But the rough formula I've followed is to calculate my "investment" in the company and compare it to the company's other investors. I look at the company's last round and figure out how much the investor(s) paid and what percentage the investor(s) got. Then I can look at the offer and see what percentage I'm getting and work out how much that would have cost in the most recent round. If the salary hit I'm taking is considerably more than that, I either ask for more equity or walk away. If a company won't give me the information necessary to perform this calculation, I walk away.
It's not perfect, but it's close enough that I can make a somewhat logical decision and not simply cave in to my preference for working in a startup environment. Investor's shares can be somewhat more valuable due to liquidation preferences and other favorable terms, but employees can also get retention grants if the company is acquired, so I haven't figured out a way to balance those considerations.
Dont sacrifice salary for not enough equity is a better rule.
The trade-off for startups vs. big companies is really in whether you're getting liquid RSUs (with clear cash value) or private options (with more upside), not so much on the salary side—especially these days.
The equity is what you get in exchange for the risk that the company will not be successful; and for all the extra hours you'll probably be working.
The salary is what you get because that is how much your position pays in the market.
Things to compromise salary for:
- You need a job badly. You're already planning your own exit.
- If you were to get a higher salary somewhere else, you'd still prefer to work here.
- You don't need the money.