
Holloway Guide to Equity Compensation - doosey2
https://www.holloway.com/g/equity-compensation
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birdmom
The search in this thing is incredible. Definitions come up, context comes up,
even get results from the material in the linked resources. Really cool how
easy it is to navigate--if you click a link to go to another section of the
text, back arrow brings you back where you were. That really makes it easier
to learn what you don't know, like flipping back and forth to a glossary or
footnotes in a book but without any hassle.

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JumpCrisscross
> _certain restrictions on it (like transfer restrictions)_

This is under appreciated outside executive levels. Start-ups are staying
private longer. Most companies allow employees to sell their private shares
(subject _e.g._ to a right of first refusal). Some, however, insert language
requiring board approval for transfers. These shares trade at a steep
discount, if they trade at all, and generally serve to give preferred
stockholders a first crack at the exits.

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tptacek
I see how that term has that effect, but before you impute intentionality to
it, bear in mind that transfer restrictions have been a standard, market term
for employee equity for decades. Closely held private companies are itchy
about who holds their stock.

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jkaplowitz
They have at least one good reason to be itchy: too many direct stockholders
and they have most of the same requirements with the SEC as publicly traded
companies. Though that doesn't justify all possible restriction regimes, of
course.

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kine
This is insanely helpful. As employee #1 at a startup, should I get my 83b up
front or in ~1 year when my first quarter of stock has vested?

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CalChris
An 83(b) election must be filed with the IRS within 30 days after the grant or
purchase date of the restricted stock.

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acconrad
Note the restricted stock portion, you may not have received restricted stock
as an early employee

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saamhaz
Searching answers on Google for this type of stuff has become futile - pretty
much written it off at this point. Thank you for this. Wish it'd been around
when I was at my first startup

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h4b4n3r0
My advice is, hire a lawyer and have him/her review and correct your option
contract before you sign it. You will pay a few hundred dollars. It’s worth
it.

I was employee #1 with a substantial equity stake, and my lawyer has found
half a dozen ways I could be screwed. By default these contracts are
incredibly one sided, but they don’t have to be. And as a rule in a startup if
you can be legally screwed out of your money, you will be.

EDIT: The linked site does have great advice and is vastly better than just
about anything else on the topic you can find on the internet. Just remember
that there will be a _lawyer_ on the other end, and they know this stuff much
better than you do. It's better to retain a lawyer on your end as well,
especially if the amount of equity is non-trivial.

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woolvalley
Also the math almost never works out in favor of working at a startup vs
working hard at bigco.

Make a spreadsheet, add probabilities of how things will work with current IPO
timelines (+10yrs), chances of exit at each startup stage, the loss your
getting from investing the same amount of cash working at bigco in ETFs,
projected career growth, cost of living, etc.

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h4b4n3r0
That's true. Don't neglect the cash base salary either, and don't overvalue
the upside potential, because probabilistically speaking even under the best
of circumstances it is likely worth much less than you think. Certain amount
of faith is required, you should just moderate the amount of faith in anything
startup-related unless it's late stage and things are going well, or unless
you're a founder (and therefore you're mostly in control and are likely to
benefit disproportionally in case of an exit). Even single-digit number first
employees should be running these calculations in their head, with a healthy
dose of pessimism.

There are other benefits to working at a startup though. For one thing you
might end up on a great team. For another there's far less bureaucracy and
process that gets in the way of doing things. For yet another, most of the
truly "cool" things are done by startups, and your chance of getting a job
doing something intellectually rewarding is far greater there (in my
estimation at least). Simple fact is, FANGs of the world have some pretty cool
teams, but those teams as a rule have no open positions, so pro tip: don't go
to Google thinking you'll work on Brain or autonomous cars at any point in
your future, unless you're joining those teams directly. Startups do have open
positions every imaginable type of work, tech stack, or field.

But yeah, do consider whether money to fun balance is there, and if it's worth
it for you.

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dmitrygr
This image [https://imgur.com/a/2Rzeac2](https://imgur.com/a/2Rzeac2) in
section "Fundraising, growth, and dilution" _really_ says a lot! Person #4 in
the company likely is as important as first 3, and took as much risk (also
quit previous job and did not take a high-paying one at G/M/A/F), but ends up
with 1/10 the share of the first 3 at best (options pool is spread between him
and others).

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nojvek
I imagine person 4 comes in after an year or two after first 3 founders busted
their arse to build a product to have the first few paying customers.

Before joining any company, you have to realize the opportunity cost. You
could work at AAMG and make decent money being part of ~1 trillion companies.
OR you choose to join a small startup that has managed to find a product
market fit and now needs to scale to realize their potential and ride that
wave.

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dmitrygr
In more sane parts of the world perhaps. In Silicon Valley, with VC funding, a
year after company ia created, it is probably 50 people or more in size.

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treblig
After hearing about this for awhile and now playing with the product for the
first time, I was super pumped to guess (and be right!) that the arrow keys
could be used to help navigate sections. Nice touch, guys :)

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ironjunkie
Wow, this is so helpful.

As other comments seem to say. I googled quickly around when joining my first
startup and this guide would have avoided me some typical first-timer
mistakes.

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css
Getting a 504 trying to access this page.

Edit: looks like it's back.

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claar
Same here.

The Google cache of holloway.com links to [https://github.com/jlevy/og-equity-
compensation](https://github.com/jlevy/og-equity-compensation) \-- perhaps
this is the same content as the original post? Can anyone verify?

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zalzal
Josh, co-founder at Holloway here. That's the original content, yes, but we've
augmented a lot on Holloway, added comments and search features, etc. Having a
couple traffic hiccoughs but try it soon as you get in, and look forward to
feedback.

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goauntflow
This is literally the best thing I have ever read. For the first time ever, I
feel like I know what position I am in as a founder.

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wtvanhest
This guide is great, but if you are the author, please, please, please
consider locking the top bar so it doesnt move while the reader is scrolling.
Many people use the top of their screen as a place holder and this is
basically unreadable on mobile.

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SparksZilla
Hi there! Andy Sparks here, Co-Founder of Holloway. This must be a bug—sorry
you're having troubles. I know it's work for you, but we'd like to get it
fixed. Can you email me a screenshot and any other details
(andy@holloway.com)?

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Dowwie
github repo: [https://github.com/jlevy/og-equity-
compensation/](https://github.com/jlevy/og-equity-compensation/)

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blahblahblogger
What do you do when a company won't give you all the info required to really
evaluate an offer like the 409A or some such?

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zalzal
(Josh, co-founder of Holloway here.)

There are a couple sides to this. No company should or will tell every
financial detail to every candidate. On the other hand, if a company has given
you an offer and really wants to hire you, yet is very evasive about all the
info you need to evaluate your offer, it can be a warning sign; it's likely
indicative of the level of transparency you'll get as an employee, too. The
409A is material to understand your stock options, so very fair to ask about
before signing.

Also—we'd love more questions like this in the marginal notes in the Guide, so
it improves iteratively! If you (or anyone else) wants early access to that
feature shoot an e-mail to josh@holloway.com

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hereIam1234
It's really well organized and the menu is well-designed. One thing that would
be nice, though, is if the menu were easier to scroll through. Without
expanding anything, you can see the headers of all the sections ... but if you
expand one thing, you have to drag and highlight in order to get to the
bottom. IDK, maybe there's a scrolling tool that I'm missing, or maybe I'm all
thumbs. I find this to be a problem with most of the internet, so.

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SparksZilla
Hello! Andy Sparks, co-founder of Holloway here. Thank you for the positive
words on the organization and menu. I'm trying to get a better idea of the
issue you're running into, as it doesn't sound like something we intended to
have happen. Would you mind sending me a screenshot or more detail at
andy@holloway.com?

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davidw
davidw guide to equity compensation: it's probably worth jack shit.

That said, this looks like a great guide if you're going to go that route.

