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Solution I personally use and has yet to fail: Auction system trading monthly wage packet vs. unit equity.

It just works, and by it's very nature is fair, everyones happy.




That's a joke right?

You have your employees bid on either getting paid or taking equity every month?


It's a one time negotiation at founding. It's not like we run it every month.

Also, it's founders, never employees. Employees get cash+bonus, never equity.


Realy good luck getting any one good to work for you after going public like this.


I don't know why this would prevent people from working for them. I'd see such a complicated scheme to split compensation amongst founders as perhaps a slight minus , but I know plenty of people who want to work for cash+bonus. I'd much rather get a competitive (with real businesses, not Valley startups), sizable cash bonus than equity in almost any startup.


Not sure why you have the veiled threat in there, but we're not exactly hurting for talent right now and the staff we do have are more than happy with the arrangement.


This sounds interesting. Can you provide more details?


Sure thing,

We total up the cash available and our runway, say $60k for 2 founders and 12 months. Total equity is of course 100%.

So at one extreme, one founder gets $60K over the year in wages and 0% equity while the other gets 100% equity and no wage packet. At the other end, its $30K each for 50% equity each. Somewhere inbetween is a sweet spot.

The core concept is get the cash now, or potentially more later.

Start with the equal split, then begin negotiating for the value per equity point. Eventually you'll reach a point where you both agree on equity/wage split.

The added bonus is you've also technically valued your startup in the process (value per equity point*100) and have an indication of how much your relative belief in the success of the startup.

Since I tend to keep my expenses down and as an example of the last one I took 55% equity for a $7k drop in monthly cash. Cofounder gets a 7K bonus over the year (he was starting a family at the time) and was happy with his 45%.

Voting rights are equal. Always. Do not fuck with these in the startup phase as they give a sense of ownership and control that founders need to commit.


This is exactly what we do. And the point is to give wages to those who value it more, and equity to those who value that more.

It's creative and win/win generally for the team. I've yet to have anyone be upset at this. I encourage those considering it to take a closer look.




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