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Open guide to equity compensation

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656 points mooreds | 2 comments | 13 Apr 25 19:13 UTC | HN request time: 0.482s | source
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cj ◴[13 Apr 25 20:33 UTC] No.43675640[source]▶
As our 30 person startup has grown, I made a conscious decision to stop pitching stock options as a primary component of compensation.

Which means the job offer still includes stock options, but during the job offer call we don’t talk up the future value of the stock options. We don’t create any expectation that the options will be worth anything.

Upside from a founder perspective is we end up giving away less equity than we otherwise might. Downside from a founder perspective is you need up increase cash compensation to close the gap in some cases, where you might otherwise talk up the value of options.

Main upside for the employee is they don’t need to worry too much about stock options intricacies because they don’t view them as a primary aspect of their compensation.

In my experience, almost everyone prefers cash over startup stock options. And from an employee perspective, it’s almost always the right decision to place very little value ($0) on the stock option component of your offer. The vast majority of cases stock options end up worthless.

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yieldcrv ◴[13 Apr 25 21:25 UTC] No.43675967[source]▶
> In my experience, almost everyone prefers cash over startup stock options.

Good to know, because its common for the founder and hiring manager guilt trips to be insane.

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grandempire ◴[13 Apr 25 23:01 UTC] No.43676486[source]▶
Startups have this weird psychological purity testing I have never seen outside of religious groups.

Effective organizations understand you actually don’t need to look inside the box. If someone is continuing to do good work for you it’s working. You don’t need to second guess their reasons why, or give them a reason to question their commitment.

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1. yieldcrv ◴[14 Apr 25 02:34 UTC] No.43677573[source]▶
It’s a basic lack of empathy. Many founders do have the privilege of choosing opportunities and seemingly cant or are unwilling to relate to people just working with integrity and sometimes being fulfilled by their choice of trade, without needing to be married to someone else’s idea and cause.

Also most founders ideas aren't unique and there is often a tone deafness there. Employees with experience have already seen their idea even if it was in a prior cycle.

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2. hnbad ◴[14 Apr 25 09:37 UTC] No.43679581[source]▶
"Believing in the mission" requires a suspension of disbelief that can reduce the impact of various factors that would otherwise decrease morale (e.g. lower cash compensation, fewer benefits, unfair working conditions, longer hours, etc).

There's a reason many startups are built on hordes of college kids and it's not that they "have more energy" or "are more willing to think outside the box". They're less experienced and thus easier to manipulate. They're also less likely to have dependents they need to take into consideration, don't understand their limits or trade-offs between short-term performance and long-term endurance (e.g. burnout), and are more likely to be naive about their place in the company and the effect/function of the company. Plus, of course, they're "less risk-averse" which is another way of saying bad at judging the odds of certain outcomes.