Startup Compensation: What You’re Really Giving, Getting

by Tony Wright’s Startup End

In a post for Tony Wright’s Startup End, Wright looks into the topic of startup compensation, focusing in the area of stock options.

Wright says while most startups are content to let employees think that stock options are this magical ticket to wealth and prosperity, it’s not the case.

He says employees with decent salaries and options will almost never get rich in a liquidity event.

“The people who might get rich with startup equity are the founders and the investors, he writes. “he writes.

(See 6 Tips for Hiring at a Startup)

The best way to look at options, Wright says, are as a high-risk investment.

“It’s important to look at the cost of the investment, the chance that the investment will “hit”, the likely magnitude of the return on investment, and the percentage you’ll likely have in your pocket at the time of a liquidity event,” he writes.

“The only way to buy more reward is with more risk,” he writes. “If you don’t fancy rolling the financial dice by “investing” in a startup, most startups are probably happy to pay you market rate and dial down your options.”

For more on startup compensation, read Wright’s full post here.