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> On the investment side, seeing early founders pay themselves similarly to their employees or slightly less was usually a good sign that the founder was truly
by ed25519FUUU 5y ago
> On the investment side, seeing early founders pay themselves similarly to their employees or slightly less was usually a good sign that the founder was truly in it for the long term.
I don’t know. Just seems like accounting to me. They take a small salary but own 80% of the company you’re helping build for the same salary but 0.03% ownership.
- PragmaticPulp 5y agoOutside of cofounders and founding employees (who, by definition, joined before the company was funded and worth more), the total employee option pool might be around 5% of the company in an early startup. Note that it will grow in later rounds, but dilution will reduce the share of early employees in those rounds. If you hire 100 employees and split that 5% equally then you get 0.05% per employee. What else would you propose? If you tried to give everyone something like 0.5% then the first 100 employees would have to own 50% of the company. Doesn’t really work. The earliest employees who join when company size is less than 10 people or so, as well as key early hires like valuable VPs will end up with higher equity, but once a company reaches a point of paying market rate compensation then a 0.05% equity stake isn't really unfair.
- runako 5y agoIt would appear there are two main avenues: - Don't split equity evenly across the first 100 employees. A non-cofounding VP Engineering should probably get a bigger stake than a non-founding customer support rep. - Increase the employee option pool.
- ska 5y agoIt's not just accounting, it speaks directly to the incentives of the founders & execs and their commitment to the long term success and growth of the company.