Two Offers: Weighing Stock Options vs. "Sure Thing"

Amazon aQWJ83
Feb 4 18 Comments

I haven't worked at a startup before, so trying to gauge how likely it is that stock options would work in my favor vs. being a disappointment after 5 years. (Also would appreciate any thoughts about the long-term differences in career path for a DE vs. a PA).

I'm currently at Amazon as an L5 BIE. TC is about 150k including stock.

I have an offer from a Stage C startup for the equivalent of an L5 Data Engineer. Base is 135k and stock options at current valuation take TC to about 170k (although obviously not liquid at this point). They are projecting some big growth numbers which could take TC to the equivalent of 300-500k/year from the initial four year vest. All signs point to a bullish stance for the company. This would be at their HQ.

I also have an offer from a late stage startup for the equivalent of an L6 Product Analyst. The base is also 135k, but there's also about 35k in targeted bonus (cash + RSUs) and another 35k in new-hire RSUs. This brings TC to about 205k, and possibly more if valuation increases after an IPO. The risk is obviously lower here due to higher cash compensation (with the bonus), the use of RSUs instead of options, and a strong likelihood of an IPO soon. This would be at a satellite office.

I tried to negotiate with the Stage C startup since the PA comp is stronger with lower risk, but they are unwilling to change the offer much. There's nothing wrong with the late-stage company, but if I put compensation aside I'd prefer to land at the earlier-stage company. So a few things I'm looking for feedback on:

1) Negotiation: is this normal for a startup to basically just say "no" when you ask if they can match a stronger offer?
2) Likelihood of stock options working out: everything I've read online is very pessimistic towards stock options and recommends valuing them at $0 when making a decision. The first startup seems very strong and well-placed, but do any of you have prior experience with something like this?
3) Career path: I'm still undecided about what I want to do with my life. Both the DE and PA positions exercise different strengths of mine. The DE could potentially be a transition into SDE if I work at it, whereas PA might transition into Data Science? Although moving into DS at an L6 is much harder.
4) Any other thoughts that might be helpful.

Thanks!

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TOP 18 Comments
  • PayPal trump 2020
    Value your startup stock at $0. That is what they are worth.
    Feb 4 1
    • Bloomberg / Eng iVX372
      This. Series C has very low chance of being worth anything. OP sounds like someone who has never worked for startups before
      Feb 4
  • New DvVM00
    1. yes
    2. all startups seem strong. $0 is the correct valuation. late stage is just as risky. most exits are acquisitions and late hires end up with nothing thanks to preference.
    3. this isn’t a transition path. if you can’t decide, literally flip a coin. you can evaluate the decision after a year or two.
    Feb 4 7
    • Amazon aQWJ83
      OP
      Late stage = will probably IPO this year
      Feb 4
    • Stripe gill_bates
      Will probably IPO this year is less risky.
      Feb 4
    • New DvVM00
      as an outsider you cannot know when they will IPO. recruiter will always hype. you should have asked every single interviewer what they think. if they are unanimous i’d give it 50-60% shot. you should ask how long has the CFO been with the company.

      unless of course it’s someone that has already filed. lyft etc
      Feb 4
    • New DvVM00
      btw don’t misinterpret my answers as being down on startups. just be smart about the risk. join because you’d want to work there anyway.
      Feb 4
    • Stripe gill_bates
      Well there is also a difference between a company that may IPO and one that will definitely IPO at some point. I mean Yahoo! or Enron could happen, but once a company gets to a certain scale, it’s not likely to fail in the near term. It’s also not likely to let restricted stocks expire. Letting employee stocks/options expire is a great way to ensure that no new talent comes in ever again. What I am saying is, Uber last year was still a safe bet, stocks had real value, just very non liquid.
      Feb 5
  • Microsoft vector3
    Beware of startups that won’t disclose what percentage of the company your fully vested options represent and what the last valuation was. You’ll have absolutely zero idea of what your options package is worth even with the most recent valuation. Run from these companies
    Feb 4 5
    • Amazon aQWJ83
      OP
      They didn't disclose the percentage, but did tell me the number of shares outstanding. Based on that ratio, my ownership is 0.019% (which would presumably be diluted in further rounds of funding). I asked about how the deals are set up with investors, and basically it sounds favorable as far as startups go. More of a split-the-pot with employee stockholders than a situation where investors get a multiplier and are paid out first.
      Feb 4
    • Microsoft vector3
      Ok if they tell u how many are outstanding you can effectively calculate your percentage ownership after fully vesting and exercising.
      Feb 4
    • Bloomberg / Eng iVX372
      None of what they tell you means shit unless you also know the strike price of your shares, and the value per share and date of the most recent 409a valuation.
      Feb 4
    • Microsoft vector3
      Correct. And the inverse is also true. The theoretical value of the options are unknowable if you know all the info that you cite but don’t know the percentage of the outstanding that you are being offered.
      Feb 4
    • New DvVM00
      run from this company. they are lying.

      no VC will invest on those terms. far far far too risky.

      no startup will ever tell you the preference stack unless you are c suite candidate. hr/ recruiter won’t even know this info so there’s no way they can tell you it.

      name the company so we can know who these liars are.
      Feb 4
  • Google masteratbs
    Do you actually believe they can grow 10x in 4 years at series C?
    Feb 4 1
    • Amazon aQWJ83
      OP
      Fair point. Probably not in 4 years. I think there are some compelling reasons why the growth could be strong (large, relatively untapped industry) but obviously a lot would need to go right for that growth to materialize.
      Feb 4

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