How much equity should a startup employee expect?

“There was an equivalent one in Canva. Some founders do that. Some founders just say, I will give it to a very limited circle, and I've seen that happen as well. In Eucalyptus, I think it was important for us that the plan had a reason, the why. So, whoever we gave it to, they needed to be a why behind it. And I'll explain it in a little bit later detail in just a sec. And then the second question is how much to give to everyone. I think that is almost, in my experience, almost no founder has done it. At least the ones that talk to me is like, think through the number of rounds that your company has to go through, the number of people you'll have to hire, retain, and actually see which levels of talent you need in your organization at which stage, and then map out this whole journey. It's maybe 200, maybe 300 times that you'll have to do the grant and then calibrate it across different stages of your company. And if you do that, the how question actually becomes, sorry, the how much question is actually gets placed in a context. So you become very, I guess, intentional about how much a junior at the Series A startup, in your startup, gets offered. And that was important for us because I've seen places where a lot of equity was given upfront to the early employees and there was very little equity remaining at pivotal stages in company formation where you had to hire world-class talent. Mm-hmm., but you weren't able to offer equity, uh, substantial amount of equity to do so. So we didn't wanna be, uh, in that situation. Now, the why question I think is important because equity plans, they are tools to some kind of a purpose. And in my mind, we wanted to use that tool in combination with others to do 3 things. One is we wanted to be able to recruit effectively. We wanted to retain people that we needed, and we wanted to engage people. I think lots of founders, they might think about ESOP as kind of a thing that I need to be doing, and they never think about how that flows through into those three categories, right? If I have an ESOP plan, how do I make sure that it's most effective recruitment tool? What does it actually mean in practice? How do I make sure that the recruiters who are out there understand the ESOP plan, able to articulate it, able to push back in the candidate discussions? How do I mar”

“Well, a couple things. One is that your ability to take risk depends entirely on the stage of your life, right? And for some people, being all in on equity is absolutely fine because they're living at home with mom and dad, right? And have very low cost base. So that's actually a great space to take risks and some of them have a mortgage and they can't afford to tilt towards the equity component. And in our offers, we've provided that choice. So you can be high salary, probably market rate. And then on the other side of it, you can be probably, I would say like 60% of what you would be getting on open market, but heavy equity. component on the other side. And people decide whatever kind of suits their needs, but they need to make that decision from the point of like knowledge. And that's where I would come in. I would make sure that they have and make myself available until they were confident to do that choice.”

“This position of like, hey, just discount it to zero because it's like, it's not worth anything. I wish I could like categorically disagree with that statement, right? But I can't. And I think there's a couple perspectives in that statement. Like one is lots of startups fail, right? So maybe mine will fail as well. I mean, that's a fair point. Like, not all businesses succeed. If you were an optimist, right, and you looked at that statement as if it's saying like, hey, don't do it for the money, right? I would agree with that statement, right? You should be, especially early on in your career, you should be learning, right? So equity is a nice component addition, but it's like not the primary reason that you should be going into the industry. Where I disagree on the worth is that a lot of people don't think about their careers as a sequence of bets, right? So it's fine if one startup failed. I had two startups in my career that went south, right? You don't see them. Actually, you might see them on my LinkedIn profile, but I don't talk about them. And everybody just thinks that I went through a string of successes. But in reality, like if you learn and you're able to ask for bigger and bigger equity pieces as you climb up the experience ladder, eventually one will land and that's enough for you to have a comfortable retirement if you can stomach it.”