Be less scared of overconfidence

When I was deciding whether to work for Wave, I got very hung up on the fact that my “total compensation” would be “lower.” The scare quotes are there because Wave and my previous employer, Theorem, were both early-stage startups that were paying me mostly in fake startup bucks equity. To figure out the total compensation, I tried to guess how much money the equity in each company was worth, with a thought process something like: • Both of these companies have been invested in by reputable, top-tier venture capitalists. • The market for for-profit investments is pretty efficient, and most people who think they can do better are being overconfident. • Who am I, a lowly 22-year-old programmer, to disagree with reputable top-tier venture capitalists? I should defer to them about the valuations. So I valued the equity by taking the valuation each company’s VCs had invested at, and multiplied it by the fraction of the company my shares represented. That number was higher for Theorem than for Wave. Seven years on, the Wave equity turned out to be… a lot more valuable. That raises the question: how dumb was my take? Was the actual outcome predictable if I’d thought about it in the right way? I don’t think it was perfectly predictable, but I do think I shouldn’t have been that anchored to the market-efficiency reasoning. Those respectable, top-tier VCs had YOLOed those valuations after a couple one-hour meetings, because that’s how early-stage VC works. Meanwhile, I had worked at Theorem for a year and my then-partner had worked at Wave for nine months. Heck, I had gotten more founder time than those VCs had just during my interview process. I had way more information than “the market.” If I’d had the confidence to use that information, I might have thought something like: • After its funding round, Wave continued to add users at one of the fastest paces their investors had ever seen, whereas Theorem is struggling to grow. • Theorem is constrained by its ability to d