[spearo77]

I think dilution is something that makes the package deceptively complex. Subsequent rounds of funding diminish a previously healthy looking equity package.

How should you factor that into your expectations for the future of your equity package? I think that's complicated.

Does anyone ask for or receive a re-calculated salary based on the change in equity that results from dilution?

[numlocked]

Assuming an up round, dilution causes you to own less of a company on a percentage basis, but the actual dollar values of your shares will be worth more. If things are going well (which is admittedly rare, and the lightning you’re trying to bottle) dilution just makes your piece of the pie grow somewhat sub-linearly to the overall equity value creation, but certainly isn’t making it negative.

I find it much easier to reason about equity comp on a per share basis rather than a percentage ownership basis (and frankly don’t understand the constant advice to try and think about it on a percentage basis - though will always happily share that with job candidates).

Additional equity grants are what can make up for dilution, not additional cash comp. I also believe that cash and equity are fundamentally different types of compensation, given for different reasons, and are not particularly fungible. I always try to make equity as comprehensible as possible, but the reality is that it IS complicated - and worth spending time to actually understand because, while there are ways to get misled, it’s also the path to wealth creation.

[michaelt]

> Assuming an up round, dilution causes you to own less of a company on a percentage basis, but the actual dollar values of your shares will be worth more.

If you're at a $10M company and you're thinking "I will own 0.1%, so in a few years I can look forward to a payday of $10,000" then you're right: getting diluted 10x to own 0.01% of a $100M company is the same value.

But if your thinking is "I will own 0.1%, and if I owned that much of WhatsApp when it sold to Facebook I'd have made $16M" then a 10x dilution would reduce that to $1.6M

Now, you might argue the second line of thinking is wrong and a fantasy valuation, but we all know no-one's getting hired away from FAANG by the promise of an uncertain, one-off $10k in a few years.

[nandhinianand]

> reason about equity comp on a per share basis The one reason I find this highly skeptical, is that this is in some sense a made-up figure. In Options, It's an estimate of a per share once the company goes public. In other cases, it's something the founders have estimated based on market potential and other things.