Why it matters
Almost 100% of offerletter.io clients with startup job offers come to me with the same very simple question: “What does this equity mean?” The answer is quite complex. Equity and stock options are super complicated and difficult to value.
Lots of startups will promise you equity and stock options because they want to align incentives. The assumption is that if you have a financial incentive -- a stake in the company’s future success -- you will work harder and think longer-term than if you were simply taking a salary.
It's imperative that you take the time to understand the equity component in depth. It's entirely possible that a company will refuse to disclose some or all equity details. If that's the case, then you should strongly consider walking away entirely. You're basically being given a question mark in exchange for your work. Also, companies that aren't willing to be upfront about equity information may screw you in other ways in the future (you'd be surprised how common this is!).
Disclaimer: None of the information in this chapter is intended to be tax or legal advice. I encourage you to consult an independent, certified tax and equity expert.