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Should I join this new startup Delicious Data?

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I’ve been asked this before by folks.

Hey, you know technology, what stock picks would you recommend?

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It’s a tough question, with a lot of intangibles. It’s no wonder people ask friends for advice. You have to think about what matters to you? Your free time? Your income? Your time to commute? What about the team you’re working with? Or what your job contributes to the world?

Many of those I can’t quantify for you. What you can quantify money, so it’s worth doing that!

1. What are their prospects for success?

When asked about the chances of a companies success, knowing the industry may be one small part. You also have to know how many competitors they have, and where they are along in the process. And it’s not just developing technology, but team dynamics that are huge. From what I hear VCs hire more for team than for idea.

What factors outside domain expertise come into play? Lots! The weather, financial markets, or the big guys like google or amazon coming into the market. They may not buy you, they may just replicate your idea. Then where are you?

Read: How to hack job search the smart way

2. How can I apply mathematics to money?

My answer is always the same, go for the S&P 500. If the S&P beats 90% of all stocks, then nine out of ten times you will win this way. That’s it, calculation done.

Yeah but how does that pertain to joining a startup?

How indeed. I still say invest in the index, not in one pony. So use that advice as you will.

Gambling on one company is something for gamblers. If you want to become a vc, that’s a different question. In that case you would do a lot of due diligence on team and idea, to be sure you’re putting your money in a smart place.

Can’t I do that as an employee? Yes sure, but the intangibles remain strong.

How can 1% of something equal nothing?.

Related: Is Fred Wilson right about dealing in an honest, direct and transparent way?

3. How does all this help me?

It leaves out the intangibles. Don’t count paper as part of your compensation package. If money is a key factor, divide the number of hours per year by your salary plus real benefits – health insurance and so forth – to come up with a real number. Compare that to other jobs.

The heck with these finance jobs that pay $200k and offer a $50k bonus, but ask you to work 90-100 hours per week. Why not get two $180k/yr jobs at 45 hours per week? You see the logic right?

And what else? Of course if you’re going to be commuting in to an office everyday, and joining the family, you want to have great coworkers. So make sure you like the place where you’re working. I don’t know how much this is worth to you, but I would say it’s quite valuable!

Related: What to do when prospects mislead you?

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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.

Related: Is maintenance sometimes a forgotten art?

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.

Read: What tools and technologies are devops engineers using today

Get more. Grab our exclusive monthly Scalable Startups. We share tips and special content. Our latest Why I don’t work with recruiters