Inbox: "What do you think about equity in startups?" Consider it from the perspective of a founder choosing between businesses to run. There are some businesses where even the success case for the business is a failure for you. There are other much more attractive businesses.
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The difference between the two is that companies which materially derisk their businesses and are seen as doing so by investing professionals (and/or by customers) end up hiring vastly disproportionately to companies which are pre-derisking.
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For a window, and a *shockingly long* window, they build a material amount of their compensation strategy around equity grants.
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"AppAmaGooFaceSoft all build a material amount of their compensation strategy around equity grants, Patrick." I am aware of that, voice in my head.
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I am low-key concerned about geeks treating equity not as a financial instrument with a payoff function attached to it and more as a tribal signifier, because the amount of the cakes geek bake which is denominated in equity is *extremely large.* To reprise yesterday:
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If you loudly advance the opinion "I value equity at approximately zero" then people who have an informational advantage regarding what the equity is worth will say "Got it, in cutting this cake, I hear you want less equity and more flavors of fizzy water at the office."
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I know there are some people who *say* variants of that who do not *believe* it (i.e. would not take the trade "4 years of your equity for a new Playstation, let's go, it's worth zero"), but tribal beliefs become *very real* for young and unsophisticated people.
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"Are you claiming people saying that are being disingenuous?" There are beliefs near and dear to my heart where you could ask me about the truth value, I'd be an automatic yes, and where I'd not weight them highly when making consequential decisions. People are complex.
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Makes sense as successful companies get larger and less successful ones die off. If you substitute a general "equity" for a more specific "options", I believe the two percentages get both lower in the absolute and closer to each other.
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But you as an employee are joining 1 company, so isn't the smaller ratio more relevant?
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From the outside, more people are getting offers from a Big5. But from the inside, the odds your offer is from a now/future Big5 is low.
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