Earlier quoted context omitted.
This doesn't get rid of any of those things.
Could it reduce (or simply eliminate) the need for more complicated ownership sharing schemes?
No.
Introducing Progressive Equity – Increase employee ownership as company grows
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Re: Introducing Progressive Equity – Increase employee ownership as company grows
#102Earlier quoted context omitted.
Ah, great minds think alike. We were doing the same thing at the same time. I backtested the process against Facebook's IPO so it could feel a bit more real http://kapuno.com/conversation/bblc6nqbe6qte
It looks like the average employee at Facebook would have received $4.5 million. Once the IPO happens and you pay your employees $4.5 million, their $100-$200k salary doesn't seem worth much anymore. What actually would have happened to Facebook, if they did this? Is it possible that the company collapses, while too many employees quit so they can do their own thing, or retire? Would they have had to double or triple…
The employees get free prepared food etc, a consistent routine that suits their engineer mind, lots of vacation, flexibility to choose their own hours, leadership roles (and unlimited mobility) to choose their own work, until they retire and become angel investors. And they get a little greedy, so they need a few more years income before they retire at 40 and the hot startup becomes and over the hill bicgo.
Re: Introducing Progressive Equity – Increase employee ownership as company grows
#103Earlier quoted context omitted.
It's not just that the reward for joining early is smaller than it used to be. It's also smaller compared to joining later . The marginal utility of money is actually what's causing the problem. If I can join a company late with very little risk and a much higher chance to make a few million, I'm probably much less incentivized to join a company early with the risks associated with that.
But in this system the incentive to join early is still several multiples, mind boggling multiples, of what it is to join later.
Just as the risk is much, much higher. People just hear about those few who became bi/millionaires out of IPOs, not the thousands that never made it.
Re: Introducing Progressive Equity – Increase employee ownership as company grows
#104Andrew isn't comfortable posting Detour's threshold, and i respect that, but for anyone actually thinking about using this in another company, a threshold must be chosen -- so what are other people's thoughts on what a good threshold might be?
I'll start with an estimate. i think i saw a retirement savings calculator somewhere suggest that one should try to save ~$2 million by retirement per person(!) (sounds a little high to me at first but i guess that's only $75k/yr for 26 years of retirement, assuming you dont make any money on investments). So if one wants to provide for themselves and a spouse, that's $4 million. Moderately fancy homes in very expensive areas can be around $5 million. So $10 million would provide for two people and a nice house in an expensive area (we havent accounted for children yet but somehow i bet you could get by on $10 million, after all, most people do). We havent yet accounted for taxes (income taxes on the initial payment (~50% including federal and state?), and also ongoing property tax on the house), so lets say $25 million, which is the threshold used by https://news.ycombinator.com/item?id=9337915 . This sounds like a lot but my sense is that for the threshold number youd rather overshoot than undershoot, and some people may have more expensive tastes than others; in fact it may even be too low.
$25 million is not that far off from the $50 million threshold used by https://news.ycombinator.com/item?id=9337837 .
So, what do others (not Andrew) think; would $25 million or so be a good threshold to use if one were actually doing this?
Re: Introducing Progressive Equity – Increase employee ownership as company grows
#105Re: Introducing Progressive Equity – Increase employee ownership as company grows
#106This is very cool. One thing I've also wondered about is letting talent adjust compensation on floating scale between $$$ and equity... also, as in "earn-in"! I thought this could be an great way to attract high-impact team members. It's tough sell to leave a high-paying stable job for a risky lower paying job... but what if you could adjust your salary and "earn-in" more equity... It could lower the burn and align i…
+1 to Megadonk as the currency of choice for my next job.
Bitcoin needs to rebrand as Megadonks;)