
Ask HN: Which startup offer would you take? - suomynona1
I recently interviewed with two startups and the offers came in last week. I need to make a decision by end of this week. Both are doing interesting and challenging work. Both are also using the same set of technologies that I prefer. The base is in the market range with some differences. Here are the differences.<p>Startup A:<p>* Series B: ~50m<p>* ~20K more base<p>* ~20K less stock options<p>* No signing bonus<p>* Free lunch<p>* High premium for family health insurance ~300&#x2F;paycheck<p>Startup B:<p>* Series C: ~200m<p>* ~20K less base<p>* ~20K more stock options (will be offered options at Series B strike price)<p>* ~10K signing bonus<p>* No free lunch<p>* Low premium for family health insurance ~80&#x2F;paycheck<p>Thank you so much!<p>Anonymous-for-a-reason
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Maro
The standard advice, which my personal experience backs up, is to value
startup stock at 0 when negotiating. Survival plus Liquidity at a good enough
valuation without preferreds wiping you out are very uncertain.

I would look at team, is the work interesting, location/office and cash.

~~~
ohyes
Well, value the options of the company you are negotiating with at nothing.
Value the options of the company you are leaving at nothing internally, but at
something when the company you are negotiating with asks. I’m making $xK
dollars and I have significant equity is a better bargaining position.

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jurassic
I agree with most people here that A is the better choice on paper.

Your comments on B seem confusing to me. Options are typically granted with a
strike price of whatever the 409A assessment of the fair market value is at
the time of the grant. So if they already raised a C round, the ship has
sailed on the "Series B" strike price. Anybody who tells you otherwise is
probably either lying or misinformed.

So, what you're getting with Company B is more options with a higher strike
price. Keep in mind that the strike price is what you pay to purchase the
stock that you may then sell at market price. There are also taxes due at
exercise. Your net profit from options issued this late in the company's
journey, after a liquidity event, is likely to be small because the strike
price is so high and the company has already achieved much of its growth prior
to your grant.

For instance, if the company IPOs at $15 and your strike price is $7, figuring
the fully loaded taxes to be around 40%, you will only make ($15-$7)*0.6=$4.80
per share. To get a more realistic expected value, you should also assign some
probability your company will never have a liquidity event or will but under
unfavorable circumstances that render your options worthless (e.g. after a
down round of financing). The market value of your options during the
liquidity event needs to be several times your strike price for it to become a
very interesting amount of money.

I recently went through an IPO with my company. The options I vested over four
years are about $60k in the money. I count myself lucky that I'm seeing any
money at all from them, but really I would have been better off to jump ship a
long time ago to a BigCo with RSUs that offer a more certain return.

If you really like Company B, tell them the going rate seems to be what A
offered as base. With their recent funding, there's a good chance they'll bump
you up if it seems like you're going to go with the other company.

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quickthrower2
You don't mention anything about technology, culture, number of hours you are
expected to work, commute, career progression, what your boss will be like,
team size, whether you are aligned to their values, whether you find their
work interesting, how much you need a high salary (e.g. do you have
dependents, big mortgage or such like), etc.

~~~
monsieurbanana
> Both are doing interesting and challenging work. Both are also using the
> same set of technologies that I prefer. The base is in the market range with
> some differences.

It seems clear to me that OP weighted all other factors relevant to him and
decided they were equal.

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mikekchar
Just on paper, hands down Startup A. Smaller company means usually less
politics. More cash (even when taking in consideration the lack of signing
bonus and higher health insurance). Difference in stock options doesn't
override it. You have to multiply the potential gain against the odds of you
actually making that gain. Let's say you have a 1:1000 chance to make a 1000x
gain. The difference in stock options is then worth ~20K. As long as you plan
to work at the company for more than a year or two, then you will come out
ahead with the higher salary -- especially since in a smaller company you are
more likely to have seniority.

Of course, this isn't a question you should probably be asking the internet.
My values are not yours. If you end up losing out on $20 million because you
followed my advice, then you will hate me forever. So do what you want.

~~~
bb88
> Smaller company means usually less politics.

In my experience this was completely untrue. Stable companies are stable for a
reason. They've figured out their path to profit and churn on making
deliverables. It doesn't matter so much on size, per se, but it does matter
that the profit has stabilized. And you're much more likely to find that in
larger companies, frankly, because they're large for a reason.

In a small company, typically, the path to sustained profit is unknown and
variable. Today you're the founder's best friend because you can crank out
ruby code like there's no tomorrow. And then tomorrow shows up and you're out,
because some influencer that the founder listens to told him that Node.JS is
the future is Ruby on Rails is old hat.

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poc_m
Startup A seems better, 20k more than market rate sounds really good for a
startup, and based on very recent HN threads (but also some bias from badly
made personal decisions), it's hard for employees to make money from options
so best assume they are worth 0 when making a decision like this. You should
get market rate at least, then everything extra can go toward more money or
more stock, whichever excites you to work more.

But, there are several other factors that may contribute more to your
happiness:

\- Who will you report to in each company? How many levels under the CEO/CTO?
Politics can suck the life out of you and make you not want to work even when
you are making more.

\- How many hours of work per week is really expected? Is it corporate 9-5 or
startup 9-5 (aka 9-9). Only way to get that info is from people working there.

\- How many days of vacation do you get? Is it a loose 'open vacation' policy
or do you actually get a fixed number of days that you can take off?
Preferably it's the latter.

\- What percentage of the company do your stock options make up? Do you know
the number of shares outstanding, liquidation preferences, etc.

\- What kind of work will you do? Does the domain and the stack interest you?
Does this help you reach your career goals?

Hope this helps, good luck!

EDIT: Formatting.

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matco11
Based on the info you provided, there isn’t really an economic difference
between the two offers. As a result, if I were you, I would try to decide
based on other parameters: how do you like the product, the people you would
be reporting to, opportunities for personal growth, etc. All else being equal,
I would go for the smaller company, as intrinsically it’s likely to offer more
opportunity, or continue interviewing with more companies to get more offers.

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kenneth
Not sure what you mean by 20k in options. If you mean share count, those are
meaningless numbers, in that without knowing the number of outstanding shares
you don't know the denominator in the denominator in the fraction. Find out
all the terms: numbers of shares outstanding, strike price & 409a valuation,
last round preferred valuation, vesting schedule, etc.

Other than that, A looks more promising.

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shekispeaks
Better health insurance and lunch are signs that the company cares more about
employees. This is a big signal in my book

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jason_slack
My thoughts are a bit different......

1\. Is one of these jobs easier on your personal life? i.e. taking care of
kids, significant other, etc?

2\. Is one of these jobs more interesting to you? Personal growth for the
future?

3\. Have you ever had stock options from other jobs amount to anything
tangible and I mean really tangible, more than 6 figures?

4\. Are you ok working for less base salary and if the stock options never
amount to anything you will be ok with that?

I prefer a pay-check to plan my future not a hyped up promise most companies
pitch when they mention their options package. I told a company recently that
their options meant absolutely nothing to me. Neither did their free lunch or
Friday night company dinners at some "new and exciting" restaurant. They
replied most staff there was working for more options than salary. It became
clear to me then why they were having motivation and teamwork struggles.

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znpy
Startup A.

First things first: if you're being offered a position at a startup-b-level
now, you're likely to qualify for working there in the future too.

More concrete things: 20k$ more on base salary and free lunch are real world
perks.

You'll make up for the 10k$ signing bonus in the first six months alone
anyway.

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bluesnowmonkey
Value the higher base salary. You don't just make more at this job. It's the
number they'll probably ask for at your next job, so you'll make more there
too. It's a raise for the rest of your life, cumulatively worth hundreds of
thousands of dollars.

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mathattack
You left out the most important two things:

1 - How much will you respect your boss?

2 - Will they give you time?

The answers to that will determine how much you learn.

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segmondy
Here's how I'll think about it.

Forget the options for a minute. Let's say you plan on being there for 2 yrs.

20k - (280*12) -5 = 11640

Option A = $11640 before taxes. ~$7000 after taxes.

is $7000 after taxes going to matter to you? If you don't have those, would
you be fine? If it matters then option A is looking better.

Now look at the business fundamentals, you know these companies better, how
long have they been in business. How much did they both raise in A & B rounds?
B2B or B2C? B2B always, what's the number of customers they currently have?
How's traction? Who are the competition in the industry? Who are the founders
and C suites? How many employees, what's on glassdoor & blind? What's their
tech stack? Any well known folks in the industry working there? This is a full
day work of research, put it all together and see who looks likely to make it
to the finish line?

If A is more likely to succeed, easy, go with A. If B is more likely, then
does that extra $7000 from A really matter? If not, go with B. If it matters,
can you work some side gigs? 20hrs a month at $50 will get you the same $7000
at the end of the year? If you can work some side gigs, then B. If you can't
work side gigs and need that $7000, can you downsize and give up some things?
Nope? Then option A.

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uiri
Ask startup A for a $10k signing bonus to match startup B. Free lunch vs lower
health insurance looks like a wash. $20k more base is probably worth more than
$20k more in options.

Aside, what does "$20k more stock options" mean? $20k more in strike? The
strike value is how much the stock has to be worth before the options are
worth anything. And if they're issuing you in the money (i.e. Series B strike
price) options, then you're going to have a nasty tax bill.

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late2part
Which job would cause you to enjoy life more? At which job will you have the
largest impact over the next 5 years?

$10k signing bonuses are tie breakers after you answer the real questions.

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donretag
Personally, I view free lunch as a signal that your are expected to work thru
lunch with long hours. Surely there had to be other differences. Commute?

~~~
maaaats
Huh, for me free lunch means the company takes an interest in the well-being
of its employees (fixd). This may differ from area to area, though. But I find
it more social and relaxing to just eat inside, than having to spend energy
and time on finding a place to go out and eat.

~~~
sverhagen
>takes an interest in the well-being of its _employers_

Freudian? ;-)

~~~
maaaats
Hehe. As a non-native speaker I have a hard time remembering the difference
between employer and employee.

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ohyes
So A is giving you 7k more money after healthcare and signing bonus for the
first year, and 17k more for subsequent years. B gives you a one time 20k
(dollars?) worth of stock options.

I would take the cash, how many years do you want to stay at the next place?
The math is pretty easy.

I personally choose based on who I want to work with, how I think I’ll grow
professionally and is the company doing something I want to be involved in.

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brogrammernot
It’s hard to gauge the Series B vs C because Company B’s product could just be
significantly more cash intensive.

Could you shed some light on the two companies/focus areas?

Some posters have made good points that on paper Company A’s equity should be
worth more to you, but either way you need a liquidation event for you to make
money off the equity (unless either offers a tinder or palantir item where you
can sell a % of your shares every 12-18 months to the company).

I’d choose whatever company’s mission/work seems more appealing to you. If you
have a family, I’d likely choose the one with the higher base salary as $20k
isn’t a small sum wlhen it comes to the cost of raising a family. For someone
who is just on their own, it’s easier at times to accept a higher risk
threshold and opt for more equity if the company’s path to a liquidation event
seems more relevant.

Honestly speaking, I’d have to imagine that considering those offers that
Company B wouldn’t match or come close to the base salary of Company A. $20k
is a drop in the bucket for what I’m assuming is a technical hire as your work
should easily cover that difference.

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nodesocket
My personal experience is if the salary is high enough, lunch is a non-factor,
you'll want to actually get out of the office and get some fresh air. $15-30 a
day for lunch is a rounding error. 261 work days in a year * $20 per lunch =
$5,220 a year. I'd much rather get away, go out with colleagues, friends, try
new lunch places. Optimize for happiness.

~~~
chrisper
You must be making a lot if you consider 5220 a year rounding error...

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codingdave
Which leadership team is better for you? Which one can deliver both a
successful company, and a healthy working environment where you will be
respected and given opportunities to grow?

The details of the offer won't matter one bit without good leadership. So
think carefully about how the interviews went, and choose the better team.

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betadreamer
If you are asking this, that means you need more data. DO NOT judge startup
solely based on the compensation package. Some tips to ask:

\- Work environment. This involves who you will be working with and how they
work together? Do they use Scrum? Have you talked to anyone that you will be
working closely with?

\- Growth Potential. Which one is more challenging? Which environment is more
suitable for you to grow?

\- Go deep in where the company stand. Competitors, market fit/advantage, etc.

\- Ignore the number of stock options. Ask for outstanding shares or get the
percentage.

\- How's the founder?

All being said, don't be afraid to negotiate! Company take so much time to
write an offer. No company will decline you just by negotiating. Least thing
they will do is to tell you straight up that this is their best offer. If you
like B more than A, tell them you will sign if they match the base with the
other.

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iambinksy
The things important to me are annual leave, are there periods of crunch and
whether you are expected to be available on email or otherwise out of work.

I care more about my quality of life now that I'm a bit older, you might not
have the same considerations now but things do change.

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whalesalad
Based on the info you provided A is my preference. Unless it’s due to hyper
growth a series C isn’t giving me a warm and fuzzy. Your options will be worth
more at A. You also have the ability to earn more options based on performance
at any time so don’t forget that. I’d take salary and lunch and not sweating
benefits over more options at a later-stage company that just got 200m. (I’m
one of those old stubborn people who think raising money should generally be a
last resort.)

That being said as other commenters babe stared I’d care most about my team,
the domain, the impact I would have in the org and the impact the role would
have on my career.

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gesman
Ignore stock options. Unless whatever they call options - can be sold for cash
(possibly after vesting) in an opened market. If not - consider it's $0 value.

Re-compare everything afterwards. $10k signing bonus is not a biggie compare
to consistent +$20k base. Bigger premium for health insurance may mean bigger
benefits - but make sure to dig that.

Free lunch saves you $10/day - multiply it by 200 - and here's another $2k
after taxes or $3k before taxes.

Also - regardless of everything - which place feels more fun to work at?

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axedwool
Assuming everything else is a frictionless void, Company A is a better deal
compensation-wise, so that's where I'd go.

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emdowling
You mention "interesting and challenging work" \- but which one is more
meaningful for you? Which one will let you deliver the impact which is most
inline with your values and principles? Compensation-wise "A" edges out "B",
but which one will you be more excited to get out of bed for each morning?

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nojvek
Option C. Work at a big mature company that gives RSUs, big fat salaries and
signing bonus.

Startups that make it big are rare and like winning the lottery.

Don’t. Just don’t work for subpar salary. Assume your stocks are worthless,
assume you’ll burn out in an year or two (most do). Will you still be content?
Then do it. Don’t bank on the lottery.

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suomynona1
Adding more details:

I have a family and kids. I am the single income earner in the family.

* Both have opportunities to grow into management although with A it feels much more possible due to their size

* Both give unlimited vacation

* Both are located fairly close to each other so commute will be the same

* Both pay for bus passes

* Both have 401K but no matching, yet

* Startup A is much smaller 11-50

* Startup B is 300+

~~~
PascLeRasc
Unless the Glassdoor reviews are a red flag, it seems like startup A is
significantly better based on the base salary and potential for personal
impact and growth (and even higher salary).

~~~
user5994461
Agreed. A without a doubt.

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ryandrake
Any other benefits that are different? 401k details? What are the specific
differences in the health coverages? Maybe startup A’s health coverage is
worth the extra money. Other, non-health-related insurance benefits? Vacation
time? So many things to consider in the package.

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sbfeibish
In the mid to late 1980's I went for $10,000 more and a job at a regular
company. A research institute. Instead of $10,000 less and stock options at a
well-established startup. I regret my decision to this day. The stock option
company is a name you know.

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jonthepirate
The one with better KPI's, unless your gut tells you you won't like your
coworkers.

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prawn
Go to Company A. Explain that you have interviewed with two great companies,
both with solid offers, but that the alternative has offered (in part) a $10k
signing bonus. Say that if they can match that signing bonus, you're on board.

------
suomynona1
Adding few more details:

Both startups are B2B. Startup A started as B2C but are expanding to include
B2B (more focus and that's I'll be coming in place).

Hopefully, I don't reveal too much by saying this:

Startup B is YC backed.

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kbuchanan
How big is the team you’ll work on for each firm?

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woolvalley
Real question is, how does it compare to FANG? Even if there is an exit, it is
unlikely to meet what you would of made at FANG.

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bitVelocity
Most startups fail, take the most cash you can.

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jakobegger
Looking through the answers, I'm surprised that people seem to prefer free
lunch to affordable health care...

~~~
tempestn
The difference in healthcare cost is $220/month, or about $7 per day. Free
lunch could easily be worth that much. More importantly though, the free lunch
offering has a $20k higher salary.

~~~
dbuxton
$220/paycheck which in the US is typically twice a month, so $440/month.

My experience as a Brit working in the US is also that health insurance with
higher employee contribution is often also (bizarrely) more expensive and
worse quality in other ways, so there are additional non-financial (or not
just financial) factors to consider. But the OP hasn't given enough detail to
evaluate.

~~~
tempestn
Ah, good point; I read it as per month for some reason. Also divided by 30
rather than working days in a month, ~21. So it's more like $21/day, which is
obviously more than a lunch. Either way though, these differences are dwarfed
by the difference in salary, so it really comes down to that and the actual
differences between the jobs and work environments. (Interesting point that
higher-contribution healthcare is generally lower quality though! Would be
interesting to see some kind of study of that; it does make intuitive sense.)

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lazyjones
The one with the more interesting (to you) product/market, if everything else
seems equal.

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philliphaydon
20k more or 20k less. That’s 40k difference. That alone should put you on
option A without a thought. Base is not relevant when you’re saying 1 is more
and the other is less and you can only choose between the 2. One is either 40k
more or 40k less.

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sverhagen
Can we know what your decided? :)

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denkmoon
startup A is probably a little more down to earth.

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rajaganesh87
Startup A

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noncoml
A

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expathacker
"Cash Rules Everything Around Me." \-- Wu-Tang Clan.

I'm old and jaded, but salary should be your primary metric. Stock options are
worthless. I took a 50% cut at PagerDuty (YC10) for 2% of the stock options,
they're now worth $1bn+ and screwed me pretty hard, the day after my father
died. They didn't even offer any severance pay until I pointed out how much
damage I could do to their reputation, then they gave me a week. Start-ups,
especially run by new founders, don't know how to treat people humanely.
Thanks guys. Since then my attitude is, "Fuck you, pay me". You will not win
the start-up lottery. If they don't offer an 83(b) election, you could end up
in the red if they do exist. This happened frequently in 2001, it even lead to
several infamous suicides.[1]

Are you 200% sure you will last the 3/6 month signing-bonus waiting period? If
not you could end up with a liability greater than the value of the bonus. I
had this when when a start-up outsourced ops to LoudCloud. They contested our
unemployment claim and I spent $3k in legal fees fighting them, in the middle
of the start-up recession.

Start-ups will not invest in you as an employee, and will drop you without a
second thought. Expect to spend all of your free time learning new skills just
so you don't get fired.

[1]
[https://www.siliconinvestor.com/readmsg.aspx?msgid=17123680](https://www.siliconinvestor.com/readmsg.aspx?msgid=17123680)

(edited for spacing, and to add the anecdote about severance pay)

~~~
segmondy
How did PagerDuty screw you? By firing you?

~~~
bb88
Yeah. Probably because he had 2% of the options, and they wanted to claw it
back from him.

~~~
kbyatnal
I don’t think firing gets rid of vested options, right?

~~~
bb88
Right, but OP said he was fired before he had options vested.

So he took 2% options at a 50% pay cut, but then got fired and that screwed
him out of the 2% options before he could vest.

Welcome to the valley.

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Double_a_92
Definitely A. Can't argue against free lunch :D

