The ESOPs lie

Hello guys, I would want to know what is the benefit of getting ESOPs in an early stage startup? The startup has a great team and working on a promising product. I have been offered a package with somewhat lower fixed component and somewhat higher ESOPs. Need insightful pointers here. TIA :)

After reading this article, it seems like early players who have become big had the fortune of liquidity. What do you think about more recent startups in last 5yrs or so? https://www.moneycontrol.com/news/technology/esop-cashout-events-drop-by-62-in-2023-as-funding-winter-bites-11987051.html

I am in discussion with some very early stage startup and if things work out then will be part of the founding team. They have promised to give me same salary as the current company’s salary but give ESOP. Is ESOP worth it if you are founding team member? The founder has sold his previous company so higher chance of success it looks to me. Is there any case where person made huge money on ESOP?

Started working in 2017 (Graduation: Tier 2 College) in hand salary: 28K per Month. Worked for 2.5yrs, had big dreams, didn’t knew what to do, how do I 10x my salary, saw my manager 40yrs old earning 25LPA in the same company. Realised I don’t want to do this for the next 20yrs and the reach at 25LPA. Started preparing for UPSC (wanted to make it big) realised within 6 months, this is not my cup of tea, appeared for MBA entrance, cleared the exam joined Tier 1 MBA, post MBA: 25LPA + XX Esops in next two years at 1.2Cr CTC inc ESOPs. Before 2030 plan to achieve FIRE with 8Cr networth. By 2040 make it 100Cr and retire. Chill at beach with beer in hand and two other friends. What’s your story, do share those goldmine inspirational stories!!

My profile: EX. Founder turned Product+ strategy person YOE: 5+ ESOPs: 80 lakhs Cliff: 1 year Vesting period: 48 months I am still thinking after how many years it will be valuable given the liquidity is very rare for ESOPs. Any thoughts?

Truths about ESOP 101 After working in multiple fast growth startup’s and having been part of multiple buybacks as well as being in the startup ecosystem for a decade I want to put to bear my pov about creating wealth through ESOP. Like any other randomised event, ESOP also follows Pareto principle which means a very small number of people within the company ever make sizable wealth that they elevate to the top 0.1% of the country. The Pareto also applies with companies; significantly small minority of companies in India have employee friendly policies which enables an employee to create wealth. Most startup’s have dark patterns within their esop policy which either locks you in for insufferable durations or forces you to pay exorbitant taxes to gain the right to exercise your esops when you are leaving the company. Survivorship bias plays a huge role in enabling the narrative that esop is a great wealth generating tool leading to rude awakening for an employee after they join a company. This doesn’t mean you can’t make wealth, it just means don’t get carried away by narratives and take preventable errors in your career. Always talk to multiple people in startup’s and ask relevant questions to understand esop policies better. Like everything else optimising only for esop for wealth creation will mostly not result in it.

What is the probability of generating significant wealth (1-5Cr) by working at startups(Both US headquartered and India headquartered) in India? Is Generating wealth through ESOPS normal thing in India or very few lucky ones make such money? Do you know guys who have made significant money by working at startups? If yes, what parameters one should look for while identifying such startups?

Where did you work and how much money did you make? Asking as it looks like a lot of promise of ESOPs and wealth creation has failed employees in this bloodbath slow growth, layoffs, and job changes.