Entrepreneur Tips and Discussions

Stock Options for hiring?

Hello! New to the world of startups (like new new). I’m currently on a job hunt and a friend of a friend is hiring so I reached out to discuss the position. He said he liked my background, but said they are ~2 months away from launching their product and asked what my current living situation requires and if I would be willing/able to work for stocks for 1-3 months then transition into a salary?

I don’t know much about that side of startups (job I’m interested in is marketing their product), so can anyone here help explain it to me, what are the risks, is this a good deal, what kind of questions I should be asking back to him?

I’m not in a position where I need a job right this second, but the job hunt has been going very ~meh over the last 4 weeks and I don’t want to turn down a job if it is a good deal. (Edited for typo.)

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3 replies on “Stock Options for hiring?”

There’s a lot of variables at play here but he’s essentially asking you to work for equity in the company instead of receiving cash. Equity positions usually defend on title, stage of the company etc.

You have to remember at this point in the company the equity isn’t worth anything.

Since you don’t need money right away I think this is a good way to get your foot in the door.

Since you aren’t taking a salary I would ask for a portion of the equity to have a short cliff (30 days).

The most common vesting schedule is 4 years with a 1 year cliff. That means you don’t vest/own any shares until 1 year had passed and the rest of the stock will be earned over the next 48 months.

Once you’re hired on full time you can negotiate salary and equity together.

Equity is a good motivator for the future. In a way, it helps you focus eyes on the prize and if the company ends up being successful, you win some money out of it.

That being said, the best combo in my opinion is a little bit lower than average salary + more equity.

Be very critical of the viability of how they are getting investors and understand it deeply as well, they are a huge part of the equation. You really need to not only just believe in the executive teams adeptness, but also test it as well. I wouldn’t join any startup paying just equity without knowing the people personally for a while or they had an incredible track record, but usually those who do have a good track record building businesses aren’t paying people in equity because they actually have money. Be very careful before you start working for what is most likely a worthless thing called “equity”. Everything can fall through and you’ll go from working on equity for 2 months to two years (that assumes you even have a product worth considering) and you’ll hear broken promise after broken promise.

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