Essay

The Equity Equation

Paul Graham · paulgraham.com Free Beginner

The clearest short piece on how to think about giving up and holding equity, and why a smaller slice of a bigger outcome is the whole game.

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Curated reading that points you to the sources, not personalised investment advice.

It answers 9 questions

  1. Should I sell some of my equity in a secondary?
  2. My company is doing great. Why should I worry about concentration?
  3. How much of my net worth in my startup should feel like too much?
  4. My ESOPs look valuable on paper. Is that real money yet?
  5. Will selling in a secondary upset my investors?
  6. How do I tell if an ESOP grant in a job offer is any good?
  7. Everyone says go all-in on my startup. Isn't taking money off the table a sign I don't believe in it?
  8. At what stage of the company can I even do a secondary?
  9. Do my co-founders and I have to sell the same amount in a secondary?

Read with it

  1. A calm explainer of what a secondary actually is, who has to approve it, and how the price gets set, before you raise it with... Carta Article How secondary sales work at private companies Carta
  2. The best reminder that avoiding ruin beats chasing returns, and that wealth is the money you don't spend. The whole founder... The Psychology of Money Book The Psychology of Money Morgan Housel
  3. A working glossary of the words on your cap table, from the company that stores most of them, so the jargon stops getting in... Carta Article Equity 101 for founders and employees Carta
  4. A plain-language India primer on what an ESOP actually is, how vesting and exercise work, and how it is taxed. ClearTax Article What is an ESOP? Meaning, taxation, and how it works ClearTax
  5. The most thorough plain-language reference on vesting, cliffs, strike prices, and exercise windows. Read it once and stop being... Holloway Guide The Holloway Guide to Equity Compensation Holloway
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