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More Money? or More Equity?

Hi All. I'm a mess right now trying to make a decision and would like the war room's advice.


I'm leaving my current company. 100% - time to go. I have a lot of options, but right now there are 2 offers on the table.


1) 120/120. .05% ownership. 8.7m revenue company, series B (series C coming early 2022), trending towards 15M revenue 2021. 50 person company. I'd be an individual contributor. The tech is something I already grasp and know I'd be successful selling.


2) 140/140. Small company (11m 2020, 30-40m 2021, goals projected at 80m 2022) Company was acquired not too long about by a 8B market cap company. Equity would be a grant of the parent's company stock. The tech is still a step away from me, but the value prop is not.


X Factor:

Company 1: Local to where I live though I'd be remote. Had an old colleague and CEO (who I like/respect) reach out to me promoting the leadership group. Also, I'm not an overly technical seller, and this is a less technical sale than #2

Company 2: More $$. Rocketship of a tech. Although I'm likely a bit underinformed when it comes to the space specifically, I can see spending 2 years here and absorbing the information as a basis for the next 15 years of my career. Also, I have a friend on the inside who started 3 months back who says it's everything it's cracked up to be.


I have til 10/6 to give an answer. Would love to get some additional insight from the war room.



Update: I ended up choosing company 1. Negotiated up to 125/125 with .075% equity. The desire to not have to travel 2-3 times a q just to meet up with my company for internal stuff (I have 2 young kids) made me choose the local company. And hell, if we hit unicorn I'll have $750k in equity.

Money v Equity
Attached poll
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☁️ Software Tech
πŸ’° Compensation
πŸ‘₯ Hiring
31
UrAssIsSaaS
Politicker
+8
SaaS Eater
If you trust your friend I take company 2 all day long. You can learn the tech/industry. You dont know if youre being sold a pile of shit with #1 or not, #2 you know is good.Β 
CaneWolf
Politicker
+12
Call me what you want, just sign the damn contract
Exactly. 3 months is a bit early to be sure your friend knows what he/she is talking about but that's better. Also, stock grants!! are dope.
FamilyTruckster
Politicker
+9
Exec Director, Major Accounts
Take the real cash. Invest the extra 1,500/mo and odds are you’ll get a better return over time than the equity.Β 
InQ5WeTrust
Arsonist
+9
Sales Savages, what is our profession? Trauma!
#2 seems pretty strongΒ 
Avon
Politicker
+7
Account Executive
Equity won’t be worth 90% of the time. So unless you have a ton of belief if the company and leadership I’d go with option 2. That being said, if you truly believe this will be a unicorn, maybe take that risk.
CuriousFox
WR Officer
+13
Senior Account Executive
Agreed. At the end of the day, we can't tell ya what to do friend.
FeelItInMyPlums
Valued Contributor
+5
Sales Account Executive
even at Unicorn status equity would only be $500k.Β  Not life changing (but still very nice)
Avon
Politicker
+7
Account Executive
500k at once is definitely life changing to most people. Even sales people
Show 3 more replies
jefe
Politicker
+8
Sales Director
Agreed
GrizzleMcThornBody
Arsonist
+12
EVP - RevOps
#2.
Diablo
Politicker
+7
AE
As you are 100% confident that you want to move out, I won't think about point 3. #2 for me considering the company is growing (that means it's selling and I'm sure you are a champ in selling), equity which will only grow (in valuation), known source in the org.
Kinonez
Celebrated Contributor
+9
WR Enthusiast
Company #2 for the short run, #1 for the long run.Β 
Sunbunny31
Politicker
+5
Sales Executive
Honestly, two solid offers, though I like 2 better.
FeelItInMyPlums
Valued Contributor
+5
Sales Account Executive
Wow I'm honestly surprised 0 people commented on the fact that #2 is a deeper tech!
Mo
MoneybaggYo
Good Citizen
Enterprise SDR
Yeah the actual selling of the product is what’s gonna get him that second number lol people forget about that
Justatitle
Politicker
+11
Mid Market AE
Option #2 seems to be better but the fact that your friend has only been there for 3 months means it's still the honeymoon phase so take their feedback with a grain of salt. In this case I believe it really depends on what you are looking for. Rocketship pros are obvious but the cons are not. They include the following. they will be rapidly hiring which means more mouths to feed accounts to and there will be a learning curve. It's easy to become a number and not have as much of an impact as you may like and their goals are lofty which is great but there is no guarantee to the future. My best advice to you would be to trust your gut, it rarely steers you wrong. Best wishes in the DM process
goose
Politicker
+12
Sales Executive
More money.
SaaSam
Politicker
+8
Account Executive
I had my answer the second you said an old CEO who you like and respect promoted the leadership group. Culture is a big thing to me now as I've learned that lesson the hard way.
DungeonsNDemos
Politicker
+10
Rolling for Initiative
From what you described I would recommend #2. Equity is potentially a long shot and having a friend on the inside at the other to give you the truth is worth it's weight in gold.Β 


Also, I will take whichever offer you don't want
desperado
Politicker
+7
Head of Sales, Americas
Equity if you can structure as follows: Set vesting cliff to 6mo. Front-load 40% of allocation to year 1. 20% to year 2. 20% to year 3. 20% to year 4. Argue 3mo cliff for Y1 and vest monthly starting at Y2 and ending at EoY for Y4
Do.it.for.the.checks
Politicker
+7
Account Executive
Math time!

So option 1, IF they became a unicorn and you fully vest in 4 years. You'd make 500k. This is high risk however. Factor in 50% of startups fail within 5 years, that if you assume a 15x multiplier you'd need to be worth 66 mil rev which at 15 rev today requires a annual growth of 44%, and that leadership and PE specialize in certain size companies i.e. 1 to 10, 10 to 30, 30 to 50, 50 to 100 (meaning change could happen).

Or take the extra 40k and invest in a moderate aggressive account at 6.5% and net 140ish.

The question becomes this would you bet 140k on a single company to net 500k?
WomenWantMeFishFearMe
Politicker
+4
SDR LXIX
I like equity
El
Elepin
Opinionated
+1
BDR
Me too
pa
payton_pritchard
Valued Contributor
+5
RSM
#2 Ask your friend a couple more questions to confirm but sounds like the better option.

Most equity ends up being worthless, the success stories are great and more visible but those are the exception not the rule. Even if there is a "successful exit" dilution and share priority means less money for you especially if you're not VP level or above with meaningful equity
LordBusiness
Politicker
+8
Chief Revenue Officer
I'd have to know the products to give you my actual advice - but I'd lean towards number 2. You have a friend giving you the real deal on the inside, they are growing fast as hell, so they have to be doing something right, its $40k more actual dollars (before over performance).Β  99/100 times equity is worthless.Β 
Re
RedLightning
Politicker
+7
Mid-Market AE
Both seem like great options and the fact that you have existing relationships is huge. Which buying persona do you resonate better with and money aside where do you want to be in 2-3 years?

Equity is great in theory, but you'll get diluted heavily along the way. Also, you're banking on the acquisition or IPO scenario.Β 

Assuming you hit OTE at both over 3 years, there's a 120K difference in earnings. You're company will need to get acquired for 24 million at year 3 for it to break even for you
dwightyouignorantsale
Politicker
+7
Manager, Sales
I appreciate this math. Def #2
dwightyouignorantsale
Politicker
+7
Manager, Sales
Having a friend there that can vouch that it’s a good place to be is worth absolute gold. So many companies sell the dream, not the reality, when hiring salespeople on. Therefore #2 gets my vote!
be
bellaccione
Member
+4
Sales Consultant (principal)
Always go for equity.
And if your friend confirms - this is actually a no brainer.Β 

Wealth is not generated by income, it's generated by equity in an income-producing asset
AnchorPoint
Politicker
+8
Business Coach
No brainer if the friend is truly a friend and not just someone you "know".
Flippinghubs
Opinionated
+7
Account Executive
ill echo some similar sentiments for company #2Β 
2
Tell me about equity!?
Advice
4
4
Equity paying out!
Question
15
How much have you made from your company equity grants?
Cr
+36
Crowtime , Β  Flippinghubs , Β  FeelItInMyPlums Β  and 36 people voted
8
Is equity worth caring about?
Question
6
Does equity really matter?
Cr
+67
Crowtime , Β  FeelItInMyPlums , Β  JaySaastby Β  and 67 people voted
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