You’re Thinking About Equity The Wrong Way

Years ago, I was introduced to the two co-founders of a fledgling semiconductor company. I have an affinity for companies in the space, so I agreed to talk with them.

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The two co-founders told me they had no funding, and they were looking to hire a VP of Engineering.

They found a good candidate for the position, and they only wanted to give him 1% equity vesting over four years. I told them the candidate wasn’t going to take the risk of joining for such a small percentage ownership.

Their answer was, “Why not? We’re going to be worth $1 billion in a couple of years.”

I told them, “I don’t think I can help you if you’re not going to be realistic about what it takes to hire top talent.” I wished them well and moved on with my life.

You either get it when comes to equity or you don’t get it when it comes to equity.

It seems to me there are two types of founders:

A. The “Spread the Wealth Founders” where the founders are very generous with equity, or…

B. The “Stingy, We’re in it Only for Ourselves Founders” where they grudgingly give out…