[SanFranManDan]

In order for equity to be worth it for employees at a Startup you need to be within the first 10 people and the company needs to be north of the $500,000,000 range.

To illustrate, give the best odds. You join within the first 10 people, get 0.7%, after 6 years of dilution you might be down to ~0.2%.

If a company runs a tender offer with a valuation of $200m, your stock is $400,000. Is that a lot? Well considering you probably make 50k-100k less per year in salary at a startup vs a "big company", for 6 years time and considering that you also get other compensation at a big company, that isn't really that rewarding.

Now at $500m, your stock is worth $1m. Its now something worth 6 years of paycuts.

But this is such a narrow window. You have to get lucky to be one of the first 10 and join a company that will be worth half a billion dollars.

If you are not one of the first 10, you need the company to be worth ~$5billion to have your stock be worth it. How many of those are out there?

[jiveturkey]

> If a company runs a tender offer with a valuation of $200m, your stock is $400,000. Is that a lot? Well considering you probably make 50k-100k less per year in salary at a startup vs a "big company", for 6 years time and considering that you also get other compensation at a big company, that isn't really that rewarding.

There are other factors to consider. Do you like big company culture and politics? Do you like being a completely replaceable cog? Do you like having order and process and a well defined job?

Even if you prefer a startup, for most of them you will come out with nothing. So you have to factor in the risk ... you’ll need multiple startup jobs to hit one success.

[tptacek]

First 10, half billion valuation is an OR condition, not an AND.

[patio11]

I think the interesting questions are probably a rangefinding exercise for a) at what age, expressed in employee count, was it pretty obvious that Google would be Google or Facebook would be Facebook, b) at what age, expressed in employee count, did the equity award stop generating lifechanging outcomes for technical employees?

I respectfully submit that the gap between a and b is measured in thousands of employees and/or plural years of calendar time.

There are other companies one could name which looked like they had a better-than-X0% shot of being One Of The Great Ones (TM) which failed (or may fail) to achieve that promise, but it seems a little silly to me to assume that seed stage is necessarily the highest expected value for engineers.

[matchagaucho]

$1M in stock sounds great... until you realize it's actually $600K after taxes.

With a 4 year vest, that equity is worth $150K per year. About what a Top Engineer sacrifices in salary to go work at a start-up.

[tptacek]

Nitpick: that salary is also subject to taxes.

[forgotmysn]

as is the vested equity. not to mention the cost of exercising the shares

[tptacek]

Right, he started by pointing out the tax haircut of equity. But he moved the goalposts when he compared the nominal dollar cost of foregone salary to the after-tax value of the options.

It's a nitpick. The underlying point stands.

[abritinthebay]

Is the startup getting them to work for free? If so the engineer is a sucker unless they’re a cofounder.