Startup offer and potential financial payoff for an experienced engineer

Amazon Neets
Nov 30, 2017 41 Comments

Experienced engineer (>12+ years) in tech, been with Amazon for 7+ years, 350k in total comp.
Received an offer from a startup (currently valued in $100-300mil range).
While the base is just a tad better than Amazon (as Amazon has 160K limit), the stock options given would theoretically provide a payoff of $1mil if the company hits $1bil valuation and Ipo say in three-four years. The financial payoff looks better if the company hits $2-3B valuation but the probability to do that is unknown!
Is this relatively lowball offer as they are not willing to increase stock options? I could stay in my job and get similar financial payoff (or better if I get promoted - most likely in a year). Not sure if it is a rational financial decision to consider this startup offer (the area of work for the startup is quite interesting but I can get similar work in my current firm if I take an internal transfer).

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TOP 41 Comments
  • Databricks / Eng
    datadicks

    Databricks Eng

    BIO
    I suck
    datadicksmore
    Lol you should check what percentage of startups actually exit at over $1b valuation. I don’t mean valued at, but actually exited so you have cash. You should value the stock options at half of the current valuation instead of 10x of what they are now. Amazon is straight up cash so dont drink their fucking koolaid of “omg we are gonna 10x in 3 years”. I say that even though databricks did go more than 10x in 4 years, but trust me we are a very very rare case and its still illiquid so there is more dilution on the way to an exit
    Nov 30, 2017 7
    • Mesosphere onsie
      Doing well; you guys seem to be doing well; ~$750m valuation is pretty good. Was there any significant dilution?
      Nov 30, 2017
    • Databricks / Eng
      datadicks

      Databricks Eng

      BIO
      I suck
      datadicksmore
      About 10 to 11% per round. Pretty normal. It’s exponential dilution though. Since i started i think it is more than 40%. I am just doing the math by current number of shares divided by number of shares i was told the company had when i started adjusted for splits. There were some refreshes for certain people recently but it is not even across the board and does not make up for the dilution. I dont think a lot of my coworkers understand this math, but clearly my options are worth more than before by quite a bit
      Nov 30, 2017
    • WRKSHP / Eng
      No wonder why your company name seemed so familiar - I used to do research with amplab grad students!
      Nov 30, 2017
    • Databricks / Eng
      datadicks

      Databricks Eng

      BIO
      I suck
      datadicksmore
      Omg research!!! Psh why do you work for a shitty gaming company then
      Nov 30, 2017
    • WRKSHP / Eng
      I'm on my way out! For real now. 😆
      Dec 1, 2017
  • New / Eng
    xofulb

    New Eng

    PRE
    VMware, Brocade Communications, Nokia
    BIO
    Take your coding puzzles and shove it up your ***
    xofulbmore
    The age old trick of pulling a fast one people looking to get rich. I am a victim of this, got shortchanged and now I am screwed :(. Fuck startups and their shitty work culture, time to move out.
    Nov 30, 2017 4
    • New / Eng
      EVFR72

      New Eng

      PRE
      Qualcomm, Nokia, Apple
      BIO
      Hardware Tinkerer, Software Engineer, Musician, Painter, Moving Helper
      EVFR72more
      I am sure they also asked you to take a paycut to join
      Nov 30, 2017
    • New / Eng
      xofulb

      New Eng

      PRE
      VMware, Brocade Communications, Nokia
      BIO
      Take your coding puzzles and shove it up your ***
      xofulbmore
      Something something similar :(. I am done with these asshole companies who treat themselves like next unicorn despite stuck 10 years back .
      Nov 30, 2017
    • New / Eng
      EVFR72

      New Eng

      PRE
      Qualcomm, Nokia, Apple
      BIO
      Hardware Tinkerer, Software Engineer, Musician, Painter, Moving Helper
      EVFR72more
      Startups are basically bro clubs where lateral hires are seldom respected. Cofounders and their buddies hog all the good work, leaving the scraps for others. Solution: form your own startup
      Nov 30, 2017
    • New / Eng
      xofulb

      New Eng

      PRE
      VMware, Brocade Communications, Nokia
      BIO
      Take your coding puzzles and shove it up your ***
      xofulbmore
      It is even more unfortunate that these Bros don't even know basics of comp science and then offend intelligence by throwing heavy words just because they work there longer. Fuck these toxic cancers. If you are their friend, everything is ignored and you get to do whatever you want else just fall in line and update JIRA.
      Nov 30, 2017
  • Google / Eng UUKg61
    It certainly is not!! If you are just making enough what you can make in your stable job, moving to a startup is not a sound financial decision. Please remember that 3-4 years to reach 1 billion dollar valuation from 100 million is not easy. Infact it’s very rare. $100 on the other hand is comparatively quite easy. So the risk actually begins now. Financially speaking, you must have at least 1.5 times potential so as to minimally cover the risk factor.

    Work wise, only you can decide. Until this is the only company which can give you the work which you want to do, don’t fall for the startup utopia. As you said you can get similar work through internal transfer, you should try that.
    Nov 30, 2017 0
  • ThoughtSpot gm1234
    Please don't join startup at such low ball offer that is close to current market price. The founders and early stage employers will make the most. You will work like 10x, start from bottom up and for close to market value.
    Nov 30, 2017 0
  • Apple pch053
    Yeah, same feeling for startups. I am sure most of us receive numerous emails related to jobs at startups with the recruiters pitching that it’s doing some earth shattering stuff and all that hyperbole but the big question is statistically how many of them have successful exits? I assume the answer is less than 5%. I would only join a startup if that’s the only thing I want to do in life, not for money. As others said, if compensation is main criteria exploring Google, FB will be more worthwhile. Plus from my personal experience, some startups are really good but quite a few are very mediocre as well.
    Nov 30, 2017 0
  • Netflix anoninsjca
    At $350k total comp at Amazon you're doing well, with the difference in TC you make up that 1M payoff with zero risk. If its $ you're after go to Google or FB or Netflix. Why gamble when you can have the sure thing?
    Nov 30, 2017 0
  • Databricks / Eng
    datadicks

    Databricks Eng

    BIO
    I suck
    datadicksmore
    Recruiters are usually liars or just too dumb to figure the financial things out themselves. It is their job to paint the rosiest picture as possible. 20% bump doesnt seem worth it from what you said
    Dec 4, 2017 0
  • Brocade flyhigh1
    All said, the equity portion for you is 0.1%. Is that low or high? That depends on their current employee count ( > 50) and valuation.
    Nov 30, 2017 5
    • Amazon Neets
      OP
      The company has 200 odd employees.
      Nov 30, 2017
    • New / Eng
      EVFR72

      New Eng

      PRE
      Qualcomm, Nokia, Apple
      BIO
      Hardware Tinkerer, Software Engineer, Musician, Painter, Moving Helper
      EVFR72more
      It's highly unlikely to get 0.1% equity in a 200+ startup. Unless you are an exec
      Nov 30, 2017
    • Amazon Neets
      OP
      It is - will be going as one of the senior most engineers.
      Nov 30, 2017
    • New / Eng
      EVFR72

      New Eng

      PRE
      Qualcomm, Nokia, Apple
      BIO
      Hardware Tinkerer, Software Engineer, Musician, Painter, Moving Helper
      EVFR72more
      Good for you, but be very watchful - get a joining bonus perhaps
      Nov 30, 2017
    • Databricks / Eng
      datadicks

      Databricks Eng

      BIO
      I suck
      datadicksmore
      If you are one of the senior most engineers then that offer is way too low
      Dec 3, 2017
  • Sysdig / Eng Akroeheveh
    Just don’t do it. And I am in a startup which grew 10x, but still just don’t do it.
    Nov 30, 2017 5
    • Amazon Neets
      OP
      Any reason why?
      Nov 30, 2017
    • Sysdig / Eng Akroeheveh
      Because they are offering you like 0.1% and the exercise price is probably already insane. You’ll get diluted, you’ll get frustrated, you’ll get handcuffed. The only startup worth joining is your own. I wish I knew this back then I joined.
      Nov 30, 2017
    • New / Product
      Nanana

      New Product

      PRE
      Amazon, Salesforce
      Nananamore
      sysdig - heard of them for sure! What's their current valuation like? I was seriously considering them a few months ago. Curious to know if what they told me is bs in terms of valuation while pitching to me.
      Nov 30, 2017
    • Sysdig / Eng Akroeheveh
      Well more important than valuation, how much equity were they giving you?
      Nov 30, 2017
    • New / Product
      Nanana

      New Product

      PRE
      Amazon, Salesforce
      Nananamore
      .4%
      Nov 30, 2017
  • New / Eng
    EVFR72

    New Eng

    PRE
    Qualcomm, Nokia, Apple
    BIO
    Hardware Tinkerer, Software Engineer, Musician, Painter, Moving Helper
    EVFR72more
    Read up on Preferred Stocks, Ratchetting, Square IPO - employees, especially lateral hires do not benefit as much even if Startup has an exit
    Nov 30, 2017 0
  • Lending Club LCTurkey
    Not worth it
    Nov 30, 2017 0
  • Amazon Neets
    OP
    Thanks all. I expressed my concerns to the recruiter and they came back with a 20% better offer in terms of options -
    One thing the recruiter told me is that I am not calculating annual refresher options and their policy of providing me 25% of my initial options in a single grant if I stick around for 2 years.
    Dec 4, 2017 2
    • Apple pch053
      At the end, it comes down to how much you believe in the company and how you will get along with the people. Startups can be one man show and it boils down to your relation with that person. Irrespective of stocks/equity they provide, it will be paper money of no value if the startup doesn’t become IPO (this number is really small) or it doesn’t get acquired (and many startups never have a successful exit). I am always skeptical about startups because I have seen them so many times making fake & lofty promises and then getting nowhere.
      Dec 4, 2017
    • Uber veterinar
      General advice, don’t make your decision based on what a recruiter told you. They can tell whatever they like as long as they believe it will help them to close you. They are not decision makers and not responsible for their BS.
      Dec 4, 2017
  • Microsoft kmuD53
    What lvl at amazon are you?
    Nov 30, 2017 2
    • Amazon pupper41
      Probably L6
      Nov 30, 2017
    • Amazon Neets
      OP
      Yup
      Nov 30, 2017
  • Booz Allen Hamilton ivoryzz
    Are you getting 190k per year options? That's insane. Numbers I heard of are 40k per year as SWE
    Mar 12, 2018 0
  • Airbnb i18n123
    “1 mil payoff if the company reaches 1 bil from 300 mil in 3 ~ 4 years” which means their current offer is really low. They should try to surprise you on the offer numbers given the high risky of current stage. And you should not be surprised no matter what numbers they offer because it’s all money on paper.
    Dec 3, 2017 0
  • Amazon Neets
    OP
    *while compensation is not the main criteria, my rational was if I stick around for 3-4 years and the company grows 10x (assuming that happens), shouldn’t it at least provide me a reasonably better return than my current one!
    I am preferably looking for a change outside Amazon - 7+ years feels so long that a change would be refreshing.
    Nov 30, 2017 0

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