There’s a seductive narrative in startup culture: equity is king. Turn down the salary, grab those stock options, and ride the rocket ship to wealth. But here’s what nobody wants to admit—most equity ends up worthless, and sometimes the smartest move is taking your payment and moving on.
The Equity Illusion
Equity sounds amazing in theory. You’re not just an employee or contractor—you’re an *owner*. You’re *invested*. But ownership in a business heading nowhere is just a fancy way of working for free.
The math is brutal. Most startups fail. Even among those that survive, most never reach a liquidity event that makes early equity valuable. That 1% stake in a company sounds impressive until the company sells for less than its debts, gets stuck in perpetual limbo, or slowly decays over a decade while you watch your “ownership” mean nothing.**When Cash Is Actually King**There are clear situations where payment beats equity every time:The founder has no track record. If someone’s on their first venture and asking you to work for equity, you’re not just betting on the business—you’re betting on an unproven operator. Why would you take that risk when they won’t even pay you market rate?
The business model is unclear or constantly changing. Pivoting is normal, but if the company doesn’t know what it’s selling or who it’s selling to after six months, your equity is a lottery ticket with terrible odds.You need the money now. This seems obvious, but people convince themselves otherwise all the time. If you have bills, debt, or financial goals that matter today, future equity that *might* pay off in five to seven years isn’t a strategy—it’s a gamble with your present security.
The cap table is already a mess. If the founders have given away 60% of the company before generating real revenue, your small slice will get diluted into irrelevance. Even if the company succeeds, you won’t see meaningful returns.
The Hidden Cost of Equity
Taking equity instead of payment isn’t just about the money you’re not getting now. It’s about opportunity cost. Every hour you spend building someone else’s dream for equity is an hour you’re not spending on paid work, building your own thing, or investing in skills that have guaranteed returns.Equity also creates psychological traps. You feel invested, so you stay longer than you should. You tolerate poor treatment, delayed promises, and moved goalposts because you’ve convinced yourself you’re building toward something. Meanwhile, the cash you could have earned is gone.
When Equity Makes Sense
This isn’t to say equity is always bad. If you’re a true co-founder with significant control and ownership—say, 20% or more—that’s different. If you deeply believe in the vision, trust the team, and can afford the risk, equity can pay off spectacularly.But for everyone else—contractors, early employees, advisors—the calculus changes. A small equity percentage in an uncertain venture usually isn’t worth sacrificing real payment.
The Professional Approach
The best operators know their worth and charge for it. They deliver exceptional work, get paid appropriately, and move on to the next project. This isn’t mercenary—it’s professional.You can still care about the work. You can still do your best. But caring doesn’t mean working for promises. Companies that can’t or won’t pay for the value you provide aren’t companies you want equity in anyway.
Some businesses deserve your ownership stake. Most don’t. Learn to tell the difference, and don’t be afraid to take the money and walk away. Your future self—the one with savings, financial security, and options—will thank you.
