> Sometimes they need employees before they can pay market rate,
But you don't get to have something just because you need it. That's not how it works. You need to raise more money, so that you can afford to pay the employees. It's not fair to make the employees act as unofficial investors in your company, and then give them a deal that the real investors wouldn't accept.
> giving out 0.01% even to earliest employees
I hope that's an exaggeration and no one actually goes that low. (EDIT: Re-reading I think you actually meant 1%, not 0.01%?)
But if you go based on the valuation paid by the investors, then even 1% is a laughably low offer during the seed stage.
$130k salary and 0.01% equity. But that's OK, I'm sure their CEO will be happy to tell you about their surefire $Xbn exit.
Last I checked Angel List, 0.01% equity was quite common, even for early engineers at very early stage startups. It almost always goes hand in hand with blatant lies about the certain $Xbn exit.
> Which is why I'm saying they should be offered a deal that investors would accept.
> Demanding everyone pay market rate is just unrealistic.
But they're the same thing! If investors would accept it, then you could just as easily have the investors buy the equity, and then pay the employee with it.
So if it's totally unrealistic that founders would actually pay market, how could it be realistic that they'd offer equivalent equity?
> First ad I clicked on from Angel List front page:
> But they're the same thing! If investors would accept it, then you could just as easily have the investors buy the equity, and then pay the employee with it.
See my [response to inimino](https://news.ycombinator.com/item?id=17291045). It's absolutely not the case that if I have $100m worth of stock according to some valuation, I can just go out and sell any amount of that for what you'd expect based on the valuation.
VCs are the only ones who are generally ready to buy this sort of equity, and raising money from them is a long difficult process, and I can't just decide I'm going to sell 0.5%, get $500k, and pay that to a new employee.
Finding a non-VC to buy your equity is very difficult too.
> That's not an early-stage startup, that's a company with >200 employees and a valuation in the hundreds of millions.
Like I said, it's the first random ad I clicked. Last I looked at Angel List, there were tons of startups offering 0.01-0.05% equity.
Also, notice they're offering this 0.01% with a maximum salary of 130k in SF who is skilled with "Python, Java, Scala, Ruby on Rails, React.js":
> That's not an early-stage startup, that's a company with >200 employees and a valuation in the hundreds of millions.
Do you have any idea how many startups were worth >100m at one point or another on paper, and ended up with an exit where nobody but the VCs made any money due to stock preference? One down round is enough to effectively wipe out most of the rank-and-file equity in these scenarios.
I agree the salary looks lame but none of this conversation is about companies at that stage.
Equity packages in percentage terms are obviously going to be much smaller for later-stage companies, since there is much less risk baked into them. 0.01% of a company valued at $200m is equivalent to 1% of a company valued at $2m.
>I hope that's an exaggeration and no one actually goes that low. (EDIT: Re-reading I think you actually meant 1%, not 0.01%?)
What I witnessed as guidance from a top-tier VC to its portfolio companies: 1% for employee #1, then ramp downwards for each employee: .07%, .05% etc and very quickly you reach .01%
How about trying to sell something and generate revenue. I long ago stopped subscribing to Startup Porn but I remain baffled as to how seemingly smart people are so intoxicated by it that the notion of building an actual business is an afterthought.
Well yes. But the premise here was that in order to generate that revenue you need the employee. If you don't need the employee then by all means don't hire the employee (and don't raise money to hire them).
But you don't get to have something just because you need it. That's not how it works. You need to raise more money, so that you can afford to pay the employees. It's not fair to make the employees act as unofficial investors in your company, and then give them a deal that the real investors wouldn't accept.
> giving out 0.01% even to earliest employees
I hope that's an exaggeration and no one actually goes that low. (EDIT: Re-reading I think you actually meant 1%, not 0.01%?)
But if you go based on the valuation paid by the investors, then even 1% is a laughably low offer during the seed stage.