Should I quit my big-tech job to join a startup?

Dear Fusion Money,

I’m 24 years old and work at a large technology company with a good salary and benefits. I was recently offered a job at a startup, and a big component of the offer is privately held stock. What does that mean and how do I know what it’s really worth? I’m considering the offer because my current job isn’t challenging and I think I would enjoy the startup much more. I just don’t want to regret the decision financially, because the base salary is lower.

— Hoping For A Unicorn, NYC

Dear Hoping,

The “right” answer to whether or not you should take the job depends on a lot of variables that weren’t included in your message. So, we’re going to make some assumptions:

• You don’t have an enormous amount of debt
• The lower salary is still enough to meet your expenses
• You’re not in the middle of buying a house or having a child, or any other major life change where financial stability is supreme
• The startup isn’t a household name yet

If those four things are true, you should totally go for the job. Here’s why.

At 24, you’re in a better position to roll the dice than you’ll ever be again. As Jarrett Lilien, CEO of the trading technology firm ITG who started his first company at 27, puts it, “I knew that if it blew up, the worst thing that could happen was that I’d end up moving back in with my parents.”

Even if you don’t have that kind of safety net, his underlying point remains true: you’ve got to take big risks to get big rewards, and it’s best to take them when you’re young. Sure, your weekly paycheck will be bigger if you stay at your current job. But over the long run, the experiences you take away from a startup can be a lot more valuable, even if the stock isn’t.

You said you’re not being challenged, and that will certainly change if you join a startup. You’ll be thrown into the deep end and you’ll learn because you have to. Startups usually have “open door” settings, meaning you’ll find yourself interacting directly, and even challenging, people at all levels of the organization—including the CEO. Even interns leave an impact on the startups they join. You’ll be building something from the ground up and leaving an imprint, which is a great feeling.

Now, let’s get to the downsides so you can’t say we didn’t warn you.

Being employed by a startup is hard work without the comforts that big, established companies afford. There may not be set hours, but that doesn’t mean you work less; in fact, the line between personal time and work time is often much blurrier than at established companies. There might not even be overtime or good benefits, much less nap pods and catered lunches.

“People look at the glamorous side, they see the Google offices and assume that’s where they’re going to go work. But Google’s not a startup!” said Anthony Frasier, founder and CEO of The Phat Startup, which mentors aspiring entrepreneurs using hip-hop tenets. “It’s a challenge, but that’s also part of the fun.”

As for your question about what the stock is worth, the answer, unsatisfyingly, is: what someone will eventually pay for it, if anything at all. And you certainly can’t use it to pay rent.

When you buy stock in a publicly traded company, you’re getting a tiny little piece of that company. The value is generally transparent, and you can usually turn it into cash pretty easily. If everything works out, the business will thrive and the stock will go up and you’ll be like Warren Buffet, but younger.

Privately held stock works similarly in that it’s a small ownership stake in a company you have big hopes and dreams for. The problem is, without a public exchange to trade the stock on, its value is incredibly subjective. It’s also not easy—and often not possible—to sell it for cash immediately, regardless of what a buyer would theoretically pay.

So, essentially, you’re not looking at a payday on the stock until the startup is acquired or IPOs, a process that can take years—if you’re lucky. Many startups simply fail. But what you’re really getting when you work at a startup isn’t the equity; it’s the experience.

Doug Nordman, an investor and self-styled personal finance expert sums it up by saying: “Basically, the employee in question is taking a pay cut in exchange for worthless shares and priceless experience.”

$$$ This is Fusion Money’s advice column. The question has been edited for space and clarity. Here is the prior one. If you have a question about money—making it, spending it, wasting it, investing it or giving it away—please email [email protected] and we may feature it in a future column. $$$

James is a writer from New York City who has worked for startups, and now works at a brand consultancy focusing on tech startups. His writing has appeared in The Village Voice, Investopedia, The Street, BlackBook and AmericaBlog.