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As I hire for our new company I find myself insisting everyone get some stock who comes on bord, including the lower skilled people.
Im my eyes its not just the right thing to do, its good business. When employees own part of the company they tend to lookout for the company interests more.
If you want a more immediate incentive alignment, give existing employees a small pay raise 6 months after a new employee is on boarded. That way everybody wants to make sure the new employee is trained properly.
I’ve seen so many businesses where the boss man says “this is our new team member, clap clap clap welcome” and then everybody watches her fail. I’ve been on both sides of the equation, there.
Not sure infollow. Why would a team want a new employee to fail? Do they see the new employee as taking away their potential raise money?
Raises for anyone who took a cut for extra early equity will certainly happen. As for those already paid fairly they will likely get more equity.
I’m not family here unless I’m getting fucked (the good way). That’s usually illegal tho
While we do try to have a familial relationship here and look after eachother i dont think anyone is fooling themselves into think we are a family in the real sense. People will get fired if they truely deserve it and we are still out to make money, ethically at least.
I have the same amount of work for the same amount of money whether we have many customers or a few. If we get more customers then we hire more employees; that money certainly doesn’t go into my pocket.
And when you’re talking about stocks and equity... unless your talking about an angel investor start up, the margins are what they are. There’s probably not much equity growth to be had.
@jenny_wu You are talking to nobody here. Freemo is maybe a nice person, but will never listen. It must be great, there must be profit, but anything else is lost to him.
And mid level employees aren’t staying long enough to realize that growth. They’re putting themselves through college, looking for a spouse, saving up to flip properties...
The growth equation is a bit different day one. For our current game plan we would expect about a 10x increase in valuation within the first year. Even someone who joins 9 months in wont see that sort of growth.
I tried the "equity" path, and it doesn't have the "desired effect" on everybody, possibly because it was "free stuff", which we tend to value less than "earned stuff".
Or maybe it was just that the value of the company wasn't large enough...
If I start a new company with staff again, I'll probably make it with "part of salary is shares", so that you work over longer period of times, you earn more shares.
Equity should always vest over time (be earned) but it shouldnt replace salary. For my guys they must stay with the company for 2 years before their equity vests.
I did say "part", and perhaps I should have said "part of remuneration".
What I try to address is "Why would staying 2 years be rewarded as much as staying 15 years?" which was bothering me back in the days.
Curious to hear your thoughts.
> I did say "part", and perhaps I should have said "part of remuneration".
You just have to be careful here. I usually recommend a normal salary with a small equity and then let the person decide if they want to exchange some salary for more equity. I would also say the people wanting to take more equity should be prefered hires early on when you want your initial hires to treat the company a bit like their own.
> What I try to address is "Why would staying 2 years be rewarded as much as staying 15 years?" which was bothering me back in the days.
>
> Curious to hear your thoughts.
Oh thats simple, you usually just give them more stock with a similar vesting schedule as their old one vests. You only do it this way because its easier. The correct way (but requires a lawyer so not suitable when a company is brand new) is to create stock options such that they get a little trickly of stock each month. Stock options are legal trickery though and not the same as a direct vestment. Also its common that stock option stock is of a different class, not something I like to do, but very common.
Thanks. Although I am not likely to start another firm with employees. a) I worry too much about their life situation, and b) loosely coupled networks of small firms have served me well the last 8 years or so.
Most of my guys are contractors but to me that doesnt make a huge difference.
Yeah, assuming that the group mostly work together.
In my case, we are not that tight, 2 are even pensioners (only work "for fun"), one is much larger than the other 5.
For those who took less salary for a boost in equity they will get raises. For those who took a normal salary for less equity will get a little extra equity. Both occur after our next round of funding.
@admitsWrongIfProven @freemo
The existing employees, the ones one or two steps removed from entry level, probably don’t see the new entry level employee as relevant to their personal wellbeing. I have the same amount of work, for the same amount of money, whether the new guy stays or goes.