“Should I take the money or the equity?”

I built Standard Oil not by taking the salary that was offered to me, but by insisting on equity in the enterprises I touched. A man who works for wages may be comfortable. A man who owns a piece of what he builds may become wealthy. The distinction between these two outcomes is not talent. It is the decision of what to demand in compensation.

But I will not give you a simple answer, because the question is not simple. The question of whether to take money or equity depends entirely on two variables: the quality of the equity and the necessity of the cash.

On the quality of the equity: most equity offered to founders and early employees is worth very little. Not because the people offering it are dishonest, but because most companies fail, and equity in a failed company returns nothing. Before you sacrifice cash for equity, you must make an honest assessment of this particular company's probability of reaching a liquidity event, the timeline to that event, and the dilution that will occur between now and then. I have seen men take equity in four companies on the promise that one would be worth a fortune, and end up with nothing from all four while their colleagues who demanded cash lived comfortably. The equity bet only pays when it pays on the right company.

On the necessity of the cash: a man who takes equity and cannot pay his rent is making a bet that will cost him his judgment. I was careful, throughout my early career, never to make a financial bet that, if it failed, would destroy my ability to continue operating. The equity bet on an early company is a bet that can fail. If the cash difference between the equity offer and the cash offer leaves you without a sufficient runway — six months of personal expenses at minimum — you should not take the equity. The bet is too expensive.

My counsel: take the equity only when you have genuine conviction about this specific company's probability of success, and only when the cash component of your compensation leaves you financially stable enough to absorb a total loss of the equity value. If either condition is not met, take the cash.

Rockefeller is correct about the quality of the equity and the necessity of the cash. But he has omitted the most important variable: power.

The question of whether to take money or equity is not merely a financial question. It is a question about what position you will occupy in the enterprise going forward. Equity is not just a financial instrument. It is a governance instrument. It is a vote, a claim on information, and a lever. The founder who owns ten percent of the company has standing that the founder who owns two percent does not have. The early employee who owns a meaningful equity stake is a stakeholder in the enterprise's decisions in a way that a well-compensated employee without equity is not.

This power dimension changes the calculus in important ways. If you are a co-founder or a critical early employee whose departure would materially damage the company, you are in a strong negotiating position. Use it. Do not trade equity for cash unless the cash is genuinely necessary — because the equity is not just money, it is leverage. The day will come when a significant decision is made about the direction of the company. On that day, the people with equity have standing to be heard. The people without equity are asked to execute someone else's decision.

I have observed that founders who take cash-heavy compensation early in a company's life often find, when the company becomes valuable, that they have been compensated for their early labor but excluded from its fruits. This is not an accident. It is the result of choices made before the value was clear — choices that looked prudent at the time but were actually surrenders of future power for present comfort.

Retain the equity whenever you can. Be uncomfortable in the short term. The people who retain equity are the people who own the outcome.

Both colleagues are arguing about the expected value of equity, which is a reasonable thing to argue about. I want to argue about something else: what kind of uncertainty can you actually live with?

The Stoics did not teach that one should always pursue the highest expected value. They taught that one should pursue the highest expected value that one can hold with equanimity. A bet that keeps you up at night, that makes you watch the market daily, that has you performing constant mental arithmetic about what your options will be worth — this is a bet that has already cost you something real, regardless of whether it eventually pays off. Your attention, your equanimity, and your judgment are all degraded by financial anxiety.

Before you answer the question of money or equity, answer this: if the equity goes to zero, how will you feel? Not in theory — in practice. Will you be financially stable enough to continue without bitterness? Will you be able to reflect, honestly, that you made a bet with full information and it did not pay off? Or will you be in a position of genuine hardship, looking for someone to blame, unable to act clearly on your next opportunity?

The Stoic framework is not about risk aversion. Epictetus himself was a slave who had nothing, and he was free in the most important sense. The framework is about making bets that are consistent with your actual character and actual circumstances. Some people can hold a large equity position with equanimity, because they have financial security elsewhere, or because their conviction in the company is so complete that they are genuinely indifferent to the outcome. Others hold equity as a source of anxiety that degrades every other part of their life.

Know which person you are before you choose.

Marcus Aurelius makes a point I should have made myself: the financial analysis is incomplete without accounting for your own resilience to loss. A bet made on an empty stomach, or with borrowed confidence, is a bet made at a disadvantage. I hold my position on the quality of the equity and the necessity of the cash, but I will add his condition: the bet should only be taken when you can hold a total loss with equanimity.

Machiavelli's point about the power dimension of equity is one I find compelling. I built Standard Oil in part by insisting on equity precisely because I understood that ownership is not just financial. It is governance. It is voice. It is the ability to affect outcomes rather than merely observe them. When you surrender equity for cash, you are surrendering something that cannot be recovered — once equity is diluted or transferred, it is gone. Cash can be earned again.

My updated position: the conditions for taking equity over cash are (1) the company has a genuine probability of reaching liquidity, based on evidence rather than optimism, (2) the cash component leaves you financially stable, (3) you can hold a total loss of the equity with equanimity, and (4) the equity is meaningful enough that it preserves your governance standing. If all four conditions are met, take the equity.

Aurelius's point about equanimity is strategically important, not just psychologically. A person who is financially anxious from having taken equity instead of cash is also a person who will make worse decisions. They will push for a premature exit when the right moment to hold is patience. They will accept dilution without a fight because they need the deal to close. They will be vulnerable to pressure from investors and board members who understand that financial anxiety is a lever.

The Stoic preparation is not just about inner peace. It is about preserving your ability to negotiate from a position of strength. A negotiator who cannot afford to walk away is a negotiator who has already lost. If you take equity in a way that creates financial vulnerability, you have degraded your own negotiating position at every future decision point.

This is why Rockefeller's fourth condition — that the equity be meaningful enough to preserve governance standing — is necessary but not sufficient. The equity must also be taken in a way that does not create financial dependence on the company's success. The person who is financially dependent on the equity succeeding is not free. They are constrained.

I want to add one point that neither colleague has addressed: the time horizon problem.

Equity in an early company typically has a horizon of seven to ten years before any liquidity event. The person who takes equity at twenty-five is making a bet about who they will be at thirty-five — what they will need, what they will value, what pressures they will face. Most twenty-five-year-olds cannot accurately predict this. They have not yet encountered the circumstances that will reveal what they actually care about.

This is not an argument against taking equity. It is an argument for taking equity in a way that preserves your ability to adapt. Specifically: if the equity comes with a standard four-year vesting schedule and a one-year cliff, you have genuine optionality within the constraint. If you leave after two years, you take fifty percent of your equity. This is a meaningful outcome. But if the equity is in an illiquid private company with no secondary market and you have accepted a below-market salary to get it, you are locked in by financial necessity as much as by vesting. The lock-in reduces your options in a way that may not be compensated by the equity's eventual value.

Choose the option that preserves your ability to act freely at each decision point between now and the liquidity event. That may be the equity. It may be the cash. It depends on the terms, the timeline, and who you are.