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If we're talking about incentive alignment being the primary driver, I personally don't believe it's impossible to justify taking an equity cut, if possible and
by mallyvai 12y ago
If we're talking about incentive alignment being the primary driver, I personally don't believe it's impossible to justify taking an equity cut, if possible and reasonable (10-20%), with the mutual understanding that the outcome is going to be much better if we help with the beginning of the process. Building a reputation for being really awesome would be challenging - people would want to know that it's worth the fee. Two other big blockers:
1) Multiple levels of taxation
2) Startups will be wary of having random third parties on their cap table
There's probably other stuff too. But I don't think it's impossible, just very hard. There are other ethical concerns from this side as well - hollywood talent agents don't always have the best persona. It's part of why we're avoiding the "Agent" moniker at http://offerletter.io http://offerletter.io and branding ourselves as Advisors instead.
This is a long ways off, of course - there's a lot of work to be done even in at the narrow step of the funnel we're targeting right now.
- terramars 12y agore: #2, that's why god invented derivatives. contrary to popular belief, you CAN write derivatives on your private stock options - the derivatives will just also be worth nothing if the engineer leaves early / company folds / etc. and they will be a tax nightmare even if you take early exercise and handle everything correctly. i'd LOVE to see someone pull this off successfully though.
- mallyvai 12y agoThis is a great point. If you have more detail or insight about how we might go about this (or precedent around it) , definitely let me know!