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Say that Dan were to sign up tomorrow. Right now, 42Floors has a five-person team. While I'm not entire sure about the company structure, it looks like Jason an
by donw 15y ago
Say that Dan were to sign up tomorrow. Right now, 42Floors has a five-person team. While I'm not entire sure about the company structure, it looks like Jason and Alex are the cofounders.
Let's assume a pretty optimal funding scenario: YC took 6%, and the next 400k cost them 9%. Figure the employee stock pool is somewhere around 5%, leaving 80% to split between the two cofounders.
Dan may be awesome, but I don't really see a spare 10% or 20% in there for an employee. Dan may be awesome and talented, but you don't bring in people post-funding at that kind of equity stake, unless they've got some insane track record (and rolodex) that justifies it, and even then, getting the board to greenlight things would be a tough sell.
There's only so much room in the CAP table to hand out equity to employees.
What they can offer, and what is a big deal, is giving Dan the freedom to maximize his own potential, and to get paid for it.
That's not a small offer, and even with the small mountain of opportunity I have on the table right now, I would think very deeply about working at 42Floors if they approached me like this.
It's classy, and honest. I like that.
- mbesto 15y agoDan may be awesome, but I don't really see a spare 10% or 20% in there for an employee. But if "Dan" (insert any developer here) gets them to their overall goal (exit?) than why shouldn't he get a piece of the pie.
- donw 15y agoA piece, certainly, but employee-sized pieces top out around 2%.
- mbesto 15y agoSays who? This is what I don't get. If hiring someone so talented is so critical to the success of your company then give him/her what they rightfully deserve. If it's not critical, then don't hire said person.
- robryan 15y agoOr just take an equity hit, raise a bigger round and pay people like Dan a rate nicely above what they can make elsewhere. Founders probably end up keeping more equity and the employee takes on less risk.
- donw 15y agoAgreed; or, offer some other form of compensation that makes the offer 'worth it' to Dan. This could mean reduced hours, company time to work on personal ventures, etc. You can have a lot of flexibility in hiring if you can offer your employees what they want, and that's not always money.
- look_lookatme 15y agoThere is a ton of room between 10% and the typical .1% or .5% (or less) that a new hire would get. Compete on equity by widening the employee pool from the start. They still have to vest, so it's on them to prove themselves.