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I'd love to see YC or someone release a definitive recommendation on fair equity distribution among the employees of the company. Maybe there'd be a few variat

I'd love to see YC or someone release a definitive recommendation on fair equity distribution among the employees of the company. Maybe there'd be a few variations on it to handle differing scenarios, and even if it's really hard to have a one-size-fits-all I think it'd be similar to their SAFE note which tries to offer a pretty good deal to all involved.

jasode 8y ago
One of your favorited links is "Holloway Guide Equity Compensation"[1] and it has a section of typical percentages. It also mentions some higher percentages for employees which are not typical. As for "fairness", it's going to ultimately be in the eye of the beholder. You could give employee #12 a 5% stake (which is CEO level at other startups) and yet that employee still feels it's "unfair" even it's explained that he's getting more than anybody else in SV. It's human nature for the employee to think he's worth more, and for the employer to think he's worth less -- and therefore, they negotiate. [1] deep link to the employee ownership percentages: https://www.holloway.com/g/equity-compensation#_there_are_no_hard_and https://www.holloway.com/g/equity-compensation#_there_are_no...
- stephenhuey 8y ago
  Thanks for reminding me! I've thought about this a lot from time to time, and I realize I forgot to mention something else besides just the equity distribution. I've heard plenty of stories of nasty ways companies wrangle hard-earned equity out of employees. I think it'd be great for YC or someone of similar stature to encourage companies to use very standard terms to avoid a lot of the unkind ways employees get screwed. One example would be terribly short windows for exercising options.
  - jasonkwon 8y ago
    re: short windows for exercising options: https://triplebyte.com/blog/fixing-the-inequity-of-startup-equity https://triplebyte.com/blog/fixing-the-inequity-of-startup-e... https://blog.samaltman.com/employee-equity https://blog.samaltman.com/employee-equity https://news.ycombinator.com/item?id=11198991 https://news.ycombinator.com/item?id=11198991 https://a16z.com/2016/07/26/options-plan/ https://a16z.com/2016/07/26/options-plan/ https://dangelo.quora.com/10-Year-Exercise-Periods-Make-Sense https://dangelo.quora.com/10-Year-Exercise-Periods-Make-Sens...
- sroussey 8y ago
  It’s also interesting that almost no one mentions % of what — the whole company or of the current option pool.
  - mmt 8y ago
    I think it's pretty widely understood that the denominator is the whole company.
    - jasonkwon 8y ago
      yes, that's what we meant by the percentages.

jasode 8y ago

One of your favorited links is "Holloway Guide Equity Compensation"[1] and it has a section of typical percentages. It also mentions some higher percentages for employees which are not typical. As for "fairness", it's going to ultimately be in the eye of the beholder. You could give employee #12 a 5% stake (which is CEO level at other startups) and yet that employee still feels it's "unfair" even it's explained that he's getting more than anybody else in SV. It's human nature for the employee to think he's worth more, and for the employer to think he's worth less -- and therefore, they negotiate. [1] deep link to the employee ownership percentages: https://www.holloway.com/g/equity-compensation#_there_are_no_hard_and https://www.holloway.com/g/equity-compensation#_there_are_no...

stephenhuey 8y ago
Thanks for reminding me! I've thought about this a lot from time to time, and I realize I forgot to mention something else besides just the equity distribution. I've heard plenty of stories of nasty ways companies wrangle hard-earned equity out of employees. I think it'd be great for YC or someone of similar stature to encourage companies to use very standard terms to avoid a lot of the unkind ways employees get screwed. One example would be terribly short windows for exercising options.
- jasonkwon 8y ago
  re: short windows for exercising options: https://triplebyte.com/blog/fixing-the-inequity-of-startup-equity https://triplebyte.com/blog/fixing-the-inequity-of-startup-e... https://blog.samaltman.com/employee-equity https://blog.samaltman.com/employee-equity https://news.ycombinator.com/item?id=11198991 https://news.ycombinator.com/item?id=11198991 https://a16z.com/2016/07/26/options-plan/ https://a16z.com/2016/07/26/options-plan/ https://dangelo.quora.com/10-Year-Exercise-Periods-Make-Sense https://dangelo.quora.com/10-Year-Exercise-Periods-Make-Sens...
sroussey 8y ago
It’s also interesting that almost no one mentions % of what — the whole company or of the current option pool.
- mmt 8y ago
  I think it's pretty widely understood that the denominator is the whole company.
  - jasonkwon 8y ago
    yes, that's what we meant by the percentages.