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On the contrary — almost all early-stage startups are part-employee-owned. The meta-analysis of firm performance you're linking to references specifically compa

On the contrary — almost all early-stage startups are part-employee-owned. The meta-analysis of firm performance you're linking to references specifically companies with ESOPs (employee stock option plans); the stock options most early-stage startup employees own are usually higher percentages of the company on an individual basis than public-company ESOPs. IMO, that's one of the huge advantages early stage startups have over larger companies. Employees are highly incentivized to work together to make the company succeed, rather than climbing internally to higher positions by stepping on their peers.

WJW 4y ago
> almost all early-stage startups are part-employee-owned. I've never seen seen a startup where more than about 10% of shares was in the hands of non-founder employees and even that was an outlier. Dilution during funding rounds can often reduce this number even further. When talking about employee-owned organisations, we usually talk about companies where > 50% of shares are in the hands of employees. I agree that the study linked does not target that group though. The biggest problem with employee-owned companies is that there is (by definition) no single person who can push through risky initiatives, so while they are often more stable they also tend to stay medium sized as it becomes harder and harder to develop risky new business units as the company grows.
- reissbaker 4y ago
  That's why I said "part-employee-owned" and not "majority employee owned." (FWIW, at least back in the early 2010s when I started a company, reserving 20% of the company for employees was pretty standard for early-stage startups. It's possible things have changed though, and it's true that dilution will drop that number.)
- maerF0x0 4y ago
  Is there a specific reason you exclude founders as employees? In the earliest phases of a company they're remarkably similar to "employees" in even like Series B companies... (save for ownership structure)
  - WJW 4y ago
    You say "save for ownership structure" like it isn't the most important thing in this case :) Because of their majority ownership, the power balance is very much different than with normal employees. It is typically not possible for employees to band together and fire a founder, but it is very possible for founders to fire employees. The risk assumed is also different: founders often put up significant chunks of their personal capital to get off the ground, but I have never heard of a startup employee being asked to put in extra money in order to get hired.

WJW 4y ago

> almost all early-stage startups are part-employee-owned. I've never seen seen a startup where more than about 10% of shares was in the hands of non-founder employees and even that was an outlier. Dilution during funding rounds can often reduce this number even further. When talking about employee-owned organisations, we usually talk about companies where > 50% of shares are in the hands of employees. I agree that the study linked does not target that group though. The biggest problem with employee-owned companies is that there is (by definition) no single person who can push through risky initiatives, so while they are often more stable they also tend to stay medium sized as it becomes harder and harder to develop risky new business units as the company grows.

reissbaker 4y ago
That's why I said "part-employee-owned" and not "majority employee owned." (FWIW, at least back in the early 2010s when I started a company, reserving 20% of the company for employees was pretty standard for early-stage startups. It's possible things have changed though, and it's true that dilution will drop that number.)
maerF0x0 4y ago
Is there a specific reason you exclude founders as employees? In the earliest phases of a company they're remarkably similar to "employees" in even like Series B companies... (save for ownership structure)
- WJW 4y ago
  You say "save for ownership structure" like it isn't the most important thing in this case :) Because of their majority ownership, the power balance is very much different than with normal employees. It is typically not possible for employees to band together and fire a founder, but it is very possible for founders to fire employees. The risk assumed is also different: founders often put up significant chunks of their personal capital to get off the ground, but I have never heard of a startup employee being asked to put in extra money in order to get hired.