Ask HN: Which startup offer would you take?

How big is the team you’ll work on for each firm?

Which job would cause you to enjoy life more? At which job will you have the largest impact over the next 5 years?

$10k signing bonuses are tie breakers after you answer the real questions.

Just on paper, hands down Startup A. Smaller company means usually less politics. More cash (even when taking in consideration the lack of signing bonus and higher health insurance). Difference in stock options doesn't override it. You have to multiply the potential gain against the odds of you actually making that gain. Let's say you have a 1:1000 chance to make a 1000x gain. The difference in stock options is then worth ~20K. As long as you plan to work at the company for more than a year or two, then you will come out ahead with the higher salary -- especially since in a smaller company you are more likely to have seniority.

Of course, this isn't a question you should probably be asking the internet. My values are not yours. If you end up losing out on $20 million because you followed my advice, then you will hate me forever. So do what you want.

The one with better KPI's, unless your gut tells you you won't like your coworkers.

Not sure what you mean by 20k in options. If you mean share count, those are meaningless numbers, in that without knowing the number of outstanding shares you don't know the denominator in the denominator in the fraction. Find out all the terms: numbers of shares outstanding, strike price & 409a valuation, last round preferred valuation, vesting schedule, etc.

Other than that, A looks more promising.

Assuming everything else is a frictionless void, Company A is a better deal compensation-wise, so that's where I'd go.

A

The standard advice, which my personal experience backs up, is to value startup stock at 0 when negotiating. Survival plus Liquidity at a good enough valuation without preferreds wiping you out are very uncertain.

I would look at team, is the work interesting, location/office and cash.

You mention "interesting and challenging work" - but which one is more meaningful for you? Which one will let you deliver the impact which is most inline with your values and principles? Compensation-wise "A" edges out "B", but which one will you be more excited to get out of bed for each morning?

Based on the info you provided A is my preference. Unless it’s due to hyper growth a series C isn’t giving me a warm and fuzzy. Your options will be worth more at A. You also have the ability to earn more options based on performance at any time so don’t forget that. I’d take salary and lunch and not sweating benefits over more options at a later-stage company that just got 200m. (I’m one of those old stubborn people who think raising money should generally be a last resort.)

That being said as other commenters babe stared I’d care most about my team, the domain, the impact I would have in the org and the impact the role would have on my career.

Better health insurance and lunch are signs that the company cares more about employees. This is a big signal in my book

startup A is probably a little more down to earth.

Startup A.

First things first: if you're being offered a position at a startup-b-level now, you're likely to qualify for working there in the future too.

More concrete things: 20k$ more on base salary and free lunch are real world perks.

You'll make up for the 10k$ signing bonus in the first six months alone anyway.

Ask startup A for a $10k signing bonus to match startup B. Free lunch vs lower health insurance looks like a wash. $20k more base is probably worth more than $20k more in options.

Aside, what does "$20k more stock options" mean? $20k more in strike? The strike value is how much the stock has to be worth before the options are worth anything. And if they're issuing you in the money (i.e. Series B strike price) options, then you're going to have a nasty tax bill.

Based on the info you provided, there isn’t really an economic difference between the two offers. As a result, if I were you, I would try to decide based on other parameters: how do you like the product, the people you would be reporting to, opportunities for personal growth, etc. All else being equal, I would go for the smaller company, as intrinsically it’s likely to offer more opportunity, or continue interviewing with more companies to get more offers.

You left out the most important two things:

1 - How much will you respect your boss?

2 - Will they give you time?

The answers to that will determine how much you learn.

Definitely A. Can't argue against free lunch :D

Looking through the answers, I'm surprised that people seem to prefer free lunch to affordable health care...

Personally, I view free lunch as a signal that your are expected to work thru lunch with long hours. Surely there had to be other differences. Commute?

My personal experience is if the salary is high enough, lunch is a non-factor, you'll want to actually get out of the office and get some fresh air. $15-30 a day for lunch is a rounding error. 261 work days in a year * $20 per lunch = $5,220 a year. I'd much rather get away, go out with colleagues, friends, try new lunch places. Optimize for happiness.

If you are asking this, that means you need more data. DO NOT judge startup solely based on the compensation package. Some tips to ask:

- Work environment. This involves who you will be working with and how they work together? Do they use Scrum? Have you talked to anyone that you will be working closely with?

- Growth Potential. Which one is more challenging? Which environment is more suitable for you to grow?

- Go deep in where the company stand. Competitors, market fit/advantage, etc.

- Ignore the number of stock options. Ask for outstanding shares or get the percentage.

- How's the founder?

All being said, don't be afraid to negotiate! Company take so much time to write an offer. No company will decline you just by negotiating. Least thing they will do is to tell you straight up that this is their best offer. If you like B more than A, tell them you will sign if they match the base with the other.

It’s hard to gauge the Series B vs C because Company B’s product could just be significantly more cash intensive.

Could you shed some light on the two companies/focus areas?

Some posters have made good points that on paper Company A’s equity should be worth more to you, but either way you need a liquidation event for you to make money off the equity (unless either offers a tinder or palantir item where you can sell a % of your shares every 12-18 months to the company).

I’d choose whatever company’s mission/work seems more appealing to you. If you have a family, I’d likely choose the one with the higher base salary as $20k isn’t a small sum wlhen it comes to the cost of raising a family. For someone who is just on their own, it’s easier at times to accept a higher risk threshold and opt for more equity if the company’s path to a liquidation event seems more relevant.

Honestly speaking, I’d have to imagine that considering those offers that Company B wouldn’t match or come close to the base salary of Company A. $20k is a drop in the bucket for what I’m assuming is a technical hire as your work should easily cover that difference.

I agree with most people here that A is the better choice on paper.

Your comments on B seem confusing to me. Options are typically granted with a strike price of whatever the 409A assessment of the fair market value is at the time of the grant. So if they already raised a C round, the ship has sailed on the "Series B" strike price. Anybody who tells you otherwise is probably either lying or misinformed.

So, what you're getting with Company B is more options with a higher strike price. Keep in mind that the strike price is what you pay to purchase the stock that you may then sell at market price. There are also taxes due at exercise. Your net profit from options issued this late in the company's journey, after a liquidity event, is likely to be small because the strike price is so high and the company has already achieved much of its growth prior to your grant.

For instance, if the company IPOs at $15 and your strike price is $7, figuring the fully loaded taxes to be around 40%, you will only make ($15-$7)*0.6=$4.80 per share. To get a more realistic expected value, you should also assign some probability your company will never have a liquidity event or will but under unfavorable circumstances that render your options worthless (e.g. after a down round of financing). The market value of your options during the liquidity event needs to be several times your strike price for it to become a very interesting amount of money.

I recently went through an IPO with my company. The options I vested over four years are about $60k in the money. I count myself lucky that I'm seeing any money at all from them, but really I would have been better off to jump ship a long time ago to a BigCo with RSUs that offer a more certain return.

If you really like Company B, tell them the going rate seems to be what A offered as base. With their recent funding, there's a good chance they'll bump you up if it seems like you're going to go with the other company.

Can we know what your decided? :)