To each their own. Comparing startup options to mature company RSUs is apples to oranges, and a retelling of the basic trade off between risk and reward. Upside, downside, taxes et. al. combine to inform individual decisions. Both paths have merit. Suggesting startup options are somehow inferior to RSU is simply disingenuous — I would have done much more poorly with RSU than options.
Come on, let’s be realistic. Startup options can have merit sure. Maybe they worked out for you, for some lucky people who make the right bet they work out handsomely. But we can do the math on this. What’s the percentage of say, Series B funded companies that make it to a successful exit, let alone an exit for multiple billions of dollars.
It’s really low.
So what’s the expected value on an option in a series B startup?
You can believe in the company all you want, it doesn’t matter. Good companies fail all the time for reasons out of their control.
Unless you’re taking options from a startup very deep in rounds that has a clear path to profitability and is obviously close to IPO there are very few situations where it would make logical sense to take an offer with options over one with RSUs.
This is kind of like saying it’s disingenuous to say that working for a salary is better than buying lottery tickets.
If we’re going to be realistic about it, then maybe we should take that $1m RSU grant down a notch or two. Those are extremely, extremely rare. The typical numbers are far lower than that, and if you’ve been there, you know it’s true.
That being the case, the amount of stock options and the exit criteria for an equivalent startup exit are far lower than you posit. It doesn’t need to be a unicorn to put your annual compensation into the mid to upper six figures.
