The Right Way to Grant Equity to Your Employees
The best part about this is that it describes equity as what it should be: an incentive to do a great job. The problem that I see with most startups (especially in SF) is that they treat equity as a replacement for salary.Sorry, guys, but equity doesn't pay the bills. Furthermore, it's delayed and potential gratification. First, there's generally a 1 year cliff, which means I'm effectively taking a salary hit for 1 year for no good reason (unless you matched my original salary). So like I said, equity is not a replacement for salary. Second, your company may be valued at $400M, but my options are worthless until you get acquired, sell, or IPO.You're basically saying "I'll give you X salary and I'll also give you Y pieces of paper that will hopefully be worth Z dollars in the future, but I can't promise anything."IMO, equity should be treated as a benefit along the same lines as free lunches or vacation days. It should be a bonus. If you offer me X salary and Y equity, then X should be enough to pay my bills and Y should be enough to incentivize me work my ass off for you.My two cents, anyway.