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Interestingly, this cuts exactly against the advice of Michael Seibel, the current CEO of Y Combinator, who advises co-founders split equity equally: http://www

Interestingly, this cuts exactly against the advice of Michael Seibel, the current CEO of Y Combinator, who advises co-founders split equity equally: http://www.michaelseibel.com/blog/how-to-split-equity-among-founders http://www.michaelseibel.com/blog/how-to-split-equity-among-...

randall 8y ago
I think also, the dominant founder mythos is often required to propagate vision in the company. Equity distribution, especially in the earliest days, is about ensuring the company's survival and thriving early on. Re-grants of equity, or what have you, are fine, but often times in the earliest days, it truly is two to four people working equally on something. Especially when those cofounders are all putting in nothing but sweat. Regardless of who's driving vision.
mmt 8y ago
Some of the arguments are a bit difficult to follow, if not swallow: > Small variations in year one do not justify massively different founder equity splits in year 2-10. Yet this is, essentially, how it's done for employees. At least recently, YC seems to be embarking on a campaign to bridge the gap in risk-vs-compensation between employees and founders, as they did between founders and investors. > More equity = more motivation. I'm not sure this is always true. I can certainly attest to its falsehood when equity is in the sub-1% range, as for most employees. Even assuming its truth, however, since equity is zero-sum, that means that the motivating ability (the "more"-ing characteristic) of equity is zero-sum, too. It doesn't, however, mean that its motivating ability is the same on every founder, nor that such motivation is of equal value. > If you don’t value your co-founders, neither will anyone else. > Startups are about execution, not about ideas. Besides potential other critiques, the above two concepts seem, to me, to contradict each other. > Equity should be split equally because all the work is ahead of you. > what we almost always recommend at YC: equal equity splits among co-founders. All that said, I think this is probably the best reasoning: equity split at the beginning isn't likely to be something worth spending a ton of time/stress on for the vast majority of early startups, so equal split makes a sensible default.

randall 8y ago

I think also, the dominant founder mythos is often required to propagate vision in the company. Equity distribution, especially in the earliest days, is about ensuring the company's survival and thriving early on. Re-grants of equity, or what have you, are fine, but often times in the earliest days, it truly is two to four people working equally on something. Especially when those cofounders are all putting in nothing but sweat. Regardless of who's driving vision.

mmt 8y ago

Some of the arguments are a bit difficult to follow, if not swallow: > Small variations in year one do not justify massively different founder equity splits in year 2-10. Yet this is, essentially, how it's done for employees. At least recently, YC seems to be embarking on a campaign to bridge the gap in risk-vs-compensation between employees and founders, as they did between founders and investors. > More equity = more motivation. I'm not sure this is always true. I can certainly attest to its falsehood when equity is in the sub-1% range, as for most employees. Even assuming its truth, however, since equity is zero-sum, that means that the motivating ability (the "more"-ing characteristic) of equity is zero-sum, too. It doesn't, however, mean that its motivating ability is the same on every founder, nor that such motivation is of equal value. > If you don’t value your co-founders, neither will anyone else. > Startups are about execution, not about ideas. Besides potential other critiques, the above two concepts seem, to me, to contradict each other. > Equity should be split equally because all the work is ahead of you. > what we almost always recommend at YC: equal equity splits among co-founders. All that said, I think this is probably the best reasoning: equity split at the beginning isn't likely to be something worth spending a ton of time/stress on for the vast majority of early startups, so equal split makes a sensible default.