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Companies need to figure out how to convert illiquid equity into actual liquidity. I don't get how it is fair founders get to sell their shares but employees do
by workerthrow632 4y ago
Companies need to figure out how to convert illiquid equity into actual liquidity. I don't get how it is fair founders get to sell their shares but employees don't. It's probably why startups are majorly lacking in really senior talent: only newbies think startups will do right by them.
That and focus on profitability to pay out employees with profit shares.
- treis 4y agoEquity doesn't really work once companies get past the 10-20 size. At that point you're at most getting back 5-10% of the increase in profit. So not much incentive to work your ass off to get an extra 100k in profit when you're only seeing 5-10k of that. Realistically your equity is less than 1% since investors and founders will have much of the equity. So now we're working our ass off for 500-1000. IMHO bonuses are generally worse for everyone involved. They tend to quickly become expected compensation so lose their incentive value. Also can end up doing the opposite. If someone doesn't get an expected bonus their morale can go down. They might end up working less. And then there's the whole "wait to quit until my bonus pays out" problem.