I am amazed how many people ask “how many shares (stock options) will they get?”.
This question
- is useless
- shows the lack of knowledge
It doesn’t matter how many shares you have. What matter is a percentage of a company you will own (number of shares / (total number of shares aka. “outstanding shares on a fully diluted basis”)). This is much better indicator.
However, even percentage of ownership could be misleading, because I would rather have 0.001% of Google vs 100% of some Acme Inc. filing for a bankruptcy. So, you want to know
- Your percentage of ownership
- Company valuation
BTW. There are some people who are really worried about a dilution. They falls into the same trap. They just take one number into account (percentage of ownership) and disregard second one (company valuation). In the of dilution, the first number goes down and second number (in a good/normal case) goes up. As long as multiplication of these two numbers goes up you are in good shape.
Summary (formula of your future fortune)
The value of your piece of pie = (Your shares / All shares) * Company valuation
