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Ask HN: Equity for a first employee | Hacker News

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This is also for your first employee. You may live or die based on the work this person does, and more importantly they may be accepting extraordinary risk (if your runway is less than 6 months, say). The same rules do not apply to employee #3. Finally, if you don't pay the person, or if you pay them bare subsistence wages (say, $20-30k) and they're senior talent, you've introduced an additional level of risk, and you should pay a premium for that. However, there may be better ways to compensate that risk; for instance, you can defer salary at a premium rate. A really important thing to remember about employee options is that employees don't know how to value them. You need to be really engaged with the strategic course of the business (not just the product: the business and its future cash flows) to really grok what options mean in rational terms. This is a good reason not to grant huge amounts to early employees; it costs you dearly and doesn't make them much happier. I've been in co

Ask HN: Equity for a first employee | Hacker News Hacker News new | past | comments | ask | show | jobs | submit login Ask HN: Equity for a first employee 80 points by newdle on Dec 2, 2009 | hide | past | favorite | 38 comments What's a reasonable range of equity (options) for a first employee (engineer; two nontechnical founders) with a 500k convertible-debt seed round? tptacek on Dec 2, 2009 | next [–] 1-2%. A lot of people say 5%. 5% is what you'll give to an executive down the road. First employees are very important, but probably not as important as your second CEO. 6% is what you give t

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