> If you join early, got plenty of stock options and the startup turns into a unicorn, those millions are totally possible.
GP comment argues correctly that there's no guarantee that employee stock options will return a profit even in the case of successful exits. Valuation multiples, senior debt, clawback options (see Skype exit [0]), fractional stocks being rounded down to zero after stock splits have all been implemented successfully by startups and VCs. I wouldn't invest my time, which is very precious compared to my capital, into any company that is managed by someone I don't know personally. I would rather earn surplus money to invest into high risk high return options. Treat startup equity as a lottery ticket and don't pay too much for one.
This is why I joined AWS 9 years ago, and left the startup world. I own (still?) 15% of a company as a founding engineer (with no voting rights). As part of a raise, the company sold its IP to another company for a 0.5% stake in that company. So now I own 15% of 0.5%....... I just didn't understand the business side of all this at the start. As I understand it, the raise wouldn't have happened and the original company would have folded if the deal wasn't done, so you can't really argue fraud.
Since then, I have seen similar things happen more than once to other friends. I can only imagine that as the number get larger, the problems become more complex.
My other option was AWS though. That $700k is like 4 years of effort, and I get vacations. Actually realizing a sale on a billion dollar company after 4 years is just incomprehensibly low. TBH Amazon is also less work than running a startup. If you think AWS oncall is bad, think about having even less people on your team to handle the load, or to build the product durably in the first place :)
Also, I have no way of knowing if the same ownership thing is going to happen again. Giving me another 0.5% of the above calculation. Sure, lots of people make millions in a startup. Way more people make millions, although over a longer time span, in tech companies and index funds.
> If you join early, got plenty of stock options and the startup turns into a unicorn, those millions are totally possible.
lets take this bit by bit.
First, you need to have a decent % of the company. At each raise your share of the company will dilute. So you might have 1% at join, but by series d its been diluted in % as well as seniority.
You reach unicorn status,but the company isn't making money. So it might take on debt.
Eventually you then IPO. You either have your options converted to real stock (for a fee) and a covenant saying that if you leave before x, you'll have to hand back those shares. or if you are lucky you might be able to sell after say 6 months (super rare)
so after n years, you are able to sell your 10k in ordinary shares.
But in 2024 there were 21 IPOs. The chances of IPO are vanishingly small.
> If you join early, got plenty of stock options and the startup turns into a unicorn, those millions are totally possible
That's the thing: there's literally no business idea in most startups beyond "sell to the highest bidder at 1B+ valuation". And the rest are hoping to coast on unlimited investor money.
That's it.
There are no business plans of, you know, building a sustainably profitable company.
For me the better question is: Why is anyone with enough money to invest in startups not just investing that money in a safe index fund or real estate instead?
Until then, naturally, it's all paper money. A bet. Maybe an investment, of your time and effort.
The majority of startups fail and the majority of startups having an IPO will not make anyone rich via stock grants.
It's definitely a safer bet to find a high paying job in a stable company.