The defining difference between Silicon Valley companies and almost every other industry in the U.S. is the virtually universal practice among tech companies of

The defining difference between Silicon Valley companies and almost every other industry in the U.S. is the virtually universal practice among tech companies of distributing meaningful equity (usually in the form of stock options) to ordinary employees. When was that written? 1985? Meaningful equity? "Meaningful" starts at 0.3/N (pre-dilution) where N is the number of employees. Anyway, equity is an awful model. Profit-sharing is better. Go here: http://michaelochurch.wordpress.com/2013/03/26/gervais-macleod-17-building-the-future-and-financing-lifestyle-businesses/ http://michaelochurch.wordpress.com/2013/03/26/gervais-macle... If I ever build a company, I'll use profit-sharing (at much more generous levels) instead of equity, except for people who are truly partner-level. Trying to convince non-partners to think of themselves as more in order to extract more from them is just dishonest. But the engineering tradition that spawned Silicon Valley was much more egalitarian than traditional corporate culture. No, those supposedly stodgy corporate cultures (see: banks) are actually a lot more egalitarian. In banks and normal companies, your boss is a social equal, just more experienced, more valuable on account of being longer with the organization, and perhaps luckier than you are. In these VC-funded startups, founders (much less the unapproachable gods called "investors") are simply better than you. That's why they got introduced to partners at VC funds and you're lucky to get a reply from an associate. No company would ever pay the 27-year-old VP/HR 10 times the salary of the 35-year-old programmer. You might see 1.5x, especially if the programmer is a bad negotiator (or female). But that's common with VC-istan equity. When it matters, VC-istan equity exacerbates the shit out of inequality because the executives are getting paid 10-100x as much as the workers (when no one would tolerate more than a 1.5-2x difference in salaries). the Wealthfront Equity Plan should result in approximately 3.5% to 5% annual dilution assuming no executives need to be hired Investor infusions dilute everyone, of course; but if employees are getting diluted for fucking executives then you, sir, are a fucking asshole and deserve to lose all the talent you have. Honestly, this product (yes, this is a product pitch, not a real article) looks like a complex solution to a simple problem: the equity model in Silicon Valley is broken and actually very un-egalitarian in practice (look at house prices out there). Equity should be substantial but for genuine partner-level people only (and most people shouldn't, and won't want to be, partners). Everyone else should get substantial profit-sharing that can pay off like equity-- in fact, most get bonuses much larger than they get under the VC-istan system that awards mediocre one-time bonuses-- but (a) isn't persistent if the person leaves, and (b) doesn't come with all the nastiness (tax, regulation) of owning an illiquid security.