The internets are abuzz with all the latest Web 2.0 companies and startup news.
Many Web 2.0 company founders (and some of those companies’ early employees) have become incredibly wealthy in a very short period of time, most recently and notably the YouTube guys.
Clearly, the founders of Flickr, del.icio.us, Weblogs Inc, etc have earned at least a few million each from their companies’ respective acquisitions. What about early employees, who may have only had .5%, 1%, 3% or 5% of the company?
The Question: Will owning 5% of a Web 2.0 Company Make You Rich?
If you live and breath in startupland, chances are you’ve done these back of the envelope calculations before. The below chart takes the guesswork out of these calculations for a multitude of ownership percentages and acquisition / IPO prices.
Click Here to View the Full Chart
Note: there is almost always a restriction period placed on insider selling when a company goes public. Chances are you wouldn’t be able to sell at the actual IPO price, but you should be able to cashout 6 months to 1 year later.
Download the Excel Spreadsheet Here (right-click, save as…)
OpenOffice users? Feel free to port it over and I’ll place the OpenOffice version here as well.
Analysis
With the notable exceptions of Skype, YouTube, MySpace, Photobucket, etc — the bulk of Web 2.0 companies (that have managed to cash out) had an acquisition price of somewhere between $10-30M.
This post by Tristan Louis does a great job of summing up the various Web 2.0 acquisitions.
Some of the notable few:
Google / Pyra Labs (rumored $20 million)
Flickr (rumored $30M)
del.icio.us (rumored $30M)
Weblogs Inc. (rumored $25M)
So, unless you are working for the next MySpace, YouTube or Skype … how much of your company will you actually need to own to come out a millionaire, assuming it can manage to be acquired for a “modest” $20-30 million?
From our chart, it appears you will need at least 4% to 10% of your company to make it to $1M personally. If you own 1%, you’ll come out with $200,000 to $500,000 or so.
Not too shabby. Then again, you could probably also earn $150,000 - $200,000 per year guaranteed by working for a Deloitte, Accenture or other “Big 5″ consulting firm, doing a little soul-crushing enterprise IT work for 80 hours a week. 
(can you tell I still love startups?)
Here the game is fun, considering that any idea may be the great one! Come up with an idea and tomorrow you may have a great audience. This is the most important thing. And the most fun, I would say, that anybody could do it (ok, supposing you have web knowledge)
Nice article! Don’t forget (and everyone does) to deduct 40-50% for taxes (US), so you really need a high percentage of ownership and/or acquisition price to live the rest of your life in Hawaii.