
Ask HN: Considering a job offer at a “unicorn.” What should I know about equity? - trying222
I&#x27;m deciding between job offers - one at a Big 4 company, one at a so-called &#x27;unicorn.&#x27; I like them both and know I&#x27;d enjoy the work and teams at either.  On paper, the later offer is better - slightly higher base, much more equity (on paper).<p>My question: how does one compare the value of RSUs from a Big 4 company (with a clearly known value and relatively predictable future performance) with shares in a private company?  On paper, the shares in the latter are worth much more (based on the current public valuation).  Are there any caveats I should know about - can I assume the numbers I&#x27;m being given are reasonably accurate?  Obviously, there is much greater risk at a company where the valuation is heavily based on future growth.<p>What questions should I ask about the shares, or what other factors might I want to consider when weighing these offers purely on compensation?  I&#x27;ve read about different types of shares, liquidation preferences, etc.  How much of this could a candidate expect to know about and should it factor into a decision?
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rahimnathwani
Where do you need help?

\- Valuing stock options or shares in a private company?
([http://www.payne.org/index.php/Startup_Equity_For_Employees](http://www.payne.org/index.php/Startup_Equity_For_Employees))

\- Negotiating compensation? ([http://www.amazon.com/Negotiating-Your-Salary-
Make-Minute/dp...](http://www.amazon.com/Negotiating-Your-Salary-Make-
Minute/dp...))

\- Establishing a benchmark? (check AngelList)

Similar questions are asked every few months on HN. Search hn.algolia.com to
see answers provided by others. A few of them are worth reading.

Mine aren't the best, but might be worth skimming:

[https://news.ycombinator.com/item?id=7370839](https://news.ycombinator.com/item?id=7370839)

[https://news.ycombinator.com/item?id=8092653](https://news.ycombinator.com/item?id=8092653)

~~~
trying222
Thanks for these. First link (and similar others I've found) has helped me get
up to speed on terminology and other issues at play.

I haven't been given information about what % of the company the shares I'm
being offered represent. How critical is this do you think? Can I take the
company at their word in terms of what the shares are worth at what they state
is the current valuation of the company?

~~~
argonaut
You should definitely press for as much information as you can - how many
shares (or stock options, or RSUs) you're getting, how many shares are
outstanding, the common stock / preferred stock breakdown, liquidation
preferences, etc. It's unlikely any startup will be willing to share _all_ of
that with you, though.

That being said, they definitely cannot lie to you.

~~~
trying222
Thanks, this is a helpful list of questions. I'll go ahead and ask and see
what they say, worst case they won't be able to answer any of them.

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rahimnathwani
"On paper, the shares in the latter are worth much more (based on the current
public valuation)."

By 'public valuation' I assume you mean a $ figure that was announced after
the last funding round. Your shares probably don't have liquidation
preferences, whereas the investors' shares probably do. So, you can't rely on
a valuation calculated by a journalist. You need to do the math.

"How much of this could a candidate expect to know about and should it factor
into a decision?"

Companies are used to dealing with people who don't understand, or do not look
too deeply into the numbers. So, I guess they will expect you not to ask for
details. However, without knowing the details of the cap table (including, as
you say, the volume of shares outstanding, and the different rights attaching
to different classes of shares) you can't hope to arrive at a useful
valuation. Many people on HN suggest valuing startup equity at $0, and this is
one of the reasons.

~~~
trying222
Well, the number I'm using is what the company has told me is their current
valuation (it's slightly higher than what was reported by press after the last
round of funding, but not dramatically so). The share prices I'm being given
are stated as a fact based on this valuation (along with optimistic projects
of what they might look like were the company to multiply in value).

Should I ask about liquidation preferences? % of company that the # of RSUs
I'm being offered represents? I guess there's no harm in asking.

~~~
rahimnathwani
"The share prices I'm being given are stated as a fact based on this
valuation"

If the company multiplies in value, and VC funds' liquidation preferences are
'non-participating preferred', then the liquidation preferences won't have any
effect, and each of your shares will be worth the same as each of theirs. (Oh,
and this assumes they don't have any anti-dilution protection.)

But, the company's value going up by a multiple isn't a sure thing, so your
shares are probably worth less.

"Should I ask about liquidation preferences? % of company that the # of RSUs
I'm being offered represents?"

If you want to know how much your shares are worth, then yes.

------
ams6110
Equity is something that is often effectively worthless. Ask yourself, if you
were in a position to exercise your options, is there actually a market for
them. Paper value is meaningless, if there is nobody who will buy your shares.

~~~
trying222
I've been told that there are various gray market (?) channels to sell shares
in a company that is not public, but I don't even know what to search for to
find more about these. Do you have any pointers on that?

~~~
jyu
The people most interested your shares are people who agree that company is a
unicorn. Usually existing shareholders with some money (angel investors, VC,
advisors, founders, other employees) or potentially new shareholders that want
a piece. Your ideal time to take money off the table is while they are raising
the next round.

