I think part of the problem is the nature of ownership versus a salary. Would you rather have equity within a company and partake of the profits, or would you like a nice salary?
I'm writing a longer post on how I think about hiring for my company, but the gist is that I want 100% equity players with the thesis that work will get done without the excess headcount.
As someone with equity I always assumed everyone wants equity. I've come to discover that most people just want a nice stable salary.
The incidence of "owners" is higher in tech, in part because its an easy way to start a business. Low capital needs, cheap equipment, no formal qualification required, and lots of examples of success to emulate. In other words equity in computer startup is highly attractive to those who have that bent in the first place.
>> I'm writing a longer post on how I think about hiring for my company, but the gist is that I want 100% equity players with the thesis that work will get done without the excess headcount.
In my experience this hasn't always worked well for me. Those that favour equity often end up going off to start their own business, where they get more equity, and don't have to deal with pesky folk like me. It's certainly worth a try, but I think you'll discover that most people just want a salary.
Equally, my advice to workers is to get a good salary first, and consider options et al to be likely worth nothing. For equity to be meaningful it has to be substantial, and you just don't get infinite substantial slices out of 100%.
Of course if your company is google successful, then great, even tiny slices make millionaires. But its vanishingly unlikely that your company turns out like that.
I'll end with this - you have a thesis and it's certainly worth a punt. If nothing else it's valuable data for your next business. It'd be great if your thesis works out (for your sake I hope it does) but be prepared for unexpected outcomes, and try and recognize those outcomes early. Perhaps, just perhaps, there's a reason most companies don't work like this.
The reason people don’t want equity is that equity is usually irrational once you get beyond a handful of employees. If you are employee #3 and you got 10% equity, sure that could make sense. You have enough impact to influence the value of that equity a lot. If you are employee #20 and you got 0.3% equity, hell no it doesn’t make sense. Employees #1-19 are getting all of the gains from your above-and-beyond efforts. You might as well work at a NGO.
That works once you are profitable enough that the salaries are enough to cover sufficiency. however, if I am taking on the risk of no salary, I not only need substantial equity, I also need control. It's going to be my company.
Now, if what you're trying to describe is a co-op, that's interesting and you should look into that literature, but it is no longer "your" company alone.
I'm looking into co-op/b-corp. My core model is that I want to create a system where people can contribute at a task level and get equity. An "upwork" for people that want income streams rather than payouts.
Yes, because that is my boat. I'm only working 5-20 hours a week. At core, I want to figure out a way to get other part-time people in to contribute to a cause and then profit if the cause is good.
At core, I want an open company building open source where people can get an effective royalty on contributions. I'm writing my thoughts on this, and I may revert if it turns out to be a bad idea.
How do you avoid “too many cooks in the kitchen” syndrome? As an idealist, I love what your advocating. I dream of idealistic egalitarian societies.
Sadly I’ve been forced to accept that many employees will happily enter into workplace codependency relationships that allow them to offload risk from themselves (e.g doer-decider duopolies).
> many employees will happily enter into workplace codependency relationships that allow them to offload risk from themselves (e.g doer-decider duopolies).
This sounds interesting but would be helpful to have some more explanation of what you mean by this.
At core, I'm looking for people that want to come and go. At essence, if there was an upwork for equity, then I'd use that.
As an example, I'd post a task "write a language tool to automate generating the code and tests for the type system" and offer 100 shares. Is it the end of the world if the task doesn't get done, no. Is it marginal? probably. However, is it a neat problem, yeah!
The core problem that I see is that I have no idea what "100 shares" in your startup even means on practical level and no way of realistically valuing them. Even if I'm happy in principal to work for equity, without getting a lawyer and an accountant involved I'd kind of have to assume that the dollar value of those 100 shares is zero, and act accordingly.
> I'd kind of have to assume that the dollar value of those 100 shares is zero, and act accordingly.
Exactly, I want people more interested in the art rather than the finances. However, once I get some profit generated, the model I want to pursue is that every month the profit from the company is distributed.
Sure thing - I would like the same equity as you have. Do not be shocked however, when after a day, with my equity in my pocket I wander off and do something different.
The model that I'm going for is an upwork for equity. "Here is a task, it is worth $X shares and there is a dilution schedule. Profit is currently $Y with $N total shares, profits are paid monthly $Y * $X/$N.
It's a mess, but if you solved a problem that I thought was worth a number of shares, and then left... great!
How large are you aiming for? I suspect beyond around 5 people this falls apart due to either the value of the specific skill at the time matching the current profitability poorly, or the protective clauses that would be needed in a contract making it very difficult to hire talent.
I'm writing a longer post on how I think about hiring for my company, but the gist is that I want 100% equity players with the thesis that work will get done without the excess headcount.