No, we're not. You're saying that there's little difference between 0.1% and 1% equity, since a big exit is a low probability event.
I'm saying there is a big difference between 0.1% and 1% equity, precisely because a big exit is a low probability event. One (0.1%) is almost always meaningless, the other (1%) can be meaningful in several different scenarios.
However, if you want to emphasize the motivation part of the arrangement, founders need to realize that offering an early engineer 0.1% or (God forbid!) 0.05% will have exactly the opposite effect that what they intend. The engineer will see people doing much less than s/he is to grow the company given 5% or 10%, and s/he will feel resentful and underperform. If you're a founder and you're giggling because you've hired this pretty good engineer for a low salary and only gave up 0.05% equity, then you're giggling at yourself, because your engineer hire will work resentfully for a few months and then run and grab the first reasonable job offer that presents itself, right at your most critical hour.
So founders need to either award their first engineer or two a reasonable amount of equity, or just forget the whole thing. But realize that if you chose that route, you'll obviously need to offer a market salary to recruit even remotely-qualified candidates.
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No, we're not. You're saying that there's little difference between 0.1% and 1% equity, since a big exit is a low probability event.
I'm saying there is a big difference between 0.1% and 1% equity, precisely because a big exit is a low probability event. One (0.1%) is almost always meaningless, the other (1%) can be meaningful in several different scenarios.
However, if you want to emphasize the motivation part of the arrangement, founders need to realize that offering an early engineer 0.1% or (God forbid!) 0.05% will have exactly the opposite effect that what they intend. The engineer will see people doing much less than s/he is to grow the company given 5% or 10%, and s/he will feel resentful and underperform. If you're a founder and you're giggling because you've hired this pretty good engineer for a low salary and only gave up 0.05% equity, then you're giggling at yourself, because your engineer hire will work resentfully for a few months and then run and grab the first reasonable job offer that presents itself, right at your most critical hour.
So founders need to either award their first engineer or two a reasonable amount of equity, or just forget the whole thing. But realize that if you chose that route, you'll obviously need to offer a market salary to recruit even remotely-qualified candidates.