Good question that most people face and are afraid to ask :) Here are some resources to check out that have covered this well: * Rand wrote a great post (http

Good question that most people face and are afraid to ask :) Here are some resources to check out that have covered this well: * Rand wrote a great post (http://moz.com/rand/understanding-stock-options-at-startups-and-at-moz/ http://moz.com/rand/understanding-stock-options-at-startups-...) * Solid overview: http://www.danshapiro.com/blog/2010/11/how-much-are-startup-options-worth/ http://www.danshapiro.com/blog/2010/11/how-much-are-startup-... * This is a good book that doesn't get enough love (http://www.amazon.com/Engineers-Silicon-Valley-Startups-ebook/dp/B004Q9U19G http://www.amazon.com/Engineers-Silicon-Valley-Startups-eboo...) * Good high-level notes about equity in startups (part of an incredible series, read it all if you can - http://blakemasters.com/post/21742864570/peter-thiels-cs183-startup-class-6-notes-essay http://blakemasters.com/post/21742864570/peter-thiels-cs183-...) * Venture Hacks on the "Option Pool Shuffle": http://venturehacks.com/articles/option-pool-shuffle http://venturehacks.com/articles/option-pool-shuffle