Contrary to the advice I've seen on HN many times, I took a position at a startup with a compensation much lower than I could have gotten elsewhere, with the understanding that I would get some kind of payoff when we make it big.
Now the company is finally incorporating, so we're going to have the chance to make that official. The problem is, I really don't know all the issues involved in how shares/options work.
-Is it simply saying I'd like x% or I'd like y shares, or is there more to it?
-Is it worth using vesting as part of the negotiation?
-Are there things to negotiate other than amount and vesting?
-I know this last question is a big 'it depends', and not useful for the majority of people reading, but I have no idea how much it's appropriate to ask for; any suggestion would be useful. Some insight into my negotiation position follows. We have several engineers, but there are two that would _really_ hurt if either left. One of those is myself. They would of course get along, but it would be very costly for them. The other engineer is a founding member. I love the company, the people, and the work I do. However, I love my family more, and I have to make long-term plans, so I am willing to leave if we can't come to an agreement.
If you started with any salary at all, you don't have a good argument for a founder-sized chunk. An early, key engineer is going to be somewhere in the 2%-10% range.
If you started without salary, and thus took founder-style risk, you might be playing more in the 5-20% space.
For the overall company breakdown, You can assume the structure is something like 10-25% employees/option pool, 75-90% founders.
For example, the founders might choose to give 5% to each of 2 key engineers, leave another 10% to spread among all future employees & advisors, and divide 80% between the founders.
Vesting is a clear "yes", for everyone on the team including the founders. Founders & employees should be on a 4 year vest with a 1 year cliff (if you get fired or leave within the first year you get nothing, at the end of year 1 you get 25% of the equity you are entitled to, and then another 1/48th of the total each month from then on).
The vesting thing is more like... if the founders don't do it, you don't want to work for them because they're clueless. So you should insist on it because otherwise the company isn't being run properly. If the founders don't vest themselves, quit immediately because they are mis-aligning themselves with the future of the company.
You always talk about equity in %, not a # of shares. Companies can be started with an arbitrary number of shares (my last one had 7 million, some go with 10 million, some 100,000). # of shares is totally meaningless -- talk in percent ownership. Founders saying "And you get 20,000 shares!" are trying to trick you.
My advice here is to make yourself a mock cap table, and try to play with how you would set it up to keep everyone properly incentivized, as if you were an outside board member wanting it all to run smoothly.
So assuming there are 3 founders (1 of whom is the engineer), plus you, plus 4 other engineers, you might end up with something like this (where you are the high-value engineer):
Founders: 75% (30/25/20), Current engineers: 15% (8/2/2/2/1), Future Pool: 10%