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Welcome to Tophatter!


Hi Melissa,

I am very excited about the prospect of you joining Tophatter ("The Company"). This is your offer letter. Below you will find details regarding your salary, equity, and benefits, as well as some additional things to know before starting. If you have any questions at all, please feel free to call me at 415-605-5753. I look forward to your response and (hopefully!) working together.

Ashvin Kumar

CEO, Tophatter

September 22, 2018

Offer Summary


We have generated 3 compensation packages for your consideration. One has an emphasis on base salary (cash), the other is emphasized on equity. The mixed option is in the middle and is selected by default.

Position
Position
Software Engineer
Annual Salary
Annual Salary
$90,000
Offer expires
Offer expires
September 29, 2018
Start Date
Start Date
October 22, 2018
Hiring Manager
Hiring Manager
Jared Tame
Options Granted
Options Granted
2,000
Strike Price
Strike Price
$0.25
Total Cost to Exercise
Total Cost to Exercise
$500
Last Preferred Price
Last Preferred Price
$1.50
Options Grant Notional Value
Options Grant Notional Value
$3,000
Options Vesting Schedule
Options Vesting Schedule
Monthly for four years with a one year cliff.
Employee Benefits
Employee Benefits
Full Participation
Home Office
Home Office
San Francisco

Salary


$90,000/year

Salary at Tophatter is determined by market value for your position from data sources such as Salary.com. We target salaries to be at the top 25th percentile of the market.

Mean
Mean
$55,000
Standard Deviation
Standard Deviation
$10,000
Top 25%
Top 25%
$65,000

Capital Structure


The graph below shows the Tophatter capital structure. Only Preferred holders are paid for exit values less than $25.7M.

Options Payout Calculator


For exits greater than $50M, your option value can be calculated as follows:

(ExitValue * EquityOwnership) - ExerciseCost = OptionValue

For example, if Tophatter is valued at $200M your option grant's intrinsic value is:

$200M x 0.02% - $500 = $39,500

Please note this is a fictional example to illustrate the calculation and is not a forecast.

  • An exit is triggered when the company IPOs or is acquired by another company.
  • You have single trigger acceleration, which is common. This means your equity vests upon acquisition or change of control.

Vesting Schedule

Your options will "vest" over 4 years. Vesting means you earn the right to purchase (exercise) those shares, at which point you own them. As you can see in your schedule, the first chunk of shares that you vest is one year from your start date. This is called a cliff. You'll vest 25% of your options on your cliff date. After that, you'll vest 1/48th of the remaining shares each month.

How to Value Equity


Equity is a difficult topic to understand for newcomers. We recommend Joshua Levy's open guide for a primer.

Estimating the value of your option grant is hard. Here is how we encourage you to think about it:

  • Do not do an "expected value" calculation. The probability distribution of an individual company's outcomes is unknown.
  • The lower bound value of your option grant is $0. That is also the default value.
  • The best venture-funded companies return 10x. If we are lucky enough to be one of the best, the upper bound of your grant is most likely 10x your notional value.
  • To compare equity offers, choose the company you believe is most likely to become a "best" company. In case of a tie, the option grant with the higher notional value is the better offer.
  • If you are lucky enough that your grant becomes valuable, you will probably wait 10 years to realize that value.
  • Live your life as though your equity is worthless. If it is worth something in the future, that is icing on the cake.

Org Chart

  • Acquisition Team
  • Supply Team
  • Risk Team

Dwight
Product
Todd
Engineer
Lindsay
Engineer
Open
Engineer
Marshall
Product
James
Engineer
Hani
Engineer
Yale
Engineer
Sanjay P
Engineer
Marshall
Product
Sophia
Engineer
Open
Engineer

Benefits


401k
401k
50% match, up to $4,000/year
Healthcare
Healthcare
75% of insurance costs
Dental
Dental
75% of insurance costs
Life Insurance
Life Insurance
$100,000 paid towards policy
Vision
Vision
75% of insurance costs
Commuter
Commuter
pretax transit savings card + $60/month
Food
Food
Free lunch and unlimited snacks
Haircuts
Haircuts
Professional haircuts on-site every 3 weeks
Phone
Phone
$50 monthly stipend
Gym
Gym
50% reimbursement for monthly membership up to $100
Paid Time Off (PTO)
Paid Time Off (PTO)
12 days for the first year, 15 days every year after
Sick Days
Sick Days
Unlimited

Commute


Your home office is San Francisco.

Everyone at Tophatter commutes to their non-home office 1 day every week. Your commute day is Tuesday. The address for the San Francisco office is below.

Your commute schedule

Monday Tuesday Wednesday Thursday Friday
SF PA SF SF SF