# How RSU's Work

One major difference between startups and big tech, is you get RSUs, aka public stock, vs private stock.

RSUs, while they don't have the same 100x growth potential of startups, have a few benefits:

* Instant liquidity - you can sell anytime. This is why they are offered as part of your Total Comp. With Private companies you will have to wait for an exit (which can take 10y+, that is if it happens at all)
* No cliff - startups generally have a 1 year cliff. Meaning you get 0 if you leave before a year. 
* Stability - < 5% of startups actually exit. Read my [experience](/success-failure-stories/comp-at-startups.md) over 12y of startups. RSUs are of a public company

You will generally get an RSU grant, written as a dollar figure over 4 years. This is what it means:

Say you receive a $500K grant.<br>

* They take the average stock price the month after you join (let's say July) and lock in the amount of stock you get based on that price. Let’s say the company stock average 1000$ per share that month. You'd get 500 shares that will with vest over 4 years.
* The month after that (August), you start vesting every month 1/48th or your grant ($10,416). You can sell anytime, unlike private stock. So it's as good as cash.

If the stock goes **down**, you make less money. If when you decide to sell the stock price at the end of 4y, and the price is $500, you effectively made $250k.

If the stock goes **up**, you make more money. If it's $2000, you just made $1M.

Most large company's stock will been more or else stagnant, relatively speaking. So shouldn’t except that TC to budge much in either direction, at least in the short term.

One small consideration: if you anticipate a recession, or the company outlook is negative at the moment, you may want to shift your start date a bit later, so that the stock does down in price. You can expect it to go up eventually, if the stock price is going up, then push for a sooner start date.


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