How Much Are Startup Options Worth - Dan Shapiro, Blog

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Dan Shapiro » How much are startup options worth?

Startup pay kind of sucks

This is not a well-kept secret. A great startup with a dozen or so people will typically pay its employees about a third less than a big company. Some will argue that that's because of the value of the equity that startups give you. I argue that that's the price of doing something that's more fun but of unproven economic value.

But regardless of why you're doing it, there's no question that startups ply you with ownership in the company, typically in the form of stock options. They will argue that there's tremendous value in those shares, more than you'll get from a big company, but they tend to get all nervous-looking when you ask them how *much* value. Now there's no doubt that 1000 options on stock in a startup with 1mm shares outstanding (0.1%) has a lot more upside than 1000 options on stock in google (0.000003%). This of course raises the simple question: what are they worth?

I'm going to give you a few tools you can use to take a swag at that value. More importantly, I'm going

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