Simple bit of math from much earlier in my career:
* Google salary is $180k
* Startup salary is $125k
Expected value of stock options must be >$55k per year to be economically equal. If we assume 5 years to exit, 20% odds of successful exit, and $50 million exit, that means I must own about 3% of the company at the time of exit, assuming I have no risk aversion (and more if I do). Assuming reasonable dilution over the 5 years, I need to get substantially more than 3% today.
In most cases, only founders get that level of equity. The equity offered to future employees is, quite frankly, a complete joke for most startups I've seen. The assumption is that there aren't enough developers who can't value options well that some sucker is gonna get fleeced.
That doesn't make startup the wrong option (I went with it), but the incentives have to be non-financial. Startups can be great or horrible places to learn, depending on how much exposure you have to business processes and similar. In Google, you're in a specialized box. In startups, you can see many more aspects of the operation. Getting into a position with that kind of visibility, however, can be difficult to properly negotiate early in the career.
* Google salary is $180k
* Startup salary is $125k
Expected value of stock options must be >$55k per year to be economically equal. If we assume 5 years to exit, 20% odds of successful exit, and $50 million exit, that means I must own about 3% of the company at the time of exit, assuming I have no risk aversion (and more if I do). Assuming reasonable dilution over the 5 years, I need to get substantially more than 3% today.
In most cases, only founders get that level of equity. The equity offered to future employees is, quite frankly, a complete joke for most startups I've seen. The assumption is that there aren't enough developers who can't value options well that some sucker is gonna get fleeced.
That doesn't make startup the wrong option (I went with it), but the incentives have to be non-financial. Startups can be great or horrible places to learn, depending on how much exposure you have to business processes and similar. In Google, you're in a specialized box. In startups, you can see many more aspects of the operation. Getting into a position with that kind of visibility, however, can be difficult to properly negotiate early in the career.