Ask HN: Need help validating offer from a startup

[fzkl]

I have an offer to join a startup as employee #41 (#16 in my country) that received ~10M $ funding from a VC besides smaller investment from a few well established companies. They have offices in 3 countries and are into core engineering work. On the conservative side, they expect a 9x increase in value in 4 years. On the upside, it's 41x. Even if successful, I don't see the company lasting more than 5 years after which I expect the product to get commoditized and margins to drop at which point someone may pick it up. I have not been in the job market for 10 years and am not sure how the startup scene works.

1) Could anyone provide me an insight into how to validate their estimation of 9x and 41x? What information could I ask to substantiate this projection?

2) I have been offered the same salary as I earn now and equity value worth 1/3rd of my salary that will vest in 4 years. I can't help but feel this is less. Any thoughts on the offer and how I could negotiate better?

Thanks!

[sokoloff]

I'm not following your second point. They could offer you the same salary and a bag of potato chips that would vest in 4 years and it still wouldn't be less than your current salary, right?

To your first point, the most conservative advice is to value the equity at zero, particularly if you believe there is a 5 year product lifespan at most, but the modal outcome for equity grants at startups is zero.

I've been at 4 companies that had exits to the public markets. In two of those, I got essentially nothing (but a job offer). In the other two, one was an acquisition by an already public company and the other went IPO. Both of the latter exits were nice, but at employee 41, nothing will be lifestyle-altering.

[jcr]

The following three links are to very recent HN discussions about (prospective employees) evaluating startups. I don't have any personal expertise in the matter, but I thought these might help.

https://news.ycombinator.com/item?id=9951762

https://news.ycombinator.com/item?id=9904519

https://news.ycombinator.com/item?id=9942866

[7Figures2Commas]

> On the conservative side, they expect a 9x increase in value in 4 years. On the upside, it's 41x.

It's one thing for a company to sell you on its current metrics and trends that it believes will propel future growth. It's another for a company to try to sell you on projections that have its value increasing by a specific amount within a specific amount of time.

In my opinion, the latter is unethical and should raise red flags.

[gesman]

>> ... employee #41

>>...received ~10M $funding ...

>>>...They have offices in 3 countries

These $10M will last them ~1 year.

What's definition of equity?

Stock options?

RSU's?

Promises?

>> ..vest in 4 years

Meaning guaranteed zero cash for you until 4 years from now?

Or does it vest gradually?

Consider everything to be equal to zero besides the cash you'll be getting on a regular basis.