> people should choose real liquid equity of public companies over the paper equity of startups

Or ask for more cash.

Did that once. Turned out to be the right move as the company went public and their stock worth basically nothing by the time we could sell.

Agreed, but public companies also often will give more of that too :) .

The most liquid of compensation.

If you like lower risk and lower gain, sure.

The most important thing is being educated. Every time this topic comes up on HN it appears that many people are unaware that liquidation preferences are a thing and many sales that are down-rounds have no money falling on common.

employee stocks are engineered to be lower gain (impossible to sell, liquidation preferences etc.), take the cash and use it to take some risk you can control. You like risk? take the money and go to Las Vegas.

Just to clarify: how educated do you need to be? Founders don’t appear to be obligated to tell you when they make deals that effect you, and more importantly retroactively reduce how much they paid you.

If you are paid in stock, and the founders make a deal that reduces the payout value of that stock (in this case to zero) they have stolen from you in a way that has no recourse. Literally they paid you with something that was presumably claimed to have value, and then after a few years made deals that made that worth less. Even though you had already been “paid”.

How much education can you do that would protect you from this?

Given the 8 comments you've made so far in this discussion, I'd say that my two education suggestions are spot-on.

> If you like lower risk and lower gain, sure.

Given how much the big tech companies are paying though, especially when it comes to RSUs, I'm not sure this calculus makes sense anymore, especially for early employees. Founders may do exceptionally well on many cases, but for most early employees at startups there really isn't that much potential upside in most cases, compared to the guaranteed earnings you can get at a top tech company.

My take is over the last 30 years the return for early employees has become progressively worse. To the point where the best case scenario you only break even vs a traditional job.

Yeah, there's ample evidence that it's almost all no gain on the startup exit side, unless you got very lucky and worked for the right company.

I can confirm that RSU payouts at the giants far dwarf what you can get at almost all startups. The total comp difference is insane.

If it really was lower gain then sure. But as it is, on average, startups give you more chance of ending up with nothing but an entry in a CV.

If you're only interested in the average, then you should definitely value startup options at zero. Not everyone thinks that way, but you certainly have a valid opinion.

I made a comment along those lines on HN a few years ago, and was told in no uncertain terms that I was unrealistic in expecting to be paid my worth unless I accepted payment in lottery tickets/stock-with-no-guaranteed-conversion-clause.

This article further affirms my position: it’s not just founders that got no payout, the employees didn’t either. Cool beans, you work your ass off for a company at below market rates with the promise that you’ll get a big payout when it sells, and then it turns out even when it sells for half a billion your stock is worth nothing. This isn’t the lottery of “the company may fail” this is the lottery of “I hope VC doesn’t rewrite the charter to ensure that we don’t get paid”. Oh, and the CEO alone got 11million. That sounds like there was plenty of money available

Selling for half a billion means nothing if you've taken hundreds of millions in outside funding

Well apparently there was enough cash to pay the current CEO 11 million. It seems that they could easily have afforded a few hundred thousand per employee, and still given an order of magnitude more money to the ceo than any of the employees.

This is theft in all but name.

It’s charter, by the way... not charta.

Goddammit, I was going “that doesn’t look even remotely right”, but my brain was fighting me the entire way. One sec while I edit the dumbass spelling away and pretended it never happened

:D

But that assumes that all other things are equal, which isn't true. It's a very different experience working for a startup.

That said, if one has the choice between a startup job vs. one with equity with real value, they should only consider taking any startup comp package with the intention of being fully okay with their decision if the equity goes to zero. And note that this is a decision you can reevaluate periodically.

Read https://github.com/jlevy/og-equity-compensation and ask all of the questions. Probably ask a couple more, like about liquidation preferences and conversion of vested ISOs to NSOs with long expiration if you leave before liquidity.

its why people choose ICOs: immediate liquidity with the biggest "controversy" being that VCs get to buy at a lower price.

this is distinct from a decade+ long private equity drama, only to find out that you, all employees and even the founders get nothing from the exit event. This is where getting to the exit is wrought with landmines, just to find out your particular exit is horrible but a fairly standard affair.

now that there is competition lets talk about what we can do to make both markets better