Most engineers don't understand their equity. Here's how to think about it economically.
Expected value of startup equity: base × probability of exit × your diluted ownership. Example: 0.1% of a $100M exit = $100K. But probability of $100M exit is ~5%. Expected value: $5K. Compare to the salary discount you took to get that equity.
For companies: equity is cheapest compensation for early employees (pre-product-market fit), but becomes expensive post-Series B when the stock has real value. Switch to competitive cash + modest equity post-Series A.
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9 minPublished Work
This article expands on ideas from my published work in CIO.com, Built In, Mind the Product, and HackerNoon. View published articles →
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