Re:Analysis of E(V) of working for a startup
by abbazabba on Friday September 27, 2013 @09:27PM
(#6460503)
Those are the companies that were actually accepted to Y-Combinator. The Y-Combintor acceptance rate is said to be 3%. So, your odds of success are now more like 3% 7% = 0.2%*
All of this hinges on the assumption:
Y-combinator is a proxy for the start-up population.
Even taking the optimistic Y-Combinator outcome, would you be willing to accept a 7% chance of making $400K?
This is assuming you only get paid in that 1% equity while assuming the 40MM exit. If I got paid a SALARY I can accept + 1%, why wouldn't I take that chance? It is +EV. Compare this to the lottery, which carries a -EV.
All of this hinges on the assumption:
Y-combinator is a proxy for the start-up population.
Even taking the optimistic Y-Combinator outcome, would you be willing to accept a 7% chance of making $400K?
This is assuming you only get paid in that 1% equity while assuming the 40MM exit. If I got paid a SALARY I can accept + 1%, why wouldn't I take that chance? It is +EV. Compare this to the lottery, which carries a -EV.