8% return on average is abnormally high.
But, on the other hand - the chance of retaining even 1% of a startup that exits for >50M is very small. By the time of an exit, almost no engineers will have anywhere near that equity.
But, on the other hand - the chance of retaining even 1% of a startup that exits for >50M is very small. By the time of an exit, almost no engineers will have anywhere near that equity.
If the parent was not accounting for inflation, 8% is low.
I’m not entirely sure it’s an assumption that will be correct for too much longer given the industrialization around the globe has increased competition significantly.
I think the true equity growth rate is closer to inflation / population growth rate; especially once we take the costs of climate change into account (think of it as a loan we have to pay back in either remediation of adverse climate effects or decreased future productivity).
And I’m not saying the US / Europe robbed any of those countries — just that there was a lot of easy growth in those countries in the 20th century, and western companies stepped in to facilitate and got paid a lot of money in the process. That growth is reflected in the stock prices of American and European companies.
My point is that those big, easy growth opportunities aren’t there anymore anywhere; and the growth opportunities in the future will be diminishingly small. We’re no longer bringing a country from the Iron Age mining with hand tools to the industrial era with mechanized mining and smelting; we’re largely just replacing one form of economic activity with another, slightly more efficient version.