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Comment by lewisl9029 | Hacker News Reader

So I've been looking at startup jobs on AngelList lately and came across many postings claiming to give "significant" equity. And then I scroll up and usually see something along the lines of 0.1%-0.2%.

Now I'm not exactly an expert on the intricacies of employee stock options, but simple math indicates that 0.1%-0.2% translates into 1-2 million for a billion dollar company.

Sure, 1-2 million is a decent amount of money, but that's before taking into account factors like dilution and opportunity costs of the associated golden handcuffs. The chances for a given startup to grow to a billion dollars is minuscule to begin with, and working at an established tech company could easily net you that same 1-2 million within a few years with none of the risks. And considering that the founders' equity will be worth hundreds of millions for that same billion dollar company, calling 1-2 million significant just feels downright condescending.

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And by co-incidence, I was ranting about the same thing on Twitter https://twitter.com/HashNuke/status/670118075841187841

0.1% is hardly anything to make it worth a pay cut to take risks.

You have to look at the 0.2% in relation to the salary that they offer. And, many companies do allow you to negotiate the salary vs options trade-off.

>And, many companies do allow you to negotiate the salary vs options trade-off.

That's definitely true in principle. But in practice, it might not be a great idea.

I actually tried to negotiate the salary vs options tradeoff recently, and I feel it didn't end well because even though I tried to be as objective as possible, the fact that I didn't want equity might have given the impression that I didn't really believe in the startup (which was true, since I really didn't believe they had any chance of becoming a billion dollar company, but it's not the kind of impression you'd want to leave if you want the job).

So, the process worked. The company finds people who have the most interest in the company's success, within the set of hirable candidates

Aka, people they can rip off the easiest. I m not saying they can't do this, but I want more people to not agree, because it's a bad deal and makes the market worse off for employees.

You can be interested in the company's success without being delusional about the limits of its potential for success.

> You have to look at the 0.2% in relation to the salary that they offer

I disagree. Salary is a real thing that you can use today. Options at a start-up? Some studies indicate that start-up failure is at 90% within the first 3 years. This means those options, 90% of the time, don't mean anything. They're literally useless.

The other 10% of the time? Depending on percentage, dilution and exit (IPO? Sale? Neither?) it's still difficult to get a return on those options in any reasonable timeframe.

In my opinion you should NEVER sacrifice salary for options UNLESS it's an established company where you can see how to get your money out of those options. There is a TON of competition out there for talent, if a company wants a quality candidate they will pay for one.

I agree, but unfortunately that's not how it works. All founders believe that they can succeed. Every VC believes that their investment is going to become the next billion dollar company, etc. Ideally, options are the icing on cake, but the reality is that most companies use options as a way to reduce their immediate expenses - for start-ups, cash is like oxygen. Most start-ups die not because of their competition, but they run out of money.

What study is that?

In any case, success is (mostly) not rolling a dice. Good planning, strategy, skill, and past experience make a huge difference.

I doubt 10% chance of success is the best you can do.

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