I Don’t Care How Well You Code, Understand Your Compensation
So, I&#x27;ve been working for startups for a long time.
Finally I&#x27;ve reached two &quot;rules&quot;-
 - Be a founder
 - Restricted Stock Units or Preferred Shares are the only way to go.<p>Options are way slanted against employees.  If you have a market value of $150k and you take $80k in salary, you&#x27;re giving up $70k of real money each year.  The value of your options in most situations that work out well (Eg: base hits) are going to be less than that (when accounting for risk).<p>If you get fired in the 11th month, you&#x27;ve lost about $70k and get nothing.<p>IF you get fired in the 13th month, you have 1 year and one month vested, and 90 days (most likely) to spend real money to turn those options -- which you&#x27;ve already paid for by giving up market salary-- into something valuable.<p>Options are basically a raw deal, and I&#x27;m not even getting into liquidation preferences.<p>IF you give up real salary of $70k a year, that is the same, literally, as the angel who puts $70k into your A round.<p>You should be getting the same terms as the A round in that case.<p>That you don&#x27;t is part of how the game is rigged.  You should vest almost from the beginning.<p>I think 90 days of trial period with a cliff (Eg: you vest 90 days on your 91st day then every 30 days after that you vest another 30 days) is ok.  You don&#x27;t want the cap table to be too complex.<p>Yes, Venture Capitalists wouldn&#x27;t like this.  Of course, because it&#x27;s fair rather than tilted towards them.<p>I know this won&#x27;t become popular because engineers are too easy to manipulate.  They read some self serving VC blog about why liquidation preferences are perfectly acceptable and they buy it.<p>But if you&#x27;re there the year before the VC you took a lot more risk than they did.  You&#x27;re investing your real salary that you&#x27;re not getting and could be getting by working for a fully developed company, while they are investing other people&#x27;s money.<p>I&#x27;ve heard of programs called Slicing Pie and the like that make this easy.<p>Why you want to be a founder?<p>Well, after over 20 years working for startups, I have spent al to of time asking CEOs and CFOs specific pointed financial questions.  I have gotten the runaround from them, and that&#x27;s a flag that makes it easy to pass on the company.  But when I haven&#x27;t gotten the run around, way too often what they have told me was false.<p>Many times the CFO when asked for the number of authorized shares or the total shares on a fully diluted basis would give me some BS number. I don&#x27;t know if he didn&#x27;t actually know. (Many times the startup doesn&#x27;t even have a CFO at that point.)<p>Many times I&#x27;ve been told that options accelerate, on acquisition, only to find out that the founders deal was that way but they wrote a new option plan for later employees that didn&#x27;t have as nice of terms.<p>Just recently I saw a plan that gave the &quot;compensation committee&quot; the ability to do <i>anything they wanted</i> including cancelling all outstanding options grants, in the event of an acquisition.<p>I really don&#x27;t know who wrote that document but I think it was one of the investors, and the &quot;executive management&quot; of the company never actually read it.  They didn&#x27;t believe it said that when I pointed it out. (Who am I, I&#x27;m just an engineer (this time, been a founder in the past, but I thought this company had reduced a lot of risk and so the tradeoff was worth it.)<p>So, another piece of advice- work for a company where the founders are hard asses when it comes to investment and terms.  These people didn&#x27;t even read the stock option plan (and weren&#x27;t going to give it to me, despite requiring all of us employees to sign an agreement agreeing to its terms, because our CFO didn&#x27;t realize that there was a separate plan document- he kept saying (or thought) that the agreements were the plan!)<p>This kind of lack of attention to detail is very common, in my experience in startups.<p>Working for a startup that fails is pretty lame, but working for a startup that succeeds and you get screwed out of the upside is much, much worse.