First time plan to start ups. What's best way to evaluate the stock options, what/how should I negotiate the options/salary package? What to watch out for in options? Red flags? I've heard employees can have tax issues with Options and funding rounds. Can anyone explain the concerns or traps an employee could find themselves in? #startups #options Seeking senior level #product jobs Current TC around $190k
Ya the biggest trap is paying out of pocket for your stock options, then having a big tax bill based on the amount stock has appreciated, all while stock is still illiquid. Can be a huge money sink. To avoid, try to get a 10 year exercise window or exercise early to save on taxes: https://www.productlessons.xyz/article/how-stock-options-for-employees-work
Check out https://app.startupequity.org/search. They let you search people's startup compensation based on a variety of parameters. They also have an educational page with tons of information about startup equity https://app.startupequity.org/learn.
Startup options are deep out of the money call options. It is like a lottery ticket. Value them as such. Highly individualistic and we, humans, tend to overestimate chances of such options getting in the money, as we do with chances of winning the lottery. Don’t join startup because of options, join because you believe in the startup’s mission, it will give you resolve to continue when things don’t go your way..
Fair. I was looking more at late stage companies. Hard part is every recruiter sells you on the dream of that lottery ticket
They are not wrong. how would you value such a lottery ticket? If you need income stability, maybe startup is not the best move.. here is a question: Assume that this startup will fail within next 5 years, so that most of your options value goes to zero, would you still join it?