This is an impossible question, but we can do better than just “probably nothing”.
I’ve been a developer for over a decade, but when I got my first-ever start up offer I felt like an idiot. I had gotten equity before, sure, but always at a public company. Startup equity had at least six extra dimensions of uncertainty and I didn’t even know which scenarios I should be considering. Even after educating myself and asking experienced folks for the right questions to ask, I got as far as figuring out that it’s a power law with a median value of zero and a mean value strictly greater than zero, and pretty much gave up there.
The website TLDR Options was born of the realization that I didn’t need a perfect answer: even just having an intuition around possible outcomes would be helpful. People who already know about things like exit sizes and dilution and valuation growth have that implicitly, but for newbies like me the most common answer we get is an only-half-joking “$0!” Understanding all the ins and outs of valuation and exit scenarios and preferences can let you get a more accurate answer, but we were looking for a happy medium. Instead of an accurate estimate, TLDR Options simply sets out to provide a more useful answer than “zero”.
Options reward risk-taking, which most venture-backed startups want to encourage. That is why we are here! Unfortunately, they can also carry extra uncertainty that has nothing to do with the success of the startup. It makes perfect sense that many people faced with that situation decide to just go with the median value. If it is easier to ballpark possible outcomes, it will hopefully be easy to take the long tail into account.
At the same time, it is worth considering whether options are successfully doing the things we would like them to do. Perhaps the problem isn’t that startup employees don’t know enough about financial modeling. There could be a less-opaque solution where they wouldn’t need to.
Until then, I hope people find TLDR Options useful. Let us know what you think!
