[lafay]

If you're joining as employee 10, you should negotiate for the opportunity to early exercise all of your shares and avoid any tough tax choices later on. Perhaps even a starting bonus to cover the cost of exercise.

This also puts you in a position to exclude your entire gain from federal capital gains tax if the liquidity event is at least 5 years out:

https://blog.wealthfront.com/qualified-small-business-stock-...

[benmathes]

True, but startup employees shouldn't be effectively penalized for inexperience in arcane startup securities and tax law.

[asabjorn]

With large early rounds exercising your stock might set you back 50k or more, making you an investor as well as an employee. With the odds of startup success it is advisable to diversify more than that unless you are already wealthy.

[Terr_]

The example that always pops to mind for me is Enron, where many employees owned stock in the company, and the company did a lot of contributions in stock. [0]

So when it imploded, not only did they lose their jobs, but their investments.

[0] http://www.nytimes.com/2001/11/22/business/employees-retirem...

[toomuchtodo]

I would really like to see YC incorporate this into their options boilerplate.