Has anyone here ever received stock options as part of a start-up? Did it meet expectations, or were there problems with dilution and certain provisions related to the exit?
The main issue here is timing - making it to said exit. If you are part of a relatively successful start-up, in my experience, it works like this:
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Business plan
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Business growing
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Profitability projected 3-5 years.
Then they raise funds with one of the large VCs ($50-100MM raised) and it looks like this:
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Marketing dollars
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Grow business substantially
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Negative profits for as far as one can see (5-10 years) with eventual huge exit (much larger than originally pitched)
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Heavy, heavy dilution at the employee level
So, all that to say, if you have 10-15 years to soak into a start-up that you truly believe will be the next big thing, by all means negotiate equity. Otherwise, make sure your base+bonus makes you happy. In the end, original employees will make out well if the company does well, regardless of their .01% equity participation.
Now, to the upside, I personally know one of the first 50 employees at apple. Started out of school and they could not pay him very much, so paid an additional $70k in apple stock at a $4 strike. Great deal in the end, but took awhile.