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Ask HN: Startup vs. big company (equity at stake)

4 points by toocool ↗ HN
Hi HN

I was the first employee at a tech startup in SV. I developed and lead many critical projects in the company, and my current title is principal architect (I'm 32 years old). The company grew a lot (100 people) and it's in a healthy growing state. The upper management wants to keep growing sales until it makes sense to sell the ship, and this will still take probably 4-5 years (sales right now are ~12M$/y and I think the plan is to iterate towards 50-100M$/y). In terms of financing, we are at series C.

My current compensation numbers are:

- Base salary: 230k$

- Stock: fully vested and exercised my 4 year stock option grant, and after dilutions I have about 0.7% of the company in common stocks

The problem is: I'm bored out of my mind and I want to explore something different. So, I interviewed for a couple Google-like companies and they offered me this:

- Title: Software Engineer

- Base salary: 190k$

- Performance bonus: 15% a year

- Signon bonus: 50k$

- RSU package: 150k$/y (600k$ grant over 4 years)

I then told my boss in all honesty that I wanted to leave, and do so in good terms, and after a few days he came back to me saying the company can put on the table another 4 year grant for the same number of stock options I received initially, so that would mean another 0.7% over the next 4 years.

However, the company valuation is now pretty high, so I wouldn't be able to buy those options when they vest and I'd have to stay here until the very final end (potentially 4+ years).

I am a very financially oriented person, so, does it make sense to diversify at Google at this point, or throwing away this additional 0.7% is irresponsible considering the situation? If the company reaches those target sales an exit might as well be in the 300-600M$ range, so you can do the math for that 0.7%...

However, I am afraid that with those "golden handcuffs" I'd just end up burning out in these next 4 years out of boredom.

What do you think?

9 comments

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ganoushoreilly
Are you doing it for the money, or happiness. That's what will dictate the right answer.
toocool
I am honestly 50/50 on this. I don't want to live a miserable life, but if by "getting bored" for 4 years I can gain financial freedom by a huge margin, it's something worth considering (and that's what I'm struggling with).
jshc
How in the world could someone who makes $200K+ live a miserable life?

What's the likelihood for the current startup to exit at $86 million valuation in 4 years? (based on brudgers' calculation. I like his logic!)

Also, I would have to agree with you from my own experience as well, I wouldn't do it again unless as a cofounder.

prawn
You're in a great position either way. Many people could only dream of picking between such options.

Obviously maintaining your interest level though is crucial. Could you catch up with your boss and say something like "You have a persuasive argument, but I'm really worried about getting bored. Is there something we can do that might address that?"

Realistically, with what they're spending, keeping you interested might be small-change for them. It could be something like 10-20% time to tinker on something tangentially useful to the company, or periodic breaks to get away and clear your head , or something novel at your desk.

Their offer suggests they value you and they might rather keep someone they value with 80% regular output than re-hire and get someone unproductive, with no knowledge of their systems, etc.

toocool
I'm thinking about this. However, how unreasonable it really is to stay at a tech company for less than 8+ years? All my acquaintances in Silicon Valley, especially the most talented ones, never had a gig that lasted more than 2-3 years. Things always "happened" to them. Putting all my eggs in this basket for such a long time makes me a bit uncomfortable. By moving to Google-like, I would shake things a little bit more for my career and possibly chase some luck.
prawn
If there's a reasonable chance that you can cash-out in four years, I'd gamble on that. Then do absolutely anything you want.
ccdev
This is getting more off topic, but what made you confident in the startup that you were joining? You said you were the first employee, so there's a high amount of unknown variables at that company's stage.

The median "startup scene" outcome for a typical person is to be 30 with 5 short-term jobs, zero net worth, and wondering if it's too late to get into a real stable career. Picking a startup that will "take off" and earns high valuation sounds like a time-costly numbers game at this point.

toocool
Dumb luck and sheer stupidity, I joined because the idea was cool, the founders were friends and I wasn't aware at that time how much big companies pay. It was my first startup experience, was working in a slow enterprise environment before and it seemed like a fresh breath of air.

I would never, ever, do it again unless I was a cofounder, in which case the stake would make it more worthwhile. I would have looked at Google to begin with.

But now that I got "lucky" (and I put it in quote because it's all on paper, all it takes is a little bump in the road and my equity gets washed away by unfavorable dilution terms, especially if I leave), I am in this conundrum of leaving vs staying.

brudgers
Without considering the time value of money, the $50,000 signing bonus is about the same as 0.7% of a $7,2 million dollar exit for the current company. An exit where 0.7% returns $600k is about $86 million. With 1.4% vested from both grants, the exit would need to be at about $43 million to equal the $600k. Note that those exit numbers do not consider preferred stock which may take some, most or all of the exit payment prior to a payout to holders of common stock. In other words, 0.7% of the common stock does not equate to 0.7% of the value of an exit. Preferred stock gets preference. It is almost certain that is the case for a company at series C. Looking at the cap table is the only way to come up with an idea of what the payout might be at exit.

A second consideration is liquidity. Once vested, how easy is it to sell the stock of the current company versus the big company. It is easy to sell vested Apple stock. It is hard to sell vested Uber stock and things tend to be worse from there.

Good luck.