Ask HN: How much equity should an early employee get?

Re:Ask HN: How much equity should an early employee get? by relaunched on Sunday November 14, 2021 @09:43PM (#29223040)

If they are getting a salary, that's probably right. The general rule is the first hire gets about 1% and it goes gown from there. But, the range for 1-10 employees is about 1-0.1%. It doesn't sound like much, but think about it this way. 0.1 percent, when the company goes IPO at a 10 billion market cap is probably 40-50 million dollars.

If you aren't getting a salary, but are working, you're a co-founder and the equity should be higher.

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Re:Ask HN: How much equity should an early employee get? by sp332 on Sunday November 14, 2021 @10:06PM (#29223186)

Isn't there going to be a lot of further dilution between when a startup hires its 10th employee and when it goes public at $10B? Getting 0.1% to begin with is going to be a lot smaller when the money comes in.

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Re:Ask HN: How much equity should an early employee get? by javert on Sunday November 14, 2021 @10:31PM (#29223353)

Yes, I'm curious about this too. How much dilution should be expected? Is there a way to think about this? (OP here.)

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Re:Ask HN: How much equity should an early employee get? by singron on Sunday November 14, 2021 @11:19PM (#29223646)

I've heard 10-20% dilution each round (assuming the company is doing well), and probably 3-6 rounds before liquidity or indefinite illiquidity. Obviously there are circumstances outside of that, but that already ranges from barely any cumulative dilution to having a third of you original stake.

If the company isn't doing well, then dilution can be worse, and your valuation will also be lower, so you will own a smaller piece of a smaller pie.

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Re:Ask HN: How much equity should an early employee get? by grammarnazzzi on Sunday November 14, 2021 @10:11PM (#29223226)

How much is the company worth today? That will tell you what the percentage points are worth.

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Re:Ask HN: How much equity should an early employee get? by javert on Sunday November 14, 2021 @10:28PM (#29223339)

In the $35 to $70 million range. I don't want to be exact, so as to not identify the company.

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Re:Ask HN: How much equity should an early employee get? by teryyy on Sunday November 14, 2021 @11:02PM (#29223537)

0.2% of this would be $70k - $140k, which is a tad low for 4 years (especially for more senior employees) but isn't a rip-off IMO

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Re:Ask HN: How much equity should an early employee get? by javert on Sunday November 14, 2021 @10:28PM (#29223330)

.1% of $10 billion is $10 million. His share would be .2%, so $20 million. But that's not factoring in any potential dilution.

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Re:Ask HN: How much equity should an early employee get? by closeparen on Sunday November 14, 2021 @11:31PM (#29223714)

Now supposing it takes 8-12 years to see liquidity, compare to what you could make in a FAANG career… perhaps $4-5 million? Whole lotta risk for maybe 5x upside.

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Re:Ask HN: How much equity should an early employee get? by relaunched on Monday November 15, 2021 @12:43AM (#29224137)

I was doing quick math and was off by a factor of 10, inclusive of dilution. Sorry.

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