Of course not, what's the purpose of asking such as silly question?
Are you being snarky and suggesting that employees deserve the same upside that founders deserve?
Are you being snarky and suggesting that employees deserve the same upside that founders deserve?
How is it silly if they already do that for salaries? Co-ops with equal ownership isn't unheard of, and isn't silly at all.
They're a worker owned co-op and have grown very nicely over the years.
The founders are excluded from the employee compensation discussion. They own the company because they founded it. Nobody thinks they just put the equity into a structure that nobody owns.
The question is whether all employees are compensated equally, which is a very important detail. Giving everyone the same salary is very different than giving everyone the same total compensation.
But what sorts of things input into the function of "deserve"?
How much equity or salary you get in a company is a function of supply/demand and the marginal product of your labor. I would say there are probably fewer CEOs who can take a company from startup to unicorn status than there are really good founding engineers out there, so CEOs tend to get more equity in a company. Sometimes the founding engineer knows something that nobody else in the world does, so their equity reflects that. It's also a reflection of how much risk the engineer is willing to take on (they'll probably take a salary cut to be a founding engineer, and they also risk the company randomly running out of runway and finding themself suddenly unemployed).
But it has nothing to do with what you deserve. Maybe if the CEO/President is a sentimental type, he'll award you equity based on how much he feels you deserve but ultimately it's about supply and demand.
If a CEO puts in 90 hours a week at a tobacco company while his engineers put in 20 hours a week, does he deserve lots of money (and therefore a more comfortable life) because he puts more effort into killing people? Or does he deserve every bad thing that happens to him because he decided to spend his limited time on this earth making it a worse place?
Does the world class engineer or business development lead just take it easy and travel around after they join?
Does the new manager push the team and business forward or prioritize stability?
Do engineers spend their time on reactors and impressive sounding projects or figuring out what customers need?
Do people feel lucky to have a seat in the org or do they spend their time complaining and looking for the exits?
Money isn't the only lever, but its a strong one - startups will never compete with established firms on cash outlays.
Employers play an iterated game where they will hire/release/develop many workers, Employees play a single game where they choose the firm that maximizes their compensation offer.
Once the employee joins, the incentives flip - employers can take advantage of the fact that employees can't move in less than a year to maximize output, while employees can take advantage of their influence on the organization to minimize expectations.
Hence employers offer strong bonuses, or pay above market to avoid this behavior. Supply/Demand influences what companies pay - but isn't the only influence.
Thinking that you can stiff your employees on equity compensation and have it go unnoticed is imaginary. Employees convinced of outsized valuations for equity compensation will quickly become disillusioned.
The founders aren’t really taking on that much more risk than the rest of the early team; it’s the VC’s money, not theirs.
I absolutely don’t agree with the idea that employees deserve the same upside as founders (because I think initiative and persistence against adversity/inertia is insanely rare and valuable and should be rewarded immensely), but it is not an insane proposition.
It’s especially popular among people who think the actual work output is more important than the leadership initiative. Both are obviously essential, and founders do both, while employees do only the first (or they’d be founders themselves).
Let’s define this. Let’s say 1:25? 1:50? What ratio is appropriate?
If they didn’t like the deal, they would become founders themselves, or choose a company that offers a better deal.
It turns out that leadership drive and the compulsion to bring something new into existence from scratch is actually quite rare.
Your figures seem to be roughly in line with what the employment market has settled on, although price discovery could be better (most employees don’t get to see the cap table during hiring negotiation, which, IMO, is wrong).