How can an early-stage startup convince high-caliber talent to accept small equity stakes over high big-tech salaries?

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Let's start with the size of the grants. As I mentioned in my last response, at the very beginning, you have almost no cash and 100% of the company. Equity is the currency you have more of --- so that's what you pay with. .5 % may feel small to you, but I guarantee that it's 100s if not 1000s of times larger than what they will get as Google. Because Google is in the opposite boat - their equity is very valuable but they hae almost infinite amounts of cash, so they use that to attract talent). Over time, as you de-risk the business, cash will become more available and equity becomes more precious. The balance shifts. It has to.

So you have to evaluate the market - you can't pay competitive salaries, so you have to pay competitive equity.

But there is also a reasonableness test. I can't remember if you have a co-founder or not, but assuming you do, you're cap table might be something like 35, 30, 20, 15. (CEO/founder, CTO/founder , Investors, Employees). So with 15% to play with, you can't give 10 people 5% - or whatever number you think is "big enough" to make them all multi-millionairees when you have your IPO.

So sure . . . be more generous ... give your lead engineer - 5%, give your two other VPS 3%, and give your other 7 early employees 1%.

But see . . . that's only twice what you were giving them before, so by your reasoning they are still "undervalued".

And don't forget ... as time goes on you're going to continue to grant them additional options as their initial grants vest - so over time, the size of their stake will increase. They should kow that too.

So the question isn't whether 0.5% sounds compelling in isolation. The question is: what's the right price for the risk someone is taking right now, at your stage?
A small percentage of a wildly uncertain venture is often worth more --- psychologically and potentially financially --- than a smaller slice of something stable. Your people aren't trading salary for a lottery ticket. They're buying into something early, when the upside is still real and the ownership still means something.

Austin Geidt didn't stay at Uber for the equity math. But the equity math validated what she already believed.

By comparing 0.5% of your company to a $300k salary at Google you're treating equity as a simple lottery ticket. It's not. It's the opportunity to be part of something important, the opportunity to have a job with agency. It's an opportunity to have a true front row seat to making something that will change the world. Ultimately it's a belief.

And that's where you come in - that's your actual job --- make the belief feel rational. The equity just has to be honest.