Private stock vs Public tradeoff
Curious for everyone’s approach to evaluating offers between private and public companies. If you were considering a role at Google/FB that came with $600k TC, and $250k of that was in liquid equity, what kind of multiple would you need in ‘paper value’ from a company that’s pre-IPO to make the offer comparable? 1.5:1, 5:1? Assuming you believe in the private company’s future, but knowing that ~1/3 of your total cash equivalent take home each year with the private company is illiquid.
L7
I asked a similar question and the answer was that it depends on your risk tolerance and negotiation skills. It's a bimodal distribution of either mild lottery ticket or zero. But when you discount the future value minus strike price with a public companies money invested over years it's very rarely a sensible decision. At a larger company your contributions rarely make a huge difference and at a smaller company the chance of zero return is much higher regardless.
That’s helpful. I guess I’m also interested in hearing others opinions on risk tolerance. I feel like 2.5-3x is the right range for myself and curious to hear how others compare
Depends on company details and how mature it is. If it's like AirBnb and profitable and stable, with increasing evaluations, probably pretty close to a public company, or maybe even more if you think IPO will pop. If it's a company with a questionable path forward who's valuations keep getting lowered (WeWork for 47 billion... Yea right), the might not be worth the paper it's written on.
Depends on the phase of the private company and the associated risk. If its too early, probably 10:1 since there is a high risk of failure. If it’s fairly late in the game and close to an IPO, then probably 1.5:1 (private valuations tend to be inflated)
What level is the 600k offer for ?