What does HackerNews think of og-equity-compensation?

The Open Guide to Equity Compensation - https://github.com/jlevy/og-equity-compensation

Holloway's Open Guide to Equity Compensation is a fantastic resource and exactly what you need: https://github.com/jlevy/og-equity-compensation. It's a lot, but there be dragons, so read carefully and future you will be thankful.

1. Yes. You're also getting an equity lottery ticket, so make sure you understand how stock options work and what information you need to make sense of the offer. https://github.com/jlevy/og-equity-compensation

2. Not at all. With FAANG you're optimizing for compensation and resume prestige. With startups you're optimizing for learning opportunities, professional growth, faster pace, etc. You'll find that at different stages of your career you will start to optimize for different things.

3. Don't give a number. Indicate why you're interested in the company and that you're targeting the market rate for a company their size. Ask them for the role's comp range. Have a lower bound in your mind, but be realistic - a startup simply cannot match the compensation of companies that bring in billions in revenues.

The best resource on equity: https://www.holloway.com/g/equity-compensation

Earlier version on GitHub: https://github.com/jlevy/og-equity-compensation

Also look at the Index Ventures link and calculator: - https://www.indexventures.com/rewardingtalent/calculating-in... - https://www.indexventures.com/optionplan

From your question and knowing nothing else, I assumed it was probably low - but it depended primarily on salary and total compensation (is it market rate for your friend? How far off?).

From other answers (the company's fair market value is $30- $70 million vs $0 or unknown, the salary is slightly under market rate), it depends on the difference between your friend's total compensation here and other offers (or realistic other offers they theoretically could get).

I'd ask for more than the difference between this start up's total comp and other offers. Why? Expected value and risk. Get a reasonable risk adjusted amount given liquidity and likelihood it will ultimately be worth $0, $1,000, or even $10,000 (good chance it's in the 90-98% range, and if the company wasn't already worth something it'd be closer to 99%).

It's probably in the ballpark of fair, but not quite there for your friend.

Typical sizes of option pools are 10-20%, of which earlier employees tend to get more than later ones. To be person 20 and get more than 1% is unlikely, at least as an IC. I'd recommend reading this guide on equity compensation: https://github.com/jlevy/og-equity-compensation

They outline typical equity levels under "Typical Employee Equity Levels"

Having been on both sides here are my 2c. Pardon any brevity since i’m on mobile and in transit. Id advise reading up on these at this excellent guide (1).

Comp at startups are generally a sliding scale of cash to equity. A typical offer will ask you to slide it one way or another.

To judge stock, ask for,

- 409a valuation to know the current strike price of the shares

- total outstanding fully diluted shares to know the total shares available

- size of the employee option pool (eg, 10-15pct)

- possibility of an 83(b) election

- ISO vs NSO - what kind uf options are they?

- re ups, and anti dilution clauses?

- triggering events (eg what happens when the company gets bought?)

The more you know the better you judge the value. If folks are cagey in giving details, definitely push back and ask why.

Next, consider that the company’s progress is all that determines your shares net worth.

- how much do you believe in this team, space and product?

- and ask yourself - are you able to completely push this into a “lost cause financially” bucket in 5y? or do you need the cash? i’d advise being comfortable with the former :)

lastly, look at how much value you bring to the table to determine how much you get. if you’re engineer 1 with two non tech cofounders - you’d be worth much more than engineer 10. In that case, look at some of the blog posts online (esp by folks like Leo Polovets) on some ways to think about these numbers.

good luck!

(1) https://github.com/jlevy/og-equity-compensation

Some resources I've collected on the topic:

https://danluu.com/startup-options/

https://github.com/jlevy/og-equity-compensation

https://gist.github.com/yossorion/4965df74fd6da6cdc280ec57e8...

https://news.ycombinator.com/item?id=2623777

Others in this thread have posted great advice. You want to know the most recent 409A valuation, and you want to see the cap table (you might be asked to sign an NDA, which is a reasonable ask). Also, its unlikely your role is going to give you enough pull for an acceleration clause or similar (in either the event your role materially changes or an acquisition occurs), so if you do want equity and they're willing to provide it, get as much as you can so you capture as much value as possible during your tenure and vesting period. The difference between 10 basis points can be material in the event of rapid growth and eventual liquidity. The answer is always no if you don’t ask.

The equity is more likely to end up worthless or a trivial amount more often than not, but you can take steps to derisk the devaluation of this component of your compensation.

Found this to be quite useful during my recent job hunt. https://github.com/jlevy/og-equity-compensation

github repo: https://github.com/jlevy/og-equity-compensation/

Another resource is https://github.com/jlevy/og-equity-compensation (was posted here a couple years ago). It has the benefit of being "open source" so it might be easier to contribute to.

financial literacy is a huge issue in society and especially startup land, many folks don't learn about the pros/cons of 83(b) elections and how to properly calculate the value of your options... also negotiation skills aren't really taught so many people don't negotiate for a better deal

I found this repo on GitHub to be the best resource on startup equity, highly recommend it: https://github.com/jlevy/og-equity-compensation

Knowing the number of options isn't nearly as useful as knowing what percentage of the company you will own. This lets you calculate the various ways the value of your equity will change as the business gets more investment, sells, or goes public. The company should tell you are offered 200 shares of, say, 2 million outstanding shares. If the valuation you say is accurate, it looks like they are giving you options for around 0.026% of the company. Probably about right if you are a late hire (say employee number between 10 and 100). Hopefully your salary is enough to be able to afford ~$65,000 worth of option exercises every year, should you be interested in purchasing them! The link below also has tax consequences, which depend on the type of option, and how much the value of the shares change between now and when you exercise the options.

Ideally the company will also tell you roughly how much the company would need to sell for in order for you to see a return. They can tell you this indirectly by saying what kind of liquidation preferences other investors have.

For a more detailed writeup, see https://github.com/jlevy/og-equity-compensation

Good luck!

For more reading about your possible outcomes in liquidation events, check out https://github.com/jlevy/og-equity-compensation

It is US-centric (especially the tax stuff), but there is still lots of useful vocabulary there.

Don't have time to go through the docs just yet, but great to see mentions of cashless exercise included. A more generous post-termination exercise window would have been a nicer default, but I get that's still the norm in many YC companies.

Over time I suspect that will change as more and more people learn the questions they should ask when evaluating an offer, i.e., as they transition from naive price takers to more sophisticated price setters. This link was circulated on HN a few weeks(?) ago, but it's worth reposting: https://github.com/jlevy/og-equity-compensation.

And here are some companies that offer >90 days: https://github.com/holman/extended-exercise-windows (e.g., Coinbase and Pinterest with 7 years, Quora and Asana with 10 years, etc.). Interesting to see two companies in the list founded by early Facebook employees -- well, cofounder and CTO -- do longer periods. Wonder if people got burned there by the standard period?

I was in a similar situation two years ago. I'd advise having both a plan and a backup plan before you pull the trigger on leaving.

This is generally pretty good, if verbose:

https://github.com/jlevy/og-equity-compensation

Talk to esofund and friends ahead of time, and see what their offers for your company's stock are, and make sure they're acceptable to you if you think you'll have to go that route.

Don't count on definitely being able to sell the stock to finance the taxes. I left after seven years in very good standing (I believed) but when I went to sell the deal was shut down [1]. Luckily I had a backup plan and I was ok [2].

[1] Had a handshake deal with an investor in the company, then the investor went silent on me. When I followed up he said the deal was "just much too small." I reached out to the company for help, and they said they'd actually told him not to buy from me. I never would have known if they hadn't decided to tell me for some reason. The takeaway is that the markets for private company stock tend to be small, and the buyers care more about their relationships with the company than they do about having your shares. Even if the stock terms allow them to buy, and they might not.

[2] However I was trying to sell for roughly double the current (public market) price. The private/public valuation gap is real! Don't put too much stock (haha) in the value at the last tender offer. If you can sell privately at close to that price it's possibly smart.