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These explanations make a lot of sense. For #1, the stated reason VCs discourage substantial employee equity is that they don't want the "equity-oriented cultu
by michaelochurch 13y ago
These explanations make a lot of sense.
For #1, the stated reason VCs discourage substantial employee equity is that they don't want the "equity-oriented culture". The real reason is greed in what they perceive as a zero-sum game (but it's not; different policies would create different companies!)
#2 is probably quite accurate. It's sad, though, that paying well confuses Wall Street into thinking a business is ineptly run.
- tptacek 13y agoOnce again, you beg the question. You pretend to draw a conclusion about how VC works, but that conclusion is based on the unsupported premise that VC works the way you say it does. To the extent company boards are parsimonious about equity, it's probably in order to preserve optionality: a new chief operating officer, or a new high-profile engineer to lead a new product team, or a new CEO, all draw significantly from the pool of equity available to employees. Humans are loss averse, so a smaller up-front allocation is preferable to a larger allocation that subsequently has to be diluted down.