Introducing Progressive Equity – Increase employee ownership as company grows
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Re: Introducing Progressive Equity – Increase employee ownership as company grows
#2If anyone has questions about how this works, let me know!
Re: Introducing Progressive Equity – Increase employee ownership as company grows
#3That's a great idea! You're in kind of a unique situation, so I'm trying to figure out to what extent this idea can apply to your average startup.
What were the reasons the Groupon board opposed your original proposal to redistribute equity? This time around, what type of pushback did you get from your lawyers and investors?
Second, consider the "median" startup raising a series A or B--not necessarily a rocket ship with a lot of negotiating power, and not necessarily a famous founder. Do you think progressive equity would raise concerns from your typical series A/B VC?
Re: Introducing Progressive Equity – Increase employee ownership as company grows
#4This is really interesting, and I always like rethinking of equity distribution--since it's so lopsided currently.
Some questions off the top of my head
- Since employees leaving don't receive from the kicker pool. Doesn't this incentivize people who are unhappy and want to leave to stay? There are some benefits to this, but seem like a ton of costs too (and part of what Pinterest's change was addressing)
- How is the kicker pool redistributed? Equally or along the lines of people's current distributions of equity?
- Curious if you have opinion on where the threshold should be set? And if it eventually makes sense to do tiers of thresholds? Or if you think the simplicity makes it make sense not to.
But think this sounds like a great thing, and would love to hear updates on it as it develops.
Re: Introducing Progressive Equity – Increase employee ownership as company grows
#5so dumb. define "grows". you went from 5 people to 500 and took on $100,000,000 of debt plummeting the stock price?
employees get percentages of the company, and as the company is worth more, that percentage is worth more.
you're fixing a problem that doesn't exist with a new problem.
Re: Introducing Progressive Equity – Increase employee ownership as company grows
#6I wonder how the tax consequences work with this.
Re: Introducing Progressive Equity – Increase employee ownership as company grows
#7This is really interesting, and I always like rethinking of equity distribution--since it's so lopsided currently. Some questions off the top of my head - Since employees leaving don't receive from the kicker pool. Doesn't this incentivize people who are unhappy and want to leave to stay? There are some benefits to this, but seem like a ton of costs too (and part of what Pinterest's change was addressing) - How is th…
> Doesn't this incentivize people who are unhappy and want to leave to stay?
So does any other kind of "golden handcuff" stock option or time-vested stock grant.
Re: Introducing Progressive Equity – Increase employee ownership as company grows
#8That's a great idea! You're in kind of a unique situation, so I'm trying to figure out to what extent this idea can apply to your average startup. What were the reasons the Groupon board opposed your original proposal to redistribute equity? This time around, what type of pushback did you get from your lawyers and investors? Second, consider the "median" startup raising a series A or B--not necessarily a rocket ship…
> Do you think progressive equity would raise concerns from your typical series A/B VC?
I don't have any experience with VCs, but from the FAQ at the bottom:
> ...it's designed so investors remain unaffected, but you're welcome to try and get them to opt-in.
So I don't see why VCs should be concerned given that they will be unaffected by this system. I could be missing something, though.
Re: Introducing Progressive Equity – Increase employee ownership as company grows
#9If this doubles the chance of a unicorn, then everyone involved comes out ahead. Nice system
Re: Introducing Progressive Equity – Increase employee ownership as company grows
#10I like that I can actually understand this program and don't feel like it was carefully designed to rip me off.
Unlike the usual jungle of capped/uncapped notes, dilution, vesting schedules, option pools, pre/post valuation, etc...