Do not care about ESOPs? Read this 70X Success Story (From India)

If you are a startup, hiring smart employees is quite often a challenge. Apart from the fact that you can’t match their MNC salary, there is hardly any respect for ESOPs.

And in most of the cases, ESOPs have failed to live up to the promise. After all, how many startups have had successful exits/IPOs in India that one can trust entrepreneurs when they say ‘Join me! I see huge returns in this business’.

To cut through the niceties of the world, ESOPs are considered a bait to attract talent without any tangible promise in return.

Not Really.

Last week, Prof Vivek Wadhwa wrote (in TC) an article on H1B and quoted me regarding an early decision I took in life.

Some of India’s best and brightest won’t even consider moving to the U.S. Ashish Sinha started his career at one of the first successful tech companies in India, called Aztec software. Later, he worked for Ketera, IBM, and Yahoo, in India. He was offered several opportunities in the U.S., but believed his career would progress better in India. In 2007, Ashish started India’s TechCrunch—a site called…[read the full article]

Quickly, let me share a bit of context about the entire deal.

I got Aztec ESOPs for INR 3, the company went IPO and the share price even touched INR 227. Without mentioning the exact amount/sale price, I was one of those who saw technology IPO (Aztec was later acquired by MindTree) from India and actually reaped ‘some’ benefits of it (i.e. apart from Infy employees!).

Value of ESOPs in India
ESOP Success Story From India

At the same time, let me also share that most of the other companies I worked later, their ESOPs didn’t add a single cent to my wallet. At one startup, I got ESOPs for 12 cents and after 2 years, the valuation actually resulted in ESOPs being valued for 1 cent only.

ESOPs are a game of risk and so is a startup venture. You can make money out of only 1 in 10 ventures (that too when you are lucky), but that one gives you enough confidence to try out the other nines.

If you are someone who is evaluation whether to join a startup or not, think beyond ESOPs and see if the company/founder adds value to your career in the long run. Chances are that it always is better to work for a startup than be another cog in the wheel.

And like me, if you get lucky — you will write this 70X story after a few years! 🙂

What has been your experience with ESOPs? Do you consider that a fair game in India?

[stock price graph from moneycontrol.]

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