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Comment by andrew | Hacker News Reader

If anyone has questions about how this works, let me know!

If I'm an employee above the distribution threshold, doesn't this incentivize me to leave early (ideally right before the distribution event) rather than get my shares redistributed?

Is it really the best way to incentivize people to do a good job, the future possibility of a large exit, and that they'd get an additional share?

I like the idea of something being pre-determined, set from the get-go, however as you mentioned different individuals have and bring different value and have different impact in the company. Does it make sense for high impact people to get a 1 megadonk increase, along with a low impact employee?

There's another model I was hoping to be able to explore, though I don't have a lawyer nor could afford putting the resources towards writing any draft for it - which takes more of a convertible notes with a cap -- you give employees higher equity initially, so if the company doesn't do as well then those employees gain more, and that equity comes with a cap - so say it's 2.5% of the company with a $5 million cap and that employee has agreed they'd be happy with that outcome. The company exits for $1 billion which would require a lot more effort from a lot of people - save if it's some automatic viral scaling company with only a small team, e.g. WhatsApp with ~35 employees before selling to Facebook ... under this model then employees 30-35 in WhatsApp scenario could gain $100s of millions of dollars for very little time and energy invested?

If an early employee leaves, they don't get to participate in the kicker pool. Suppose it takes a company 10 years to have a significant liquidity event. In the timespan, it's very likely key employees join & leave and don't best a stake that would achieve financial independence. Shouldn't these employees also have access to the kicker pool? A relevant example here is Quora, where several very key engineers have left but (I'm assuming) wouldn't achieve financial independence in an IPO. Isn't this system a bit predicated on a high growth company that hopes to IPO within a few years? What might help is giving option/shareholders access to the kicker pool so long as they don't liquidate otherwise.

Is this something you implemented from the incorporation at Detour or only later on as the company started to grow? Seems like this level of complexity when the company is still incipient could be too much mental overhead.

I guess you give the same amount of kickers to every employee. Wont the kickers then be too diluted to be worth anything? I haven't done the math, just a feeling.

It doesn't seem like it. My read is that 50% of the windfall is distributed evenly and 50% is distributed according to the existing equity disbursement. It's like a basic income. It's designed so that in a company of N employees, no one gets less than 1/2*N of the payout.

It's a great idea because it means that average employees will actually be motivated by the equity; let's be honest, 0.05%, vesting over 4 years, of a 100-person company isn't enough to motivate anyone except for a starry-eyed young kid on his first startup.

If Silicon Valley ever wants to grow up and remain innovative, that's the sort of thing we'll need. A 0.05% slice is just a bonus and, compared to Wall Street, a pretty weak one.

I am a little confused. Why would you continue diluting the employees? don't they get heavily diluted by subsequent VC rounds already ?

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