JazzyBagel

Zepto

Are your ESOPs worth it?

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?

14mo ago

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BubblyNugget

Stealth14mo

most start up wont list

JazzyBagel

Zepto14mo

Exactly. And there are so few buyback events in the whole ecosystem. How much do you have?

BubblyNugget

Stealth14mo

I had 30L. Don't think it will ever list or any buy back will happen

BubblyKoala

Stealth14mo

ESOP value has following risks

Company growing sizeably and being valuable
Founders ensuring liquidity events for everyone.

You should be joining early stage startups for the experience and your growth. ESOPs should be taken with above two probabilities

JazzyBagel

Zepto14mo

My concern is that in the last 7-8 years I have rarely heard about liquidity. ESOPs are always the last ones to get liquidity after VC, angel, founders....

BubblyKoala

Stealth14mo

VC/Angels have a different class of shares altogether. You shouldn’t be comparing to them at all. They will get some money in average situations while ESOPs are only worthwhile if it keeps doing well and growing

SillyDonut

TCS14mo

Take cash bruh

JazzyBagel

Zepto14mo

Haha I wish bro. But kya karein

SillyDonut

TCS14mo

Kare wahi jo man kare...esops are hoax at startup.

Decide judiciously

JumpyHamster

Guidewire14mo

It is a equivalent to a tissue paper unless the company has successful exit. The chance for this is 1 percentage

JazzyBagel

Zepto14mo

I feel even less than 1 percent.

ZestyKoala

Stealth14mo

Interesting profile.
What would you prefer
X ESOPs vs Y cash? X, and Y can be discussed but assuming in a comparable range

JazzyBagel

Zepto14mo

I would prefer more cash now. But again depends on the founder pedigree.

FuzzyCupcake

Prismforce14mo

I often say this- you never think esops as compensation for paying lower CTC. ESOPs are only compensation for the risk you are taking and trusting the company/team/founders.

Whenever someone asks me about taking a pay cut and going to a startup, I ask them to be doubly sure and don’t go just because they are offering a lot of esops.

I joined at a pay cut in startup but really thought the team and idea was really good

FluffyNugget

Plivo14mo

It’s just to inflate compensation unlike RSUs of public companies.

JazzyBagel

Zepto14mo

True in a lot of the cases

DerpyDumpling

Stealth14mo

These days new startups year of expiry is unlimited

BubblyNugget

Stealth14mo

Also in buy back your stocks need to be vested + some cap is there . Toh at max 10% of vested you can use for buy back

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