

Startup employers unwilling to mention % equity offered. - bankim
http://www.quora.com/Why-are-startup-employers-hesistant-unwilling-to-give-information-like-equity-offered-when-making-an-offer

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prodigal_erik
That's much like promising you a salary of 200k ... in some undisclosed unit
of currency. The rational valuation of it is roughly nil, even if they
succeed. So you have to decide if you'd still take the position if that part
of the compensation weren't offered at all.

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gamble
Then consider it to be worth nothing... which is probably what it will be
worth. It wouldn't be an encouraging number anyway.

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techiferous
Nothing would be overvalued. Consider it worth a negative amount because of
the opportunity cost.

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johnrob
When these companies hire people without telling them the percent, what
caliber of person do they think they're getting?

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grimlck
Wow, i'm surprised there is even debate on this. If you don't know the %, then
you should value the equity at $0.

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jasonjei
If you are being paid market rate, there is no reason for you to know the % of
equity offered until you bring the company to an important stage. But if you
are discounting your salary for equity, then it should be in writing.

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jasonjei
Believe it or not, I have had applicants who have felt entitled not only to
$85/hour (52 weeks x 40 hours equates this to 176,000 USD for this particular
programmer whose only skill is Basic and C#), who was even asking for equity
at this rate. This guy was talking about serious CEO pay even though he didn't
even know our main language (Ruby) and would presumably require time to be
acquainted with it.

The bottom line is you need to account properly for the past, the present, and
the future. We pay $75,000 or $45/hour (if contractor) for a programmer with
3-4 years of professional experience (add $10/hour to your rate if you are not
salaried or there is no guarantee of continued work a la contractor. We talk
equity later.

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salemh
Cost of living low or not, that is entry / mid-level pay. Ruby tends to be in
high demand as well..your post is confusing.

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beagle3
Well, they must give you the exercise price; and if you assume it is a fair
price (or 15% discounted, which is often the case) of $x/share, you know that
e.g. if the company grows up 10 times in value, you get a bonus of $n _x_
(10-1) where n is the number of shares you get an option for. So in that
sense, the total outstanding is not interesting.

It is interesting in the sense that you need to know the total company
valuation to have an idea of how much the company can still increase its
value. If an unknown facebook competitor "mugshotbook.com" is already valued
at $5B without any users, it is unlikely your option will be worth anything
ever, regardless of how much you are getting.

DO NOT FORGET: Options are a contract to buy in the future at a price known
today. They are not equivalent to shares (if they were, you'd be taxed for the
face value on the day of the grant!). If the value does not go up, they are
worth exactly nothing. If you get facebook options with exercise price
reflecting $50B market capitalization, and facebook IPOs at $50.5B when you
are vested, what you earn is 1% of the share value of your options (because of
the exercise price), not a penny more! In numbers: If you get $10M worth of
facebook options today, and facebook IPOs at $50.5B, you get a $100K bonus for
your (e.g.) 4 years of vesting, or $25K/year -- not shabby, but a far cry from
the $10M you think you'll be owning.

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joshu
Tough. They have to.

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kgrin
Is there a law/regulation? (federal or state?) Or just a norm?

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staunch
IANAL. Stockholder laws in Delaware are very protective. As a stockholder you
probably can force a company to disclose some basic information like this.

Two problems:

1) You only have those rights once you've been granted the equity.

2) You would have to sue or threaten your current employer.

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jaxn
To be fair, the percentage can be a pretty fuzzy number for a young startup in
the middle of raising money.

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rorrr
So let's say you know the percentage, like 10%. What would it mean to you?
There's nothing that would stop them from diluting it to 0.0000001%.

