Startup equity for early employees: what to ask and what to plan for
Five members of the Product Careers work group on the numbers to ask for and the risks to plan for in an early-stage grant.
Updated
Work out what percentage you own and what you would receive after investors are paid, then make sure the offer still works for you if the equity pays nothing.
- Turn the option count into a percentage. Nikhyl Singhal suggests asking for the fully diluted share count: 10,000 shares out of 10 million is 0.1%, more than 30,000 out of 100 million. Ravi Mehta and Jiaona Zhang would also ask for the vesting schedule, the strike price and what happens to your options if you leave.
- Check who gets paid first. In Nikhyl's example, a company sells for $100 million after investors put in $40 million. If they recover their money first, employees and founders split the remaining $60 million. Hadar Dor suggests asking the finance team for a payout table at several sale prices that shows what is left for common shareholders.
- Plan as if the equity pays zero. Hadar joined Quixey as employee #10. It grew to 350 people and raised $130M, and still failed. She suggests deciding whether the cash salary works for you even if the equity pays nothing. Ravi would compare offers under a few outcomes, including a company that never reaches an exit.
- Price the cost of exercising. Ravi notes that exercising options can take cash, and the tax bill can arrive before you can sell. When leaving means paying to exercise, Yue Zhao suggests first deciding whether you would leave if the options expired worthless, then having a tax adviser estimate the cost.
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Frequently Asked Questions
How do you decide what role to take next?
Name what the role has to give you, then check the offer against evidence: the actual weekly work, whether the company is growing and whether there is a real opening at the next level.
Is a bigger title at a smaller company worth it?
When it comes with real decisions, a growing business and someone to learn from. Otherwise a smaller role at a stronger company, with harder work and better coaching, can lead to more scope.
When should you switch career tracks?
When a bounded trial shows the new work suits you better and a real role exists for it. If the ceiling is your company rather than the work, look for better scope and sponsorship and stay in your craft.
How do you know when to leave a job?
Make one specific request first, with a date to revisit it. Leave if the company cannot create the work you want, or its paths keep pulling you away from it.
How do you prepare to leave a job and start a company?
Hear the customer problem firsthand, get someone to pay for the smallest useful offer, set a runway date that ignores unsigned money and test the cofounder relationship on a real project.
How do PM, designer and engineer roles differ now?
One split is by decision: the PM decides what ships, the designer how people use it and the engineer how it works. Before product-market fit the founder may make the PM's call.
How do you move into product management?
Most reliably from an adjacent role at your own company. Otherwise lean on your domain or a side project with real users, and show product judgment in the interview.
Which tech jobs will hold up as AI spreads?
Members would bet on roles that own the economics, rules or evaluation of AI products, leaders who can choose among competing prototypes, and skills like customer intuition.
How do you build product analytics skills?
Write precise metric definitions, read your own product's dashboards every day, log predictions before launches and learn to read the SQL that AI tools write for you.
How should you prepare for a performance review?
Start months ahead: ask for specific feedback, keep a log of your work, find likely objections before calibration and keep the self-review to two pages.
How do you get promoted to the next level?
Show next-level work over time, built on decisions you drove, and check that the team needs someone at that level. If it has no room, a growing team may offer a clearer case.
What should you do in your first 90 days in a new role?
Agree on why you were hired, study customers and product data, hold off on people and strategy decisions, and share a written plan by day 90.
