It’s interesting that the author thinks that the value of the shares is higher than the preferred price, even though employees typically hold common shares, meaning they get wiped out in most scenarios except best case. The expected (best case) growth is not an argument in favor of a 4x multiple on price. The chance of achieving that is baked into the price
The value of the equity package is 4x higher than the FAANG equivalent equity package (at preferred/market pricing) - that's not the same as saying the shares themselves are worth that.
To sum up the arguments:
* Employment packages allow things a shareholder cannot do (functionally recall their investment), so the high volatility leads to higher package returns.
* FAANG equity grants (RSUs) are taxed at much higher rates
* Expected return is in fact higher on startup equity than FAANG equity (and you generally have no way to invest in the good startups directly aside from working for them).
random_savv|7 months ago
usaar333|7 months ago
To sum up the arguments:
* Employment packages allow things a shareholder cannot do (functionally recall their investment), so the high volatility leads to higher package returns.
* FAANG equity grants (RSUs) are taxed at much higher rates
* Expected return is in fact higher on startup equity than FAANG equity (and you generally have no way to invest in the good startups directly aside from working for them).