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Time value of money, which in short summarized as "money available at the present time is worth more than the same amount in the future due to its potential earning capacity." [0]

[0] http://www.investopedia.com/terms/t/timevalueofmoney.asp

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I see what you are saying. But the factor I mentioned I think is more of a loss than the time-value loss. Basically, would you take $2M up front but then no salary for 4 years or $2M spread over four years but you still can earn your salary (which in this case I would assume is at least $150K/year).

I don't see where you get that scenario for. The $2m would be to get him to give up the company, whether or not they intended to take the product further, on the basis that he presumably expected some return on it. It's a hiring bonus. I know people who gotten hiring bonuses well in excess of that without having a company or product to use to justify it.

But in any case: It comes in addition to a salary if they hire him, whether or not the $2m would be paid up front or in tranches, and if they genuinely wanted the product, not to hire him, he'd expect to be able to still earn a salary. In fact, I'd argue that he'd expect to be able to increase his income potential: He'd have a Google acquisition to put on his resume.

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