> In my experience, almost everyone prefers cash over startup stock options.
My experience has been a little different. We had a lot of people demanding both very high cash comp and then demanding very high equity packages on top.
Giving people a sliding scale option did put some of the control back in their hands, but it also produced an analysis paralysis for some where they couldn’t decide what to pick.
> And from an employee perspective, it’s almost always the right decision to place very little value ($0) on the stock option component of your offer. The vast majority of cases stock options end up worthless.
Much of this is due to startups failing. Every random “startup” trying to pay people with options because the founders have no hope of success inflates this statistic.
However another driver of this statistic is the extremely short exercise window upon quitting. People may work somewhere for 1-3 years but the company could be 5-10 years away from acquisition. Employees have to give the company money at time of quitting to get any equity, which few want to do.
I know the common wisdom, but I also know that there are a couple local technology centered private Slack groups in my area where people will eagerly try to evaluate and possibly buy your options for local startups. They don’t buy everything, obviously, but there is demand for the few cases where contracts allow transfer of the resulting equity.
> but I also know that there are a couple local technology centered private Slack groups in my area where people will eagerly try to evaluate and possibly buy your options for local startups. They don’t buy everything, obviously, but there is demand for the few cases where contracts allow transfer of the resulting equity.
isn’t this illegal? private stock ownership needs approval from company/BoD to change hands, no?
While board approval can be a condition of transfer (consult the options agreement), forward contacts can be used (with counterparty, liquidity, and price risk) when transfer conditions cannot be met to effectuate a de jure transfer.
This is why I will never work somewhere with a short post termination exercise period (PTEP). If it’s not at least 5 years, ideally 10, they don’t seriously consider equity something that employees are owed.