11
ralee
8y

Heard its a norm from my ex-classname that its a norm be paid with equity instead of a fixed salary. whats ur take on this? please share. I for one cant imagine how i am suppose to survive without money.

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  • 1
    Unless it's a unicorn like google or Facebook, it's rarely worth the hunger pains. I've seen sad stories of extreme loyalty with that type of compensation, and the execs through some loophole cheated them out of all the shares they had. I'd make sure to talk to a lawyer about the terms and conditions of that compensation, but then again if you can't afford a lawyer...
  • 0
    build your dream or someone else will do it for you.
    and dreams can't be shared
  • 4
    It's normally not an either-or situation. Only the scummiest of companies will try to pay in equity only.

    Normally it's a lower salary in return for equity. For example the rate for a developer at Big Corp in your area is $50k but a new startup can only afford to pay $30k they might offer up equity or share options instead.

    Say they did share options and the current valuation is $2/share and they give you 1,000. Well right now the shares are actually worth diddly-squat. A share option is only the OPTION to buy shares at a later date, but at today's valuation.

    So in 3 years the company is bought, and the new valuation is $100 a share, you've made $98,000 ((1000 shares * $100/share) - $2k to buy at original price).

    So your $30k/year + $98k means you've made $188k compared to the $150k you would have made at Big Corp.

    But that only works out if the company succeeds. If they fail or you leave for any reason, you don't get your payout.

    Bigger risk == bigger (potential) reward
  • 1
    @aaron That's a dann good explanation. Thanks
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