Hooked on Building Equity Value - Issue 2
Give to Get - Value Creation at a Startup
What is going on?
In our last issue of Hooked, “Always be recruiting the best talent, not just the best available talent,” we set the stage for how a surge of available talent can sometimes be noisy for founders working to recruit the best talent for their early startups. That got us thinking, once the gems are discovered and interviews ensue, are founders doing a good job framing opportunity to equity value?
Why this matters:
Talent coming from bigger companies may not have considered the real impact between their individual role and the value creation of the business. This is especially critical early stage, when first-in hires are on a journey to build long-term outcomes. For those accustomed to liquid stock, it’s hard to quantify the meaning of equity at VC-backed companies. Disconnection compounds when companies leave this topic shrouded in mystery, or founders lack the transparency, tools, and frameworks to sell the mission and equity to those coming in the door.
What do YOU think?
Shanis Windland, former CFO at Heptio, acquired by VMWare for $550M shared this guidance for founders, “Be transparent and honest about what you’re building towards. Maybe it’s an IPO, or maybe it’s building for an exit at a company like Google or Microsoft. Show examples of outcomes in your market space, the valuations of those outcomes, and roughly how long it took. That’s super helpful in selling the long term vision.”
Anyone else want to weigh in?
What we think:
We love the idea of transparency driving the right motives. Why? The truth increases the likelihood of alignment. The truth helps candidates make educated decisions. The truth ensures employees stay invested in building outcomes. The truth helps founders place bets on talent who won’t become disenchanted with equity and bounce at the dreaded one-year cliff.
Take Action:
Founders — Remember: Equity education is not a lost art and is ongoing.
YCombinator and Gusto can help you plan, build frameworks, set number of stock options, be transparent, and educate.
Talent — Take steps to learn what equity means at early stage.
Events, Tools, Insights
End of year pay report levels.fyi
Fresh off the LinkedIn press —> Madrona Insights
Hey! Entrepreneurs —> Take the Leap!
Investment News —> Yucheng Low and Rajat Arya @ Xetdata