3 ms·

How Much Equity Should You Give to Employees

14 points by jaybol 17y ago

jack7890 17y ago
These percentages seem far too low to me. Or, at the least, they only apply to very late-stage companies. If your startup has <10 employees, 0.05% isn't enough for even the lowest-level employee.
trevelyan 17y ago
Unless you have funding, I say none. Equity reduces flexibility for small bootstrapped businesses. This feels to me like a cultural norm from the VC days rather than a rational way to grow a good business. Also, most people really don't care. They will treat your equity as worthless unless it aleady has value, in which case just pay cash.
- graemeklass 17y ago
  I have found the lack of cash means businesses are more likely to offer equity. Again, it depends on the ability, the trustworthiness of the employee and, of course, whether they believe in the business in the first place.
drallison 17y ago
What is the rationale for the basic rule that "each level of the organization should get about half the number of options as the level above"? Rather than distribute options by organization chart and title, wouldn't it be better to treat everyone as an individual contributor and allocate options according to the value they bring to the company? The guidelines seem to presume that management is what counts and that the individual contributors, the folks who make things work, are not all that important. Or am I missing something.
- anamax 17y ago
  > The guidelines seem to presume that management is what counts and that the individual contributors, the folks who make things work, are not all that important. Or am I missing something. The most important factor is "what does it take to get the folks you want?" Strike "most" - it's the only factor.
- graemeklass 17y ago
  The organisation chart generally reflects the value that they bring to the startup. The higher you are the greater you are expected to add value. But, if you have a star developer, then yes, you could allocate more share to that individual.

14 points by jaybol 17y ago

These percentages seem far too low to me. Or, at the least, they only apply to very late-stage companies. If your startup has <10 employees, 0.05% isn't enough for even the lowest-level employee.

trevelyan 17y ago

Unless you have funding, I say none. Equity reduces flexibility for small bootstrapped businesses. This feels to me like a cultural norm from the VC days rather than a rational way to grow a good business. Also, most people really don't care. They will treat your equity as worthless unless it aleady has value, in which case just pay cash.

graemeklass 17y ago
I have found the lack of cash means businesses are more likely to offer equity. Again, it depends on the ability, the trustworthiness of the employee and, of course, whether they believe in the business in the first place.

drallison 17y ago

What is the rationale for the basic rule that "each level of the organization should get about half the number of options as the level above"? Rather than distribute options by organization chart and title, wouldn't it be better to treat everyone as an individual contributor and allocate options according to the value they bring to the company? The guidelines seem to presume that management is what counts and that the individual contributors, the folks who make things work, are not all that important. Or am I missing something.

anamax 17y ago
> The guidelines seem to presume that management is what counts and that the individual contributors, the folks who make things work, are not all that important. Or am I missing something. The most important factor is "what does it take to get the folks you want?" Strike "most" - it's the only factor.
graemeklass 17y ago
The organisation chart generally reflects the value that they bring to the startup. The higher you are the greater you are expected to add value. But, if you have a star developer, then yes, you could allocate more share to that individual.