How can 1% of something equal nothing?

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I just read this painful story
My company sold for $100 million and I got zilch. How can that be?.

I felt apalled. I was a little sick to my stomach actually.

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Is it possible to work for years, putting blood sweat & tears into a firm, and end up with nothing?

I’ve been working with startups since 1996. While I wish this was an aberration, I’ve seen it happen a half dozen times over the years.

Here are my thoughts…

1. Have a lawyer review legalese

If your intuition tells you this additional compensation is worth something, then use logic to prove it.

The first step is to have a lawyer review the fine print. They know things you don’t. Since this isn’t your domain of expertise, you’ll want someone who can see around the corners, to give you fair advice.

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2. Have a financial expert review it

Ask a financial expert to review your compensation package. Think of it like buying a house, you’re commiting to something big, with a slow long term return.

What are the chances statistically that the company will succeed? What are the chances it may fail? If it does get bought, what are the chances the fine print will eat up your portion? When in doubt be conservative with your guesses.

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3. Use your math skills

Compare these numbers to other financial investments, such as real estate, or the S&P 500. Use your math skills to choose the best place for your money.

Be relentlessly logical. It’s very easy to get emotional or be irrational when you are dealing with money. But remember it is just math in the end. Evaluate. Test. And execute rationally.

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