Seth's Blog : Project ownership (equity and equity)

Project ownership (equity and equity)

Since the days of Atari and Apple, the culture of Silicon Valley has been based on the idea of programmers and early employees owning equity in the startups they took a chance on.

The media is always happy to write about folks who took a shot on stock options and did very well indeed.

Too often, though, people who deserve an upside and need an upside the most are left out, because they don’t have the standing or resources to insist.

And more frequently than we notice, the stock options people trade salaries and effort for fail to become valuable.

The financiers and investment banks are sure to profit the most, with individual contributors often left in the dark. The closer you are to controlling the cap table, the better you do.

Being in alignment with the people around us is really valuable. And ownership is a powerful concept.

But there are ways to simulate the promised benefits of stock ownership with simpler and more direct tools. Instead of offering a magic ticket that has no real connection with the efforts of an employee, why not tie significant bonuses to relevant outcomes? If we actually want alignment, perhaps we could write down precisely what success looks like.

Often, equity isn’t based on equity.