The liquidity what if? Our alternative to employee options/equity grants
This is a cute system and I&#x27;m not going to be against a company having a secret bonus that might give employees free money.  But c&#x27;mon, don&#x27;t write a blog post about how this is great.  This system is much worse than equity.  This is basically like a lottery that might give extra money to employees lucky enough to be presently employed in case the magic numbers hit.<p>The whole point of equity is to incentivize people to create value for the company and give them upside in case the company does grow a lot (how people personally value equity is another story, but the incentive is the same).  This plan doesn&#x27;t do that at all...<p>1) The company says it has no plans to exit so there really isn&#x27;t an incentive for an employee to think their contributions might return them upside.<p>2) The 5% figure for all employees is tiny.  A growing startup might give away 5-10% in equity, <i>per year</i>, to employees via stock grants.  This is 5% total.  Every year that goes by employees <i>should</i> own more of the company because they are doing more of the work, a fixed number makes no sense.<p>3) Past employees who might have made significant contributions and created tons of value get nothing.  Do you think if any founders leave they are giving up their real equity?<p>&gt; it’s a great alternative to the organizational complexity of option grants, acceleration, strike prices, conversion into shares, private markets vs. public markets, dilution by outside parties, partial vesting, etc.<p>So no, it isn&#x27;t a great alternative to equity, it does completely different things.  It is a random bonus that nobody can expect which is loosely correlated with whatever value they may have contributed.  This is certainly better than no bonus, but maybe is worse than a good bonus (though they might also have other bonuses, I have no idea).