The Big Picture

Equity compensation can be a powerful but complex part of your total rewards in tech. Here are the core points from the lesson:

• Startup equity is high risk, with data showing over 60% of startups from 2018 have already shut down, and only a tiny fraction have reached IPO or unicorn status
• Multiple cognitive biases—like endowment effect, loss aversion, and optimism bias—can cloud judgment and lead to poor decisions about holding or selling stock
• Emotional and social factors, such as FOMO, herding behavior, and recency bias, often push people to mirror peers rather than make rational equity decisions
• Selling strategies can range from immediate liquidation to goal-based triggers (e.g., home down payment), percentage-based sales, or predefined holding periods
• It's crucial to plan ahead, especially around liquidity events, and work with financial professionals to optimize tax implications and align decisions with personal goals

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