Founders: Would you agree that team should own a part of a company? | Hacker News Reader

Founders: Would you agree that team should own a part of a company?

20 pointswithoutshape32 comments

If this is a common practice for you. Could you share how are currently achieving this?

Your question will get lots of different answers, because you've phrased it in an ambiguous way, with no context. This suggests to me, that in your specific case, the answer is no.

For example, "company" could mean private or public. It could be 5 people or 150000 people.

"own" can refer to control, responsibilities, legislation, profit share, product direction, market fit, investment of cash, and more.

"team" might be everyone from the lead who's been there from the beginning, to the receptionist hired last week. Or some subset.

Context matters. The goal of ownership matters. Each context is different so there's no blanket answer. Hence my answer to your (incomplete) answer is no.

I post this reply, not to be a dick, but to point out that your question needs a lot more thought and clarity. From that I infer (perhaps incorrectly) that you are the team-member in this context, not an existing owner.

I think you have a valid, specific, question in there somewhere, but you need to narrow it down a bit. And perhaps also figure out if team ownership will actually solve the problem you are trying to solve.

Ownership can mean many things, including monetary ownership, passive stock, or part ownership in strategic direction. To the latter point, every team I've worked on that had a shared strategic vision was more productive, had higher morale, and was overall a more satisfying experience. I'm not sure anyone can quantify should in terms of compensation, but ownership of purpose and direction seems to fit.

Exactly. I think people want to be treated like owners more than they want an obtuse legal status of being an owner. In other words, a seat at the table when strategic objectives are being defined is what will make them act like owners, not a RSPA document.

I think people join startups for a chance at getting fuck you money, and offering "a seat at the table" but no equity is a non-starter.

It all depends on the people. I know lots of people who prefer working for startups not because they're looking to get rich, but because the startup is doing something new that particularly excites them.

And in my statups, I want that group of people, and actively don't want the ones who are just looking for a big payday.

Early day startups generally have high risk, the options are the high yield to compensate for that risk

Right, but that's a bit different intent than looking to get rich.

What’s wrong with looking to get rich as a reason to join or start a company?

I never said anything was wrong with it. I only claimed that's not the motivation for everyone, and in my own startups, I prefer people who are motivated by passion for the work over those who are motivated just by income potential.

That's not a value judgement, that's just being interested in finding people who are more on the same page as me.

I assume you are either already rich or want to become rich because of your startups. Why wouldn't you expect people to want to also be rich?

I will say every time I hear someone claim that their employees should want to join them for non-monetary reasons, I assume its to try to keep more of the rewards for themselves.

> I assume you are either already rich or want to become rich because of your startups

You assume incorrectly. I am not rich by the standards of rich people (although I am rich by the standards of many others, but I think it's safe to say that most of the people reading my comment right now are wealthier than me), and I don't form startups because of a desire to gain wealth. I have no actual interest in amassing wealth as such.

I form startups because they give me the opportunity and freedom to engage in projects that deeply interest me.

"Not rich by the standards of rich people" is a moving target as your social class improves and you rub elbows with the more wealth as you make more money. There are people making $500k a year in the Bay Area or NYC who don't think they are rich. But the simplest dividing line I can think of is "has fuck you money". That is, could you (financially, not socially or being bored) retire tomorrow if you felt like it.

This is the reason I work in education right now. The pay could be way better given my skillset, but the one thing this institution (an art school) gets right is that they let each department decide on their own what direction they want to go in and how they do it.

Of course it is not 100% free and there are some self-correcting forces at play (e.g. students who would complain if you picked meaningless topics each semester), but if I decided the next semester is going to be on something arbitrary like the history of karaoke technology and building RC-cars I could totally do that.

So even if ultimately I end up doing something reasonable that fits the needs of the students, I know that the choice is mine entirely and I don't get the feeling of "this is the boring crap course I have to give each semester". This is worth a lot in terms of satisfaction, especially since there are few people in this instution who would understand what I am even teaching (apart from the students who visited the courses and the IT department)

Some companies have this model, others don't. The key is the word "should," it totally depends on what the owners want. One of the nice things about America is that it's very easy to start a company. Intel started when "team" left Fairchild.

You need to explain the question further.

Should employees have some equity in the company? Of course. That’s the single biggest driving force behind the growth of the tech sector over the last few decades. It’s pretty hard for employees - especially at startups - to be fully bought in if they are getting a paycheck and nothing else.

Should every tech company be some kind of cooperative? That’s a harder one to answer, but this model hasn’t really been proven in the real world so until that happens it’s safe to say no, that won’t work.

If I have a 1% stake in the company via an option and there are lots of ways you can get screwed out of making any money from it, then I am not going to act much different to an employee without it. If the founder becomes mega rich, I might if lucky get a paid off apartment in 15 year’s time.

I assume you mean giving employees equity in the company, and early stage employees meaningful amounts. I have always done this and cannot imagine not doing so.

Shares in the company are about control. Founder teams (ie., founder/co-founders) should decide early on about how much control each cofounder is going to retain through their ownership -- this is anyway part of forming the founding team based on the skills and capital they bring to the table.

When it comes to expanding the team with key employees outside of the founding team, giving them equity share is a decision that the founding team needs to make. A policy decision could be x% of the shares will be dedicated to key employees equity participation.

Also, key employees doesn't have to be all employees. You can segment this by role, service duration etc., For eg: an entry level role may not be eligible, but may become eligible after x months of service in the company.

There are opposing philosophies to the above. But most use some form of probation period to make employees eligible for participation.

Edit: Also, typically the equity is granted through options vesting. So, it is part of deferred compensation over a vesting period that runs over several years. It is also tied to differentiated performance-based pay.

I don't think there's a blanket answer to this. In some cases, I could see some measure of employee ownership being a good thing. In others, I could see the opposite.

In my ventures, I've never done that sort of this because the complexity of it is a headache I could do without, and I've not seen a good argument for why it would benefit my companies or employees enough to be worth the cost. But that's very dependent on the particular venture, I think. I could see it penciling out very differently in other situations.

If a team created the company then why don’t they own it already?

If a team didn’t create it, then why should they own over the team that actually created it?

It here == whole company or any substantial part of it.

Nope and this is a big reason to avoid someone else's startup.

Perhaps you are interested in the "Mittelstand" model? It is hard to execute in America though, our business culture doesn't really align with it in recent decades. But that is probably changing.

https://en.wikipedia.org/wiki/Mittelstand

I heard Germany recently legalized stock options. Is this true?

I've always wondered, could dollars be matched to equity? Imagine a company with three employees earning $100, $200, and $300 per year. Each year the company issues them 100, 200, and 300 shares. Has anyone done this?

Do you mean actual ownership via stock? If so then I can speak for all founders: NO. I say this based on the absolutely shit percentage of stock with terrible terms that are offered to all employees.

Cooperative business models do exist but it does not seem common at all for VC backed startups.

No, RSU has largely become a an accounting scheme to inflate adjusted EBITDA.

Few people are that committed to a company to be real owners.

The workers should own the means of production?

You have nothing to lose but your chains.

But seriously, it's an interesting question and I got some interesting answers when I asked something similar last week. https://news.ycombinator.com/item?id=34945428

Stock Options?

Stock Options != key equity ownership. Neither does employee equity, because the key word there is "key".

If you get hired at Amazon, you get stock options after your vest is done. This does not mean you have any real impact at all on company decisions.

The idea of employees owning the company is Marxism 101. No fucking way any founders in this economic system will be for it

Reply on news.ycombinator.com