You are completely reasonable. I've turned down offers because of this exact reason (and it was the only problem with the offer). I tell them that if they won't give me the denominator of the equation, I'll assume it's pretty close to infinity, and value the options aspect of the offer at $0. I think it's shady and manipulative to not provide such details ("but we're giving you 50,000 options!"). What are they trying to hide?

Also, why do these companies think that engineers won't try to find a way to bring math into the equation?

They're assuming that big numbers will make engineers shut up and stop thinking.

You are not doing anything wrong. You do not have a misunderstanding of how these things work.

You should not go work for a company that will not tell you the total number of outstanding shares (so you can calculate your % ownership). It's basically the same thing as saying that they're going to pay you 100,000 a year but not bothering to mention the currency.

Why isn't the relevant number the valuation per share? (which they have to tell you, because that's information for your tax return, right?)

In other words, if I have an option for N shares that are currently valued at $X, why do I care whether N is 10% or .0001% of the company. The "value" of the grant is the same in either case, no?

My understanding is that the valuation per share (at least, the valuation that matters for tax purposes) should depend on the 409A evaluation of the company, which determines the current price of shares in the eyes of the IRS. In some cases, especially if e.g. you're pre-revenue or nearly so, this number will be much lower when compared to the valuation per share that you'd see in an acquisition or subsequent funding round, both of which would presumably price in your potential future growth much more aggressively.

The net result is that generally speaking the number given by your 409A would seem low compared to the "true" price of the shares, and make it a weak recruitment tool.

(If this assessment is wrong I'd definitely be interested to hear to learn more)

As an aside -- unscrupulous companies can always quote inflated per-share prices based on extremely optimistic valuations e.g. "we're at least 10x the last round of funding -- your options are worth $500k!" So generally speaking, watch out.

It's red flag. I asked the same question of one startup and was told that i didn't need to know the answer.

Fast forward 10 years ... The company tried to go public and they had to do a 5760 to 1 REVERSE split to shore up their share price. People who naively thought they had 100k shares ended up w less than 20. Thecompany had to cancel the planned ipo, too.

I agree with this. An offer I didn't accept wouldn't disclose the numbers, ran out of funds and shut down a year or two after I declined.

And that is why refusing to share information is a bad idea. They lost a (presumably) good hire who might have made a difference to the outcome of their company. They wanted to hire but chose secrecy over a new employee. It didn't work out well.

It's not only reasonable but very crucial for you to ask the total number of outstanding shares. I have made it a point to ask every company this question and have gotten an answer out of them. Also, and this is me, I don't trust a word recruiters say. Not a single word. Ask to talk to the VP (or if possible CEO directly) if the recruiter is being cagey about it.

Usually recruiters are told not to tell people the number. And usually they don't know themselves. So it's probably coming from the top.

> the recruiter I was going through literally told me nobody has ever asked these questions about the options they were getting.

Whenever someone says something like that during a negotiation, you can be sure it's because they don't want to answer the question.

Other good ones:

-"This is totally standard"

-"That form is industry standard"

-"Nobody else has ever had a problem with that"

Sort of like the common response to questions about non-competes: "Oh, we never enforce that!"

"...then why can't we take it out?"

It's a totally reasonable question. If you were working for the same person and you signed a contract that obliged the company to do/purchase something and there was un undefined number in there, you'd probably find yourself fired.

"The service level agreement says if something goes wrong we'll get 50% of their staff working on it."

"How many staff do they have?"

"I dunno, but 50% of it sounds like a lot!"

Ask them if they want employees who would sign contracts which lack key bits of information.

I 100% believe that no one else has ever asked that question. Because lot of people have no clue at all.

I've bitched before about losing potential employees to other companies who, they said, were giving "more options," when we were offering them 0.5% of the company.

You should be asking, and if they aren't answering, realize they are offering you cereal boxtops. Whether you choose to value those at $0, or be insulted at walk away, if up to you.

You're doing nothing wrong. At the same time, I wouldn't walk just because they aren't being candid. Usually what this tells you - especially for later-stage startups - is that your options have very little expected value (think a few thousand a year in the best case), and you should act accordingly. Sometimes it's not because HR is full of evil monsters - sometimes it's their way of telling you an unpleasant truth that they aren't allowed to say directly.

Assuming if you're truly ready to walk if they don't share, this could even carry over to your negotiation. At this point, it's just business - if this company is willing to give you $XXk more than a competing offer with more candid numbers, then the cash could be worth it to hedge that risk. Depending, of course, on how much you value the upside.

I encountered this myself and have a few conclusions:

1) Be open with them and tell them that without a cap table you have to assume the options are worth $0. Use that to push for more salary.

2) The reason for not disclosing that information is often that the company is close to another fundraising event (an IPO for example) and that is very confidential information. It's definitely not a bad thing.

3) A safe assumption (to use yourself, not in negotiations) is that the company will exit at around $10/share. There might be a reverse split or something so take this assumption with a grain of salt.

My experience was not that the company was being malicious. I joined and it worked out fairly well.

2) You are incorrect here. # of outstanding shares isn't a secret in the events you describe.

3) This is not a safe assumption at all. Just because it worked well for you in one situation does not mean that it will work out in all scenarios.

The reason that companies sometimes don't disclose this information is that when you state ownership as a % it can seem minuscule emotionally. Anything less than 1% just doesn't seem like much even if it actually it.

That being said I don't think this is a good enough reason. Companies should disclose this information and then educate candidates about how to interpret the numbers.

And what do I do if they use #2? Are you saying it's reasonable for them to not give me that information? Should I assume they're worth $0 in this situation?

What else can you assume, though? You have no information at that point.

No, they did something wrong: not be honest. It sounds like you didn't go there - why work for someone who can't be upfront?

"nobody has ever asked these questions about the options they were getting" -> "company is full of idiots - run (dont't walk) away"

Actually it was an external recruiter. He was saying that all the programmers they've interacted with have never asked those questions.

I'd think it's more greedy liars than idiots necessarily. Though if you're just talking to the recruiters it's both.

And even that might be deceiving.

First, with the dilution trick (like Facebook did against a founder). Second, the voting vs. non-voting stock.

Also, if you happen to leave the company you likely have to buy the options. If you don't have the cash, you're screwed. If you have the cash, you might end up in unsellable-stock limbo for years. In their case, about a decade and still counting.

Don't work for a company that won't give you all of the details necessary to value their equity.

I'm not surprised that people don't ask about the equity, because people are generally woefully uneducated about it.

Recruiters might be lazy and push back because people really don't ask. But if you press the issue and can't get a straight answer, pick another offer.

You need to ask for more than just outstanding shares, but about also liquidation preferences and convertable notes as well. Otherwise, you won't get a true understanding of the value of the options.

I just assume it's common stock if I'm not a founder/exec. Is there a lower liquidation preference than that?

I'll have to research what convertible notes are.

They don't want to tell you, because that would essentially reveal their inflated valuation.