this is a tough lesson to learn, but let it be known that any and all information asymmetry available can and will be used against you. needless to say, it's critical you become as informed as your adversar- err, colleagues, when spending years towards building someone else's (to include investors') dream.
My story is similar to this, but with a slightly better result. VP Eng at a startup, ~1.5% equity, etc. It was during that time that a startup I'd left many years before finally sold, and net value of those options was also $0.<p>When my current startup sold, total value of my 1.5% stake was also worth $0. While I didn't get a severn figure payout for the stock, I did at least get a cash bonus from the investor (part of the executive contract) and a decent retention package from the acquiring company.
"Ownership is not the most important thing. It is the only thing that counts.<p>Nothing else counts in the getting of money. Shareholder thanks do not count. A good salary and a company car and health plan and pension don’t count. Most share options (usually nothing more than the promise of chickenfeed to salaried employees, and a promise broken half the time, too), don’t count. The gratitude of colleagues doesn’t count.<p>Nothing counts but what you own in the race to get rich. If you haven’t much skill, or much wit, or much talent, or much luck, and yet you insist on owning more than your fair share of any start-up or acquisition, then you can become rich. If you take what you’re given, you will probably not get rich."<p>- "How to Get Rich" by Felix Dennis (late billionaire publisher)<p>If you want compensation, insist on it. Don't accept third-class steerage shares that are 100% of nothing.
I once owned 1% of a company that was 22 minutes away from its IPO and then it got pulled. Then we merged with a Big Brand Name company and there were years and years of lawsuits.<p>Oh, the memories...
Remember, a meritocracy means that the best at ‘X’ rise to the top and continue to duke it out while leaving the 99.9% behind.<p>When you are interacting with VCs, remember that their goal is to capture as much value in $ as possible. Our entire system rewards those who have money by giving them the resources to hire the best to help them get more money.<p>That is why wealth distribution follows a Pareto distribution.<p>Ergo, unless you are the founder, assume your shares are worth zero, realize your skills are worth double what you think they are, and put your extra negotiated salary in compounding investment accounts (after enough time, you may join the 1% too!).
> The “easiest” way for your 1% to be worth nothing is to have that preferred overhang be a lot of money<p>Isn't the simplest explanation that the options where not in the money, the strike price was higher than the selling price?
I understand the person is bitter, but owning 2% of a failed company that sells for scraps doesn’t net you anything.<p>Remember when you raise money, that’s not just free money that you suddenly own a percentage of. Unless you manage to make the company worth more than the investments put into the company you don’t get anything, no matter how much the company sells for.
That’s both reasonable and should be expected.