
Ask HN: Does equity motivate you? - ryeguy_24
Curious to know if having equity at your job (small or large) motivates you to do your best at work.
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dlojudice
Startup Stock Options – Why A Good Deal Has Gone Bad
[https://steveblank.com/2019/04/10/startup-stock-options-
why-...](https://steveblank.com/2019/04/10/startup-stock-options-why-a-good-
deal-has-gone-bad/)

Lessons Learned

\- Venture Capital structures were set up for a world in which successful
companies exited in 6-8 years and didn’t raise too much capital

\- Venture capital growth funds are now giving startups the cash they would
have received at an IPO

\-- “Growth Capital” moved the need for an IPO out another five years

\-- This allows VCs to capture the increase in market cap in the company

\--It may have removed the incentive for non-founders to want to work in a
startup versus a large company

\--As stock options with four-year vesting are no longer a good deal

\- Investors and Founders have changed the model to their advantage, but no
one has changed the model for early employees

\--VCs need to consider a new stock incentive model – RSA’s for the first key
hires and then RSU’s – Restricted Stock Units for everyone else

\- Large companies now have an opportunity to attract some of the talent that
previously went elsewhere

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motohagiography
By motivated, do you mean working for less than I was worth, or perhaps a time
when I added more value than I was paid for?

When I couldn’t accurately value my options in my total comp, I realized that
was the point. The only time I have been motivated was when I was on or
working with a great team. The very best were indie consultants who were all
paid consultant dollars. The next was doing startup consulting to prove a
concept.

Equity that isn’t measured in a percentage of the company with transparency on
prefs is at best, %99.9 of the time just a tax liability. It’s negative
compensation.

Ask yourself, is what you do so magical that someone would give up partial
control of their company for you to perform it? If you are not a cofounder,
not an investor, not the key customer rainmaker what do you do? More so, if
they don’t have the money to pay you, consider the long tail of clowns who do
get funding , then why there isn’t money or why aren’t you worth it.

Most people take options because they are just happy to get the job and it
makes spousal conversations easier. This latter reason I suspect is the most
valuable one of all.

~~~
lonelappde
> percentage of the company with transparency on prefs

I had this at 1 of three startups job offers that offered options. Guess what?
It was only at that one that equity paid out to anyone.

Having an "equity" package without this is insane. Why would you want to work
for someone who trusts their core business to someone they think would fall
for junk like that? It's not just "equity has unknown value", it's "equity has
unknown value but I'm giving it a wholly fake measure of 100,000 Monopoly
dollars because I think you are just that stupid."

I'm not going to join a team that is pulling the moral equivalent of a 419 or
Windows Tech Support Telemarketing Scam on day 1 of our relationship.

These companies are actively selecting for morons. Not only are they immoral
scum, but they aren't going to be very successful if their engineers are
morons.

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mharroun
Short answer from someone in the startup space for over 12 years... no.

They are lottery tickets and I treat them as such. I was a c level at my last
position and had a percentage ownership... no difference.

I treat salary and bonus as my only comp, equity is just a lottery ticket of x
size.

~~~
udayrddy
This shook me. Obviously, I was on the opposite side of the opinion. I never
had the experience working in a funded startup, I prepared my mind to join one
(I already chose, a seed funded, likely to join in 2020) after the current
company was acquired in January - Now, I'm confused. Of course, I understand
the equity as a lottery ticket - I'm confident on the startup I chose will
grow big, I'm interested to hear the negative side of your 12 year experience,
especially the climax. Honestly, I'm in a opinion of cashing a 300K at the
least after Series D or Acquisition, in 3-5 years.

~~~
madamelic
> I understand the equity as a lottery ticket - I'm confident on the startup I
> chose will grow big...

I know you already got a response, but I wanted to offer my experience.

Your immediate concern shouldn't be whether the company grows or not. Your
immediate concern should be what happens to your options when your employment
is terminated.

All jobs end in two ways: you are either terminated (fired, laid off, etc) or
you terminate yourself.

What you need to understand is what happens.

\- Will you be able to afford exercising your options? Not a huge deal most of
the time, especially for engineers. It might cost a few thousand. In extreme
cases, you're on the wrong side of the golden handcuffs. Once you exercise,
you are chained to that company's future unless a secondary market is
available.

\- What's the window for doing so (typical is 90 days!)?

Further questions to ask before spending too much time:

\- What are the founders' beliefs about VC (Growth-only, money-hungry, what)?
Every dollar that is invested post-hire potentially means your options are
worth less.

\- What are the founders' beliefs about revenue? Do they want to make their
product "free"? Do they have a business plan?

\- How open are they about finances? If they aren't, just don't. If they spin
some BS about not being able to legally disclose company finances to
employees, run.

Having $1MM worth of equity means nothing if you can't exercise them or if the
founders' crash the company into a cliff being dumb.

------
Porthos9K
Equity is to techies what exposure is for artists: a way to con them into
busting their humps for the promise of a big payoff that almost never
materializes.

I got burned during the first dotcom boom and learned my lesson. Demand the
biggest salary and benefits package I can get, and walk out if they offer
equity in lieu of actually paying me.

------
oriel
I recently discovered that the stock i was hand-wavingly promised never
materialized. 10 months in to this job it's caused a cascade of reflection and
'why bother' moments.

So first, thanks for this question.

At prior jobs, I've hit points of "I dont want to be here, but i'll see it out
because of x vesting point." Personal history has shown vesting to be a
lottery ticket as has been said elsewhere. Its only paid out once and to the
tune of about 4k total.

What i've landed on at this job is that I really dislike many aspects of this
job; the domain, the location, the open office plan, and a lot of apples-to-
apples comparisons when really theres a basket of varied fruits.

That said.

I get to do work here at my own pace and on my own terms. It's why I took a
job at a smaller startup to begin with. Even as I struggle with the finer
points (with some other insights in this thread), and moral points aside, I
find that a lack of options means I'll at least see the year out here. I gave
up a lot to prove myself in a slightly new area of the profession, and that
experience is what I'm choosing to use as my "stock" instead.

------
JohnFen
I'm not motivated by equity at all (and particularly not if that equity is in
the form of stock options). When I'm working for a company, I'm already
completely on-board anyway. If I weren't, I wouldn't be working there.

That's not to say I'd turn it down, I'm only saying that it's gravy, not meat.

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muzani
I always do my best regardless of compensation. Why would I be doing any less?
Doing less harms me more than it harms the company I'm in and it makes it
harder to get compensated more.

Equity is part of a range of other forms of compensation. It is a lottery
ticket, yes, but statistically, lottery tickets have a value. A job that pays
$20k with 1% equity in a million dollar company is better than a job that pays
$25k, but worse than one that pays $50k (after taxes and all that). Plus
there's other little things like potential to learn, comfort level of chairs,
fun level of team.

If I get a better offer elsewhere, I will take that instead.

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recursivecaveat
No way. I work in a startup (~35 employees) on a small, mission-critical team
(~6 members). Even so I consider my contribution to company success or failure
to be negligible. It boggles my mind that someone at a giant company like
FAANG would allow their options to influence their work habits, as if their
role in any way impacts the share price. Perhaps if I was in a top leadership
position, but for a line-worker, equity is just an investment that happens to
be correlated to the performance of your employer (ie bad, because its not
diversified).

~~~
muzani
To be fair, in giant companies, they are no longer lottery tickets, and often
quite valuable.

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codingslave
Startup equity structures are financial vehicles aimed at transferring the
wealth generated from the labor of the employees to the founders and
investors.

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olegious
No. It is and should be treated like a lottery ticket.

Don't sacrifice salary for equity.

The real benefit of working in a startup is gaining experience/exposure to
more responsibilities than you would in a big company.

------
staller
First time equity holder. I like where I work and what I do, but the equity
just gives me FOMO when I think about moving on in the future

~~~
twobat
Missing out what?

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marssaxman
I pay no attention to equity, since it usually ends up being worthless. Salary
is all that matters.

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angryasian
No

Its harder to leave a job that pays well, with good benefits and great work /
life balance above all

