in your direction. When you understand that new money is created constantly and, just like the river, the water cycles between the mountain and the sea, you start to understand the value of positioning and 'being selected'. The people upstream will keep telling you that they don't control the flow of money; that the river flows naturally through the lowest valleys... It's your job to put yourself in that low valley... But really, they've built massive dams up there directing the water almost arbitrarily. You may be at the lowest valley but they're redirecting the water elsewhere artificially because it suits them better. Reality is that they can easily alter the path of the river anywhere they want and it has little to do with 'building something people want'. It's about building something the people upstream want... And sometimes they just want to help their existing friends; unfortunate for you if you are not their friend.
It's a catch-22; you need rich friends to get money but you need money to get rich friends. But I suspect it's way easier for a poor person to get rich by befriending a rich person than it is for a poor person to get rich without rich friends. The second approach feels like you're piercing through 'the matrix' because of all the weird almost conspiratorial resistance you might get (tech feels like one big club).
Sometimes you might accumulate some dirt on some rich people and that gives you some leverage over them but it's the kind of leverage where you have to keep coming back to them to get crumbs. I feel like you can never break through that way due to regulatory capture. You can only do limited damage to them and it's always costly to you. They still have the balance of power.
Some time ago I found a good formula to plugin numbers and get a valuation multiple. The questions above were the ones that really moved the multiplier. A major lot of “startups” are in the 1-2x range. The hot ones will peak at 7-12x.
I feel like they could easily bump up profits by $2 million just by letting go of people... But they could probably double the license cost per student. Although schools don't have much money, they are kind of slow and bureaucratic; set in their ways. It's a small cost for them anyway, once a system is part of the curriculum, they'll probably pay extra to avoid reorganizing the lessons.
A tech enabled business needs gross margins north of 70% to be attractive from a leverage standpoint, unless revenue is scaling very rapidly. Without these there’s no attractive exit opportunities.
0.2 % of that is nothing.
The only good reasons to do so are if you want to learn or make contacts so that you can found your own startup later.
In my pensive moments, one of the things about humans that makes me go "god damn" is how little money it takes for insanely talented people to just come and work for you.
You need to work with good people. There is no substitute for ethics.
Also you need not go for roles where they offer .3 % and make a big deal about it. Don’t take less than 1% minimum and as soon as two years pass by and you have carried your weight start looking for a new job. If they value you they will bump you up. It they don’t you will bump yourself up by going for a new job. And don’t be afraid to go for competitors if you believe in the value of the space.
They have the cash, if you have the leverage. Use it.
I value startup equity at ~$0, but if the salary is enough to live comfortably, that's fine.
$4.888
https://www.zillow.com/homedetails/86-Rittenhouse-Ave-Athert...
Only way to get a nice house for 300k now is to work remote in some podunk town for a big city salary.
It's not that it's cheap here, not by any measure, but it's not nearly so dire as y'all want to claim.
Plenty of people live in any city with less than that, but it is below the average income in many nice counties in the US.
Yes, housing is more expensive. A lot more. Everything else is way cheaper.
I've lived a thousand lives, spent most of the time as true quality time with people I love, and I still have a few years left in this decade of my life.
And I'm still further ahead, financially speaking, than >99% of other people my age. (To those asking, I tripled down on life after getting a remote job.)
The one year I spent 9-5 in an office as a traditional SWE was by far the quickest and least eventful year of my life. Also probably the saddest.
I'm very glad I just said "no" and walked away and simply lived. It was absolutely worth the risk. I would never trade these years for the ability to buy a house in the Bay Area suburbs.
I probably will be able to do that anyways, if I want to, even though I don't.
I will say though that travel is the main one that’s obviously independent of where you live (at least mostly). So that’s kind of nice.
8% of your waking life going to and from work without getting paid for it is dumb
It just doesn't stack up. This world is cooked. The steak used to be medium rare once upon a time, but now it's pure charcoal.
Lots of people are paying millions extra just to live up winding roads on a hill, where the commute is longer, and you need a geotechnical engineer to design your patio.
50 mins - what on earth? Take the train. Even a bicycle would be faster.
1. The neighborhood I grew up in in San Jose has 3, 4, or even 5 cars in front of every house. My working thesis is that despite being small, these are multi-generational homes, probably with the notional homeowners being the ones that were living there back in the mid-80s.
2. My aunt lives in a much nicer part of San Jose in the house that her husband inherited from his parents. Many of the other neighborhood homeowners are in the same situation, although there has been some flipping going on.
3. Three more boomers at the family event are all living in inherited houses, including one couple that has a pair of houses that they each inherited from their respective parents. They're not renting out the surplus, but instead have turned both into animal rescue sites.
All of these folks are grandfathered in to extremely low Prop 13 property taxes.
I miss knowing where the darkest place is for 50 miles in all directions. I never got to bike highway 1 from SF to Big Sur. My boyfriend and I would have an easier time finding jobs there. There’s better roads for car enthusiasts.
There was a lot of depressing tech saturation in the Bay Area, but there’s still good pockets of the pre-software culture around there if you’re willing to live towards the edges and look for the weirdness.
I would also add, the forklift driver who bought the house for 40k in 1971, by state law (Proposition 13), is still paying 1971 valuation property taxes and contributing essentially nothing to local school funding, funding which is mostly covered by you according to a "new guy has to hold the bag" type scheme. In a state obsessed with fairness, a most unfair policy.
Should you wish to modify the property, conventional area wisdom is to just do so unpermitted. Boomers don't like construction because it increases supply and they want no supply, only demand, home price go brrrr. Environmentalists don't like construction because the more nature the better. Others don't like construction because they make it their business to set the vibe of the area as static and frozen. These political interests culminate in a construction permitting process that basically autorejects everything, paradoxically increasing public danger because everyone now does everything unpermitted.
Even the famously wealthy Steve Jobs ran afoul of it and couldn't buy his way out. He had a property he wanted to modify but they wouldn't let him touch it at all. So he just let it sit and rot to make a point. Ultimately the government agreed his plan was better than a rotting house.
my wife doesn't drive and we wanted to have access to good public schools and good transportation. this is not a given if you go more rural. The postbus goes maybe every hour or so.
the lakeside communities near Zurich are great and all of our friends live in one of them (on the same side of the lake of course). not living here would have severe effects on my wife's and our kids' social lives.
However then your interest rate is not 1%. The best I've seen is 30 year fixed, where you pay off your house is 2.5%.
I'm paying 0.65% right now, thanks to SARON going to 0.
It just does not make financial sense to pay it off even if could.
https://www.zillow.com/homedetails/221-Woodbridge-Cir-San-Ma...
You do have to pay interest taxes and maintenance, whether that exceeds the rent for an equivalent property is another question.
https://www.zillow.com/homedetails/5436-Agana-Dr-Santa-Barba...
https://maps.app.goo.gl/2aEXsdH9hU3o4SZw5 (winter, March 2012)
I'm used to seeing yearly or every-other-year streetview updates for locations I look at regularly.
That said, might be mixing up my broader impression with the interval of satellite photo updates in the google earth history. (but my bay area neighborhood does indeed have streetview history updating every year or so; obviously this is probably on the high end given proximity to tech companies...)
4br in only 2k sqft? For 2M? Please...
I'm saying $2.2M for a "shithole 1300sqft" doesn't make sense when you can pay $2M for a nice 2279sqft.
~"Not saying X, but... X."
How does my second sentence say the prices are reasonable? My second sentence is saying chasebank's friend did something that doesn't make sense. It's not saying the housing market in Santa Barbara is reasonable.
Are you intentionally ignoring you said "nice" for what most would consider to be a source of ridicule (4BR SFH in 2k sqft). BTW, you haven't made an argument about real estate differences. The smaller home might be a better deal.
And you're using a turn of phrase that is the opposite of your apparent intent.
I don't think most people would consider it a source of ridicule. (BTW, you omitted 279sqft.) In all the places I see discussing it online, I see tons of people saying 2279 sqft is a normal or even large size for 4BR, and only 1 person saying it's small[1-6].
The average bedroom size in the US is 132 sqft. The average master bedroom size is 224 sqft[7]. Even if we go with 224, with 4 of those, that's 896 sqft used by bedrooms, and 2279-896 = 1383sqft for non-bedroom stuff. I don't see why that's so bad.
>BTW, you haven't made an argument about real estate differences. The smaller home might be a better deal.
chasebank described it has a "shithole". So I assumed the real estate was bad. If chasebank was describing a house on a super valuable piece of land, chasebank should have mentioned that. It would be an important piece of information that would completely undermine chasebank's point. It would be misleading for chasebank to leave out that information, so I assumed chasebank didn't do that. Anyway, the real estate of the one I linked to seemed fine to me.
[1] https://www.familyhomeplans.com/4-bed-3-bath-house-plans-hom...
[2] https://www.coohom.com/article/how-many-square-feet-in-a-4-b...
[3] https://www.reddit.com/r/HousingUK/comments/vq293z/after_gen...
[4] https://www.quora.com/How-many-square-feet-is-a-4-bedroom-ho...
[5] https://houseplanfloorplan.quora.com/How-big-is-a-typical-4-...
[6] https://www.coohom.com/article/how-many-square-feet-in-a-4-b...
[7] https://www.crddesignbuild.com/blog/average-bedroom-size/
For the latter, isn't it odd how you cherrypick and dismiss?
1. Spuriously apply national averages (including a UK forum!!! LOL) to a way above average zip code
2. And conveniently dismiss another HNer's conclusion because they...didn't provide a fact needed for an argument that YOU are trying to make and could research yourself? This is unreal.
>"Yeah, even though I didn't ask, the defendent didn't tell me they were innocent or not, so I will dismiss further review and assume they're guilty."
You said "what most would consider to be a source of ridicule (4BR SFH in 2k sqft)". You didn't say that it would only be a source of ridicule in certain zip codes.
Whose conclusion am I dismissing? chasebank's? I think chasebank's conclusion is that housing is too expensive. I agree with chasebank there. I'm not dismissing that.
Shithole is probably overstating it, but $2.2m doesn't get you much in more expensive Santa Barbara neighborhoods. Here's a 3/1 1000sq foot house that sold for $2.2 in June that better represents what the parent comment was referring to:
https://www.zillow.com/homedetails/2430-Mesa-School-Ln-Santa...
A 4BR 2k+ sqft house in any of the good neighborhoods in Santa Barbara ( Mesa, San Roque, Riviera, Mission Canyon, Samarkand) would easily be closer to $2.5-3 million.
For example: 1900sqft for $2.6: https://www.zillow.com/homedetails/2818-Valencia-Dr-Santa-Ba...
2100sqft for $2.7: https://www.zillow.com/homedetails/3117-Calle-Noguera-Santa-...
800sq ft for $1.6: https://www.zillow.com/homedetails/512-E-Islay-St-Santa-Barb...
That first one you linked to must be priced based on building something new there. The Zillow listing even has pictures of plans for a new house.
Here's a 2270sqft 3BR3B for $1.9M that I think is actually in Santa Barbara (looks like the edge of Riviera), although it doesn't really have a yard: https://www.zillow.com/homedetails/533-Conejo-Rd-Santa-Barba...
That Conejo rd listing is less expensive mostly due to fire/landslide risk and the elementary school district.
How ironic that you now backtrack when someone else makes my point. You did no research, made a spurious claim, then doubled down.
That's not the same point as sblocal123's point.
Regarding the real estate location point, yes, you and caminante made the same point. caminante made the point convincingly and you didn't. There's nothing ironic about me changing my mind when someone makes a point convincingly.
You've embarrassed yourself.
I'm a digital nomad and have been traveling full time for 7 years now. It's great, it's a good balance of work/life balance but one thing you slowly start to notice is when you leave your country, no matter if you learn the language or how much integrate yourself into that country, you will always be an outsider to the majority in that country.
As an american you will always be a Yankee, Farang or Gringo and will carry the weight of the US collective.
Being a nomad is basically asking to start from scratch everywhere you go.
Even something like living in the countryside domestically would worry me (that is, longer times between calling for help and it arriving, then time to be transported to a medical centre or hospital, and then probably getting transported to the city anyway for access to advanced medical care).
I can cry that my dream flat in London is more expensive than I expected 30 years ago but that just shows how stupid I’ve been the last 30 years
Hey, at least he’s taking his LARPing as a douchebag ceo seriously. Easy vip invite for DND nights.
This becomes truer and truer the more of an employee and the less agency over the company's choices you have, but generally if you're not a co-founder (founding engineer doesn't count) equity traded off against salary is someone scamming you.
Not very good incentive or compensation, if you have to value it at $0.
the much bigger motivation is "keep the company afloat so i can keep drawing my salary", so just boring old non-equity paychecks provide plenty of motivation.
if you're an employee that thinks your contributions are so great that you are single-handedly juicing the stock price or valuation, you're probably wrong but if not... you should probably take those skills and found your own startup.
You can almost never get any info on equity until it's too late and you realize it's worth nothing.
Those questions are certainly worth asking but employees should also keep in mind that even if they do share that information your equity can still later be diluted away to worthlessness.
There's many opportunities for VCs and founders to screw you over. And that's assuming things go well enough for that to be an option lol
even finding a lawyer with the expertise to handle a case like this is not easy, its a very small world among those types of lawyers
"Wanted to hire me" as in they made an offer, or an earlier step? At offer stage, I've never had a company refuse to answer these questions. I don't have "dozens of companies" worth of experience though, maybe one dozen if that.
That said, everyone here treats equity of non-public companies as if it's toilet paper. Some of my coworkers got very lucky and very rich when our company went public, but that was also a long time ago now.
Yeah, because that is in your interests, not the engineer's.
They offered to sell me more shares
I countered that I'd been trying to dump the shares they already gave me and if the shares are truly worth X dollars they should buy them back from me
Anyway glad I quit
I always offer companies pushing equity hard to trade for cash at 10% of the highest number they try to get me to value it at. Nobody has ever taken me up on it, even when they really should have.
I always take more equity. I wouldn't work for you in the first place if I didn't believe in your equity.
If you’re an employee you can’t look at this like an investor would. Your risk profile is completely different. The write up is correct in that it’s basically a call option, correctly point out there is no market for it and then ignore the fact that zero liquidity means you can land a 747 between the bid and ask (if you get anyone to buy from you at all).
This a feel good number generator.
Sure, if you don't want to take a risk then look for a higher salary, and probably at a more established company because even if you have mostly salary and little equity a startup is still risky (and you're making it even more so by putting cash pressure on the company at that stage).
On the other hand, if you want a chance at a bigger payout, you'll want more equity. And yes, you may well not get that payout.
That's exactly why it is true. If every person who held early stage stock walked out of those events happy then no one would recommend they focus on salary.
Even if each risk is a good one to make separately, it isn’t always good to make both risks.
Early stage investors know that even the best startups have a fairly low chance of success, which is why they diversify by investing in a lot of them. The many failures are paid for by the few successes.
As an employee, you are only given stock in the one company you work for. Even if you think it will be a success, it isn’t smart to put all your eggs into that one basket. No investor would do that, and no employee should either.
If you are working at a startup, a lot of your eggs are already in that basket; your ongoing salary is dependent on the company continuing to succeed. If you take less cash for more equity, you are putting even more eggs into that same basket. If it fails, you are going to lose all the equity AND your salary.
You don’t want your investment risk and your salary risk to be that correlated.
Then there are non-unicorns. These may even start as maybe unicorns. But as soon as you know it's never going to be a unicorn, you can leave. Or stay, prospects depending. If you know it's never going to be a unicorn before you even join, you can think of it as glorified contracting. Done that too. Maybe lean on compensation rather than options because a whole lot of nothing is, tap-tap-tap, nothing.
BTW, VCs think along similar lines.
Stock options were always a lottery. But this takes the shenanigans to a whole new level.
Ask HN: How to negotiate stock options? - https://news.ycombinator.com/item?id=28401655 - September 2021
It's always worth offering to take equity as long as they agree in writing to not ever dilute your shares and vest them immediately. However, it's unlikely that any company will agree.
It's best to imagine compensation as exactly one's salary. Then (virtually) all surprises are good.
Such a privilege is also likely to be almost worthless - if the company succeeds and the round makes it worth more, you’ll win even with dilution. If the company doesn’t, then other clauses such as liquidation preferences will make your stock worthless, regardless of how much you own.
Without this provision, it's possible in many ways for the employee to be left with far less than $X, even if the company succeeds. In some ways <<<<<<$X.
The claim in the tweet was that they got 1% of the value of the diluted shares: e.g., on paper they should own 1% of $100m, but somehow they only got $10k out of it. There does seem to be a culture of this going around now -- the VC version of "Hollywood accounting". In a lot of situations it doesn't make much sense to me -- is it really worth poisoning the well of startup talent for the VCs to get $95m instead of $85m?
If the value of a company is $10m and the company asks an investor to give $10m in exchange for equity, the investor should own 100%.
If the value of a company is $20m and the company asks an investor to give $10m in exchange for equity, the investor should own 50%.
That's not investing, that's buying. Buying means the buyer gives $10m to the previous owners, at which point as you say, the previous owner owns 0% and the new owner owns 100%. But the company is in the same position as it was before -- the same amount of cash on hand as it did before.
For investing, you're putting cash into the company's account, which raises the total value of the company.
Value of the company before investment: intangibles + pre-investment cash - debt = $10m
Suppose I own 10% pre-investment; 10% of $10m is $1m of estimated value.
Value of company after the investment: intangibles + pre-investment cash - debt + $10m == $20m
Now I own 5% of $20m, which is still $1m of estimated value. The investor owns 50% of $20m, which is still $10m of estimated value.
In practice of course, there are different classes of shares which end up being paid out differently.
Under simple dilution rules, the Investor takes 50%, and the existing shareholders are diluted to 50% of their stake - the C-Suite owns 5% of 2 Million, 10 million as before.
If the C-Suite demands that their equity proportion remains at 1%, they’d suddenly own a stake representing 2 million valuation. That difference needs to come from somewhere.
Well, yes, because that’s insane.
Absent those guarantees, it's smoke, nothing, kaput: 1.5% equity or whatever % can become approximately 0% and there's nothing the employee can do about it.
They could structure the agreement in other ways to incentivize the potential employee: if additional shares are issued, pay a dividend to the employee.
the whole point of equity compensation is that it replaces cash, as the startup rarely has sufficient liquidity in cash.
But equity is often used in ways the employee does not understand and get screwed over. It's also why there are accredited investor requirements for VC/startup investments - so that only those who can afford to pay for a lawyer and such can partake in these deals. Unfortunately for an employee, the loophole is that they don't get this regulatory scrutiny, and also don't have or earn enough to hire a lawyer (and oft times not even access to the cap tables - it's just a literal number of shares, without context).
No wonder employees get screwed while investors (of the accredited kind) don't.
Understood and it makes sense. Offering equity to a potential employee is a way for the employee to benefit potentially on future growth in the company.
I'm proposing that if there is a future funding round, pay the employee a dividend from part of the proceeds. Or maybe give them more shares or a combination; but put it in writing from the start.
I feel like I understand _what_ an RSU is and what options are, but are there any good resources for me to learn from?
Options go to zero much more often.
So you're working at this startup. Lets say it's worth $10 million. To make things simple, in this company, there are 2 people, the fucker, the CEO, the guy that started it all. He holds 90,000 RSUs, each worth $100, so $9 million, and the fuckee, you, who holds 10,000 RSUs, each worth $100, for a cool million.
Here's where the fucker fucks the fuckee, ie you. The company does a round, and then creates, out of thin air, a billion shares (1,000,000,000), and issues them to the new investors. Lets say the company reached unicorn status this round, which is to say a valuation of a billion.
Holy hell a billion! But wait now there's 1,000,100,000 total shares out there, and the valuation of a billion, divided by the new shares, means that each share, of which you only have 10,000 of, is now worth just under one dollar.
That's right, your $1 million just turned into $10,000. Which isn't nothing, I'd love to come across a random $10k I didn't know I had. But that's just, like, one really nice vacation for you and the kids, which you haven't seen enough of because you've been working so hard at this startup, and not, like, a college fund for the kid that's showing aptitude at engineering and that you were hoping was gonna go to MIT.
Dilution is inevitable, there's no avoiding it. The scenario I presented is just to show you an example of how dilution fucks you. If things go well, would you rather have 10% of $1 million or 0.1% of $1 billion?
For more, it depends on how you like your information. ChatGPT's got stuff like ISOs vs NSOs pretty well covered, Investopedia's got a lot of good stuff if you'd rather it that way.
The problem tends to be elsewhere - as part of the deal, the investor asked that his share get preferred treatment in the next round - a liquidation preference which grants them the right to first take their investment of the table and then, whatever is left is distributed. The company gets sold for 1 billion. The investor takes the billion that they invested off the table. There’s nothing left to be distributed. Your shares are suddenly worthless - just as the founders.
First a 409A is generally engineered to keep the lowest value possible in order to allow the employees to exercise their options at the lowest value via an 83b election so at an exit they can be taxed at the long term capital gains rate. When someone joins a startup and is issued options the value of the stock is set via the 409A (which has to be renewed every year). The lower the number the more likely an employee can afford to write the check. 100K shares at $0.01 vs at $0.25 is a major factor for anyone to consider. Any startup worth their damn will make sure the facts in any 409A fit a low number for that reason. The reality of an exit where you are acquired will be based on other numbers that optimize for forward earns and value of your team and tech.
The questions you need to ask are:
What is the total authorized shares? What is the required process to raise that number? How are we funded? Does funding include preferred shares? What is the preference on those shares? On an exit what is the payment order?
I agree about the salary bands and at my current company we provide them, as well as answering all the questions above upfront to any candidate with an offer.
The reality of windsurf is that the founders are scum and this is going to end up in court for years. Google should be ashamed.
The only time it ever makes sense to push for more salary instead is if you literally cannot get a job at a public company (or even a near IPO unicorn). Plenty of startup employees can, so clearly they believe their startup equity is worth something.
Financially speaking, startup equity is actually worth a lot as an employee (https://www.amafinance.org/startup_comp/). Yah, over 50% it's going nowhere but expectation needs to consider how huge the win is even if it is lower probability.
yes that's literally the definition of expectation value...... so
ev = 1 bagillion * 0.0000000000000001 = ~0
But you don't want to be that employee...
It seems like you're saying: if you choose to work for a startup rather than a bigger company, it must be because you think their equity is valuable, so you should prefer to take more of your pay in the form of equity if you can.
But there are plenty of other reasons for choosing to work at a startup.
You might have chosen to work at that particular startup because the work interests you. You might prefer startups to bigger companies because they have less bureaucracy and can do (some) things faster. You might prefer startups to bigger companies because there are fewer layers of management above you and so you have a better view of why you're doing what you're doing.
Even if you're only in it for the money, I don't think your argument is valid, though this is more of a nitpick: it might happen that a startup particularly wants you or at least your skillset and is willing to pay more for it than any bigger company you've found. You might think the startup is likely to fail, but still prefer being paid twice as much. (This is kinda nitpicky because I don't think this situation is super-common, unlike the other ones I mentioned above.)
I know a few people who did well working for unicorns, but that isn't most startups, and pretending that any given startup will be one is selling yourself short.
This is why you would never see an early stage investor invest in only one company. They need volume to be able to survive the high risk/high reward nature of startup investing.
Now, maybe you think you are a better judge of the probability of success for your startup than an investor, so the risk is lower. You would be wrong; if there was a way to reliably predict which startup would hit it big, then investors (who spend all their time trying to predict exactly that, and have a lot more data and history to use in their evaluation than you do as an employee) would have a much higher success rate.
So even if you have a very promising startup, your equity is a huge risk. Your company probably won’t hit it big, and if it does you have to hope you aren’t screwed out of your equity by the millions of tricks they use to screw employee shareholders; dilution, preferred shares, etc.
Even worse, you are taking double risk. Your startup is risking both your equity AND your salary. You want to diversify your risk, so you can use your investment when your salary fails and use your salary when your investment fails. In this case, those both will fail together if your company doesn’t make it.
Look, equity and stock options are great, but you REALLY have to discount its value as an employee because of the way the risk shakes out as an employee.