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Thoughts on 'The Equity Equation'

• pg 19y ago
  His argument that you have to pay market rate regardless of the equity equation is false. If a transaction is a net loss for the company, you shouldn't do it. If your situation is so desperate that you feel forced to hire someone (or take more funding) at what seems an excessively high price, then what's really going on is that you're overvaluing the company. If your situation is desperate, your value is low.
  • asdflkj 19y ago
    What about the other half of his argument, that you shouldn't pay more than market rate?
    • pg 19y ago
      That's already covered in the original essay: "How much of an additional margin should the company need as the "activation energy" for the deal? Since this is in effect the company's profit on a hire, the market will determine that: if you're a hot opportunity, you can charge more."
  • nivi 19y ago
    Thanks for the comment Paul. There is some more discussion over at Venture Hacks: http://www.venturehacks.com/articles/equity-equation#comments http://www.venturehacks.com/articles/equity-equation#comment...