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.
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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.
@freemo
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.
@admitsWrongIfProven @jenny_wu