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In Silicon Valley companies at least, founders are not pouring their life savings into companies, paying for employees out of pocket until they reach revenue.

In Silicon Valley companies at least, founders are not pouring their life savings into companies, paying for employees out of pocket until they reach revenue. No, the only real difference between founders and early employees is: - The founders had the original idea / area to work in (usually not very well-defined yet). - The founders raised capital. Yes, this takes some number of unpaid weeks or months, toiling deep in the mines of Palo Alto coffee shops. And yes, they do a bit more than that, but that's the essence. Then you hire your first few people and off you go. Founders believe that effort is worth 10-100X more than early employees' contribution, and at least 1000X more than the later ones. Employees, often unaware of how lopsided their equity is, go into it believing they're "in it together!" with the founders.

Turing_Machine 9y ago
"Founders believe that effort is worth 10-100X more than early employees' contribution" Maybe the "early employees" should become founders, then. There's nothing to it, right? Just hang around some coffee shops!
- khazhou 9y ago
  Every time, that's the argument. "Well everyone should become a founder if they care so much!" Ad absurdum. The right answer is for employees to start calling bullshit on the standard Silicon Valley equity agreement, where Emp#1 signs up for 1% (imagine having 1% of Google!!), Emp#2 takes .6%, Emp #10 goes with .05%, and so on... often unaware the founders hold 60%+ between the 2-3 of them. It's appropriate for there to be a falloff in equity, but it's just too lopsided today. Emp#1 should ask how much the minority founder holds, and ask for (say) 80% of that. You spent 6 weeks without pay? Great, you get more reward. But not 50X more than #1. After all, the payoff is only if the company is successful, many years later... when those unpaid weeks are minor relative to the collective sacrifices of the company in whole.
  - Turing_Machine 9y ago
    Every time, that's the argument. "Well everyone should become a founder if they care so much!" Because it's an excellent argument. "often unaware the founders hold 60%+ between the 2-3 of them." Everyone who goes to work for a company knows that it's owned by someone else, dude. The vast majority of employees in this world get no equity at all. Ever. the collective sacrifices of the company in whole. As an employee, you are being offered a certain salary in exchange for performing a certain duty. You decide whether it's a good deal or not. There's no "sacrifice" involved.

Turing_Machine 9y ago

"Founders believe that effort is worth 10-100X more than early employees' contribution" Maybe the "early employees" should become founders, then. There's nothing to it, right? Just hang around some coffee shops!

khazhou 9y ago
Every time, that's the argument. "Well everyone should become a founder if they care so much!" Ad absurdum. The right answer is for employees to start calling bullshit on the standard Silicon Valley equity agreement, where Emp#1 signs up for 1% (imagine having 1% of Google!!), Emp#2 takes .6%, Emp #10 goes with .05%, and so on... often unaware the founders hold 60%+ between the 2-3 of them. It's appropriate for there to be a falloff in equity, but it's just too lopsided today. Emp#1 should ask how much the minority founder holds, and ask for (say) 80% of that. You spent 6 weeks without pay? Great, you get more reward. But not 50X more than #1. After all, the payoff is only if the company is successful, many years later... when those unpaid weeks are minor relative to the collective sacrifices of the company in whole.
- Turing_Machine 9y ago
  Every time, that's the argument. "Well everyone should become a founder if they care so much!" Because it's an excellent argument. "often unaware the founders hold 60%+ between the 2-3 of them." Everyone who goes to work for a company knows that it's owned by someone else, dude. The vast majority of employees in this world get no equity at all. Ever. the collective sacrifices of the company in whole. As an employee, you are being offered a certain salary in exchange for performing a certain duty. You decide whether it's a good deal or not. There's no "sacrifice" involved.