Ask HN: What is “significant” equity?

yeah, its a grant with vesting period, not options. As far as type I'll have to get into with actual contracts to sign but I believe we're all the same across the board, talking in terms of fully diluted percentage.

35/35/10/20 would be significant. The equity grant is treated as increasing the value of the founder's equity. The option pool is already a sunk cost toward employees.

I would say significant stock is at least an amount that doesn't make someone think twice about the package. If the founders are holding 80%, then everyone else is pretty much an employee not an owner.

There's nothing wrong with being an employee. There's nothing wrong with working below market rate in exchange for some equity. Just be clear that it's a job and the only way you'll achieve market rate compensation or above is with a significant exit, limited dilution, and good-will toward you on behalf of the major shareholders.

So let's say you take the job for 80-90k for a salary of 30k below market. In exchange you get 2% equity.

Suppose there's a 5% chance of a $50 million dollar exit after five years and there's a 2:1 dilution risk of 50% and a bad-will at liquidation risk of 20%.

The 2% of a $50 million exit is $1 million. The 2:1 dilution risk at 50% reduces that to $750k. The bad-will at liquidation risk reduces the value to $660k. The 5% chance of such a payout makes the value of the equity $33k.

So on those optimistic assumptions, there's $3k of upside in taking the deal. Continual reassessment is necessary to make sure that continuing with the company is a good investment. Odds are that the odds of a big exit will go down over time and that dilution and bad-will will go up.

Finally, if you're arguing for more do you really want to work somewhere that requires constantly convincing people of your worth? Investing in the current opportunity limits your ability to invest energy in something better (in fairness it also limits your ability to invest in something worse).

If you're already willing to walk out the door for another job, why fool around with something that offers very marginal return? Go into business with people who share some of your interest in your getting rich.

You have to understand that a payout (which is very, VERY rare to be worth anything to you) is likely to be years off.

Is it worth being below-market for 5 years for that supposed payout?

Early stage companies (pre series A, perhaps even pre Seed in your case), cannot afford market salaries - especially in cities like SFBA. Startup compensation includes equity to make up for a below-market salary. Your "risk" is your opportunity cost - is that 2% over 4 years worth the $300-400k you could could have earned as part of a market salary somewhere else?

Ideas are very cheap - worthless actually, if you can't execute them into a product, let alone a product that users will actually pay for.

I don't know your current salary, but it should be a hell of a lot more than $100k in SF. So yes, 2% is low, especially given that it doesn't sound like there is an MVP or demo product existing - i.e. you would be building this as your role. Whether they like it or not, you're technically a cofounder, however as you're receiving some salary, you're not taking anywhere near as much risk and shouldn't receive as much equity as them - assuming they're not paying themselves.

Looking at that link, you're talking, in the Bay Area, about 185k + 2% with less than that meaning (significantly) more equity.