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What most people forget is that equity is awarded over time for value provided over that period. For simplicity's sake, imagine a startup with two people: a fo

by bpm140 15y ago

What most people forget is that equity is awarded over time for value provided over that period. For simplicity's sake, imagine a startup with two people: a founding CEO and their first development hire. At the beginning, their contribution to the company may be equal, or even tilted towards the developer providing more value. As the company grows, there is still just a single CEO, but now there are multiple developers. Several years on, the CEO is still responsible for all their own duties, but engineering might encompass dozens or even hundreds of people. Over time, the relative value of the first program is diluted, while the CEO's remains fairly constant. This is why there is great inequity between founder and early hire option grants.

andrewvc 15y ago
And who built that team? Who hired and managed those dozens of devs? Often times its engineer #1. Also, who picked the stack? You're selling technology short on HN of all places.
- bpm140 15y ago
  No offense, but you appear to be acting deliberately obtuse. I am not denigrating the role of developers. In most cases engineer #1 is the founding CTO and has commensurate equity. The first hired developer, like the first hired sales guy, marketing guy or customer service guy, is the first person in an eventual team of people, all performing similar duties in parallel.
  - andrewvc 15y ago
    Your post only mentions two people a CEO and a developer. No CTO or technical founder is mentioned.
dlevine 15y ago
To be fair, at an extremely early-stage startup, no one really knows who will eventually fill the executive roles. There is a good chance that the founding "CEO" will no longer serve in the CEO role a few years down the line (particularly if the company has taken a significant VC infusion). It is relatively difficult to know how much "contribution" each team member will make over the long-term. Therefore, I would say that your argument makes little sense. The reason why the founder gets more than developer #1 is that the founder takes on the risk of starting the company, while employee #1 is making a salary of some sort (if not, he should be considered a founder and take a significant equity stake).

by bpm140 15y ago

andrewvc 15y ago

And who built that team? Who hired and managed those dozens of devs? Often times its engineer #1. Also, who picked the stack? You're selling technology short on HN of all places.

bpm140 15y ago
No offense, but you appear to be acting deliberately obtuse. I am not denigrating the role of developers. In most cases engineer #1 is the founding CTO and has commensurate equity. The first hired developer, like the first hired sales guy, marketing guy or customer service guy, is the first person in an eventual team of people, all performing similar duties in parallel.
- andrewvc 15y ago
  Your post only mentions two people a CEO and a developer. No CTO or technical founder is mentioned.

dlevine 15y ago

To be fair, at an extremely early-stage startup, no one really knows who will eventually fill the executive roles. There is a good chance that the founding "CEO" will no longer serve in the CEO role a few years down the line (particularly if the company has taken a significant VC infusion). It is relatively difficult to know how much "contribution" each team member will make over the long-term. Therefore, I would say that your argument makes little sense. The reason why the founder gets more than developer #1 is that the founder takes on the risk of starting the company, while employee #1 is making a salary of some sort (if not, he should be considered a founder and take a significant equity stake).