I've been approached with an opportunity to work at a new startup. I've known the founders for several years, working with them at one point or another. They understand both the business and technology side and have had several successful exits.<p>They're self funding, offering competitive, but reduced from my current, salary of 100k and 2% grant. My risk is essentially nil with how good the job market is, and my upside will be nice if we're successful. The position is first employee and lead architect. It seems like a favorable offer and it seems like the numbers line up fairly well for what I see for post series A startups.<p>Theres always talk here about not working yourself to death for minimal equity and not getting blinded by it, but being new to the startup side of things I don't really have a clue about what "significant equity" means and the self funded nature of the business makes things more confusing. I don't expect to get rich from it, but I think we've got a good plan and history of executing well so we've got a good shot at turning time into a good payoff.<p>So, HN, at what point in the ownership percentage do you go "all in" on? 2%, 5%, 10%, 25+?
In my deluded world, significant equity is enough that you get rich if the founders get rich and get wealthy if the founders get wealthy even if less so in both cases.<p>It's not the $100,000 in salary over three years you didn't get in exchange for taking equity after a deal which made the founders rich if not wealthy. Significant equity aligns your outcomes and interests and gives you a seat at the table when liquidity events are going down.<p>Significance is more of a sliding ratio. 0.5% is significant if the founders each have 6%. 10% is significant if they have about 25%. There should be only one qualitative step between stakes, and that step should reflect the size of the company.<p>A final tell on significance is if the ownership structure is relevant to the discussion. Significant equity alters it in a...wait for it...significant way. It signifies that the offer is about more than a hiring decision. If the next programmer passing the interview process would get the same offer next week then the equity isn't significant. Gates and Allen wanted Ballmer, nobody else was going to get 6% with an option to 8 because there was nobody else.<p>Good luck.
The stock they offer you is to compensate you for the risk you take by working for an 'unproven' company, that may or may not be successful, with a below-market salary.<p>In post series A startups, there is already some 'proof' of success (generally in the terms of growth), so salary offerings gets high and stock options get low than a pre-series A startup.<p>Stock options/grants are tricky because of dilution and preferences. The 2% can mean many things. How much the company plans to raise in the future? Even if it's not planned, circumstances can change overnight, and company may need to raise.<p>It seems you have a connection with founders, so it probably won't hurt to talk to them about this issues.<p>In the end, it all comes to how much risk you are taking, and the compensation you are getting for it.
If you're building the bones of the company and you're not getting double digits of equity you're getting a raw deal. That percentage will get diluted with every round too so it's not like 10% of 100M or something.