Some people are talking about the "expected value" of being an early employee, which is a very valuable view. I'd like to focus more on the best case to give a sense of what you can hope for if everything goes right.
I was fortunate enough to be an early engineer at LinkedIn after I graduated college. I was one of the first few engineers hired. I'm not an amazing company picker, and I barely knew what a startup was at the time -- I just got lucky because I knew one of the cofounders.
I received a decent option grant (especially for a kid just out of college!) and stayed at the company for two years. My options got diluted approximately 50% during the various funding rounds. Right now, LinkedIn is a top 20 website in the world, and there's a consensus that its current stock price is "very optimistic". My net worth on paper ends up being a couple of million. Needless to say, I'm thrilled. However, I also want to point out that there are only twenty "top 20 websites", and most of them aren't going to change anytime soon. So if you're one of the first few engineers at one of the 10-20 companies that's going to go from nothing to huge in the next 5-10 years, then you can view a few million -- perhaps 10-20 million -- as being the best that you can expect. And there are literally a few dozen, or maybe 100 people that will get this kind of success every decade. There is little skill involved here. It's all about getting lucky.
Furthermore, people forget that it takes time for value to build. It might take you 4 years to get most of your stock options and decide you want a more stable job or a change of scenery, but it might take another 10 years for your company to go public or get sold. You're giving up a big chunk of your 20s for the potential of a few million in your mid-late 30s -- but you could probably save close to that much anyway with good spending habits and better paying jobs.
So if you want to be an early employee at a start-up, it's an awesome experience. But you should do it because you love it, because you're passionate about the product, or because you cherish the learning opportunity. You shouldn't do it because you think it will make you a gazillionaire.
(just to be clear, I did love my time at LinkedIn -- I made some great friends, learned a ton, understood that startups are the kind of places that I like to work at, etc. I'm really happy I was there, and would be even if the company hadn't become a big success)
I was fortunate enough to be an early engineer at LinkedIn after I graduated college. I was one of the first few engineers hired. I'm not an amazing company picker, and I barely knew what a startup was at the time -- I just got lucky because I knew one of the cofounders.
I received a decent option grant (especially for a kid just out of college!) and stayed at the company for two years. My options got diluted approximately 50% during the various funding rounds. Right now, LinkedIn is a top 20 website in the world, and there's a consensus that its current stock price is "very optimistic". My net worth on paper ends up being a couple of million. Needless to say, I'm thrilled. However, I also want to point out that there are only twenty "top 20 websites", and most of them aren't going to change anytime soon. So if you're one of the first few engineers at one of the 10-20 companies that's going to go from nothing to huge in the next 5-10 years, then you can view a few million -- perhaps 10-20 million -- as being the best that you can expect. And there are literally a few dozen, or maybe 100 people that will get this kind of success every decade. There is little skill involved here. It's all about getting lucky.
Furthermore, people forget that it takes time for value to build. It might take you 4 years to get most of your stock options and decide you want a more stable job or a change of scenery, but it might take another 10 years for your company to go public or get sold. You're giving up a big chunk of your 20s for the potential of a few million in your mid-late 30s -- but you could probably save close to that much anyway with good spending habits and better paying jobs.
So if you want to be an early employee at a start-up, it's an awesome experience. But you should do it because you love it, because you're passionate about the product, or because you cherish the learning opportunity. You shouldn't do it because you think it will make you a gazillionaire.
(just to be clear, I did love my time at LinkedIn -- I made some great friends, learned a ton, understood that startups are the kind of places that I like to work at, etc. I'm really happy I was there, and would be even if the company hadn't become a big success)