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I didn’t stay for 6 years. I don’t work there anymore. And like I said, the company will likely raise soon, potentially at a much higher valuation. There is a comparable company that is already public that is trading at a much higher valuation.

I also didn’t say my experience is/was common, but it certainly was not the same as winning the lottery. That is my point.

Got it. Sounds like you did pretty well then! Congrats!

It is still rare to be given such good terms on equity, and also rare to be knowledgeable enough to take advantage of the opportunity.

> but it certainly was not the same as winning the lottery

I am happy that things worked out so well for you, but you're not sharing any data to back up this claim. I mean someone could literally win the lottery and say how great things worked out - it's anecdotal evidence.

https://xkcd.com/1827/

For many people, and I strongly suspect most, startup options are a losing bet. The worst part is you have to wait years before you know whether or not they're worth anything.

The odds of winning the CA lottery is 1 in 42 million. There are fewer than a million residents in SF. I don’t know the exact number of startup winners (both founders and employees who made more than $1m) living in SF at this moment but I would conservatively estimate something in the 5k range.

The odds of winning the minimum $38 MM payout in California are 1 in 42 million. The odds of a smaller payout are orders of magnitude higher. And you can play twice a week, instead of having to wait a minimum of 1 year between potential payouts. You're also allowed to buy other lottery tickets in that period of time.

To put things in perspective, of the dozens of people I know who joined startups, almost all of them felt the stock wasn't worth it.

Getting promoted to L6 at Google is a winning lottery ticket! Most people at Google never reach level 6.

I got options priced at 12c that were valued at 35c by the time they vested, $1.50 when I quit and exercised and paid AMT, and $5 at IPO.

This transpired over a span of about 5 years.

This company was successful but not clearly profitable when I joined.

Maybe I got lucky picking a winner, but I'm not a famous (or highly talented) engineer and I didn't cast a wide net when job hunting.

OTOH, I got another job offer years earlier where the employer tried to match a $15/yr gap in salary with an offer to buy $15k strike price options! The clear deception in how the VP presented the economic interpretation of the options was a factor in my decision to decline.

> current equity compensation is far too low and tricky

Of course, we can imagine various ways in which the situation can be improved, like getting equity directly instead of options, increasing the amount of equity, etc.

But that's beyond the main point of stocks. The point of them is to align employees with founders more, get them excited and motivated about the future.

> workers, and especially new workers, should not be optimistic about the benefits.

But the same argument can be made about founders and starting new companies. Of course most startups do not succeed, but should that discourage people from creating them?

I think there is a bit of confusion in that generally it's believed that these aspects of startup industry are much different - one is a 'unavoidable state of the world' and the other is 'unwillingness of certain people to make the situation better'. But perhaps both of them are in fact state of the world... There are many variables that go into selecting the values for employee stock grants and could be just as much hard to change.

Maybe they ultimately end with 'smarter people are able to control those less smart', but that's another discussion.

A founder's situation is very different from an employee's situation. The founder will immediately purchase their stock for peanuts, where employees usually face all the hazards of the 90-day exercise window. The founder starts out with 40%ish of the startup, which is tremendously more upside than the <1%ish of even early employees. Founders typically have a board seat and negotiating leverage over all future equity rounds, where employees are powerless and need to hope that their founders are ethical enough to protect their interests in future raises.

I'm not against founders getting these benefits. I think VC's are the ones getting too good of a deal here. Roughly, if they pay $10 million for 10% of a company, and an employee gets 1% to offset $1 million of their reduced compensation (over 4 years, vs working at Google), looks fair, right? But oh wait, we forget the many many downsides of the employee's position (not preferred shares, had to ALSO pay to exercise them, risk of AMT, 90-day exercise window, etc). Seems to me that the VC got somewhere between a 5x and 20x better deal here.

But the VCs pony up the cash up front and they are likely to lose it in most cases. The VCs and LPs have an opportunity cost too, they could be investing in other things, including a public market with a great track record for large caps.

There’s no easy answer but founder equity seems over weighted to me. If the founders want to align the interests of the company with the interests of the employees what’s wrong with having 15% instead of 30% and doling our dramatically more options to everyone else? No doubt founders take more risk and work harder but do they work 300x harder? (Usually by employee 10 or so grants are at 0.1% or less)

As an employee, giving a startup a discount on your compensation is pretty similar to a VC giving the startup cash.