Legal, Tax, and Accounting October 15, 2020

Ask HN: How should I think about employee equity?

boolyang

Hi community,

We are in the early stages of running a company and realized that we must be able to attract and retain the best people to achieve stable growth. We want to attract people who are truly part of the company, and so we would like to issue equity.

How should we begin to think about this topic? What are some pitfalls we should be aware of? What topics should we be researching?

Thank you, and much gratitude for any insight into this topic!

  1. 2

    Don’t do anything other than a 4 year vest with a 1 year cliff. You are going to be in for a headache otherwise.

    This also goes without saying, but don’t bait & switch like too many startups on Angel List do...they advertise a 6-figure dev salary and switch to equity after they have you on the hook. This is a big no-no and showcases their utter lack of character and professionalism.

    Good luck! 👍

    1. 1

      Thanks for the wisdom.

  2. 1

    I think DHH at basecamp has a unique prospective on this. Worth looking up.

    1. 1

      Thanks for sharing. I couldn't find any article where he speaks about this topic dedicatedly. Is there a recommended writing or video that you are referring to? Or does DHH speak about this in-passing?

      1. 1

        Ah, it was JasonFried, the co-founded of Basecamp.

        https://signalvnoise.com/posts/2987-an-alternative-to-employee-optionsequity-grants

        I originally heard about this on a podcast, most likely Rework by Basecamp.

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