3 ms·

How do you know you're "delivering 20% of the revenue"? Edit: Removing my example as it apparently misrepresents my intent. The gist is I think doing 20% of th

How do you know you're "delivering 20% of the revenue"? Edit: Removing my example as it apparently misrepresents my intent. The gist is I think doing 20% of the work is not the same as delivering 20% of the revenue.

st3v3r 10y ago
It absolutely is, considering that 20% of the work has to be done, and if the employee isn't doing it, then the founder has to be doing it, taking time away from revenue producing activities. This idea that only those who are delivering revenue directly deserve to be rewarded is asinine.
- Tenhundfeld 10y ago
  I'm an engineer. I'm not saying only sales people should be rewarded. I agree that is asinine. This is what I'm saying: If a founder builds a business over many months and then hires an employee who can take over 20% of the founder's current workload, that does not mean the employee deserves 20% of the company, IMO. It does not mean that employee is "delivering 20% of the revenue." It merely means the employee is doing 20% of the founder's current work. Equating percent of current work to percent of equity completely disregards the risks and effort involved in building a sustainable business. Developers tend to overvalue the software assets and undervalue the business relationships and other revenue-producing activities. Hence my question about how the OP is arriving at their figure.
- pcmaffey 10y ago
  The whole point of equity is to measure what's invested. You could be doing 20% of the current work of a company, but that does not account for all the past contributions that got the company there in the first place. Equity is granted on a vesting schedule to approximate the future contributions of a person. If that approximation does not accurately represent the reality over time, it should be reviewed and renegotiated alongside performance.

3 ms·

How do you know you're "delivering 20% of the revenue"? Edit: Removing my example as it apparently misrepresents my intent. The gist is I think doing 20% of th

by Tenhundfeld 10y ago

st3v3r 10y ago
It absolutely is, considering that 20% of the work has to be done, and if the employee isn't doing it, then the founder has to be doing it, taking time away from revenue producing activities. This idea that only those who are delivering revenue directly deserve to be rewarded is asinine.
- Tenhundfeld 10y ago
  I'm an engineer. I'm not saying only sales people should be rewarded. I agree that is asinine. This is what I'm saying: If a founder builds a business over many months and then hires an employee who can take over 20% of the founder's current workload, that does not mean the employee deserves 20% of the company, IMO. It does not mean that employee is "delivering 20% of the revenue." It merely means the employee is doing 20% of the founder's current work. Equating percent of current work to percent of equity completely disregards the risks and effort involved in building a sustainable business. Developers tend to overvalue the software assets and undervalue the business relationships and other revenue-producing activities. Hence my question about how the OP is arriving at their figure.
- pcmaffey 10y ago
  The whole point of equity is to measure what's invested. You could be doing 20% of the current work of a company, but that does not account for all the past contributions that got the company there in the first place. Equity is granted on a vesting schedule to approximate the future contributions of a person. If that approximation does not accurately represent the reality over time, it should be reviewed and renegotiated alongside performance.