In this piece, we will explore the specifics of the tech environment and how it relates to your career. When exploring your next career move, there are many connotations to understand.
Working at a Public Company
The tech environment is vast. If you are moving to a publicly traded company, your fortunes lie on the future prospects and economics of the company, and its stock price. The equity outcome has a wide dispersion. The stock price can go up significantly, can decline, or stay the same.
There is risk in the equity; however, publicly traded companies can offer you larger cash compensation. With more cash via a salary you have less overall risk when it comes to compensation.
Tech Environment at a Startup
On the other hand, if your next role within the tech ecosystem is at a privately held startup, you will likely receive more equity, lower cash compensation, and fewer benefits.
The odds of success at a startup are challenging. Startups have a 5% success rate. Seems low. You read about a lot of success stories from Y Combinator, and how a lot of companies will become the next Google of their domain.
There’s always a chance for wonderful success and it’s great to be positive and optimistic. It will be wonderful for your finances.
But it’s also important to be realistic with yourself and the company’s chances. More importantly, if there isn’t a successful exit, what does it mean for your financial picture?
Understanding Your Equity
There are many conditions and scenarios within the tech domain that affect your equity value and its liquidity.
For publicly traded companies, the calculation is more straightforward with a regularly updated stock price. Be knowledgeable of the vesting and other conditions that exist for you to own the equity outright.
Startups have more trade offs with equity types and equity at different stages of the startup lifecycle. Liquidity and preference rights can impact you significantly.
Comp Trade Offs within the Tech Ecosystem
Evaluating compensation and equity packages in the tech space is very, very important for you. How do the different components of your job offer align with your financial picture now and in the future?
It can be best summed up by a successful lemonade stand owner. “Is the squeeze worth the juice?”
There are many important pieces in a job offer. If you are feeling confused, unsure, or overwhelmed, we can chat.