Startup Equity 101

Summary

Startup Equity 101 I am writing this essay because I believe that money is both useful and worth thinking as little as possible about. No one I know joins a startup to learn acronyms about equity and stock options. But some of those acronyms might have serious impacts on your life (or, at least, your money). The point of the below is to provide clear explanations of concepts that I think everyone who works in tech should understand. There is a chance that reading this essay will help you make decisions that increase your net worth in the long term. The piece will probably take you at least 30 minutes to read. But, if you have (or may one day have) startup equity, the infomation below may directly or indirectly help you buy the house you want, retire earlier, provide a comfortable education for your children, travel more, or whatever else you want to do that money can help with. This is not an advertisement for any particular service. It is also not financial, tax, or legal advice. My only unsolicited advice is that you should not blindly take unsolicited advice from strangers on the internet. The information below will probably be most helpful for people who are tax residents in the United States and/or work for American startups. But if you have questions, or if something below is incorrect (or incomplete), you can email us. Choosing where to work is an investment decision. But unlike venture capitalists, your currency is time, and you generally cannot diversify your time across a portfolio of companies. (You could freelance, though this lacks many of full-time work’s benefits.) Selecting the right startup to join will probably be your single biggest driver of returns (or lack thereof). You can define returns in terms of money, though you could also consider other variables: like fun, learning, ownership, impact, connections, and so on. This essay is about the money. Compensation is the most straightforward piece of the puzzle. You look at the number and decide if ...