Being Fair With Equity

I met with a friend last night who is considering a role in a pre-Seed stage startup that she was excited about.  She had a lot of great questions about how she should structure a negotiation for coming on board.  I gave her the answers I had from my experience, but wanted to dig into the topic a little this morning to see if there are some good guideposts out there to leverage.

It turns out Joel Spolsky pretty much closed the book on this topic with this response.  I wish I had this five years ago, so I’m sharing it here in the hopes that it helps someone else along the way.

I’m not going to repeat Joel’s entire framework here (you should go read his response), but I will call out a few points that resonated with me:

  • His ‘risk-layer’ approach is the right way to think about equity. The 2-3 people who start out with a blank page are taking all of the early risk and are entitled to the largest share of equity. If you are coming into a startup with a salary, you are probably not in that first risk layer and shouldn’t have an expectation that you are.  At the same time, if you are the first ‘non-founding’ employee and you’re a catch, you should think about that second layer and what you feel is the right amount to ask for.
  • The notion that ideas are essentially worthless is a great point, and this is a movie I’ve seen a number of times in the past.  It’s not that ideas are worthless, nothing could happen without them, it’s just that they aren’t worth valuing in terms of founding equity because it’s too difficult to assign value to them, and outcomes will be 99% determined by execution.
  • All equity (founders included) being subject to their equity vesting is a great idea.  To be perfectly honest, I’ve never, ever seen this and I don’t think it will ever become the rule, but it’s a really smart idea.

Most importantly, the theme on fairness and transparency really resonated with me.  Fairness, above everything else, is the most important piece of this equation.  Not that everything in these negotiations has to be perfectly ‘fair’, but in the end everyone needs to feel that they were treated fairly and with respect.  The probability of success from early stage to liquidity event is so, so low and the only thing propelling the company forward is the team.  If great people feel that they’ve been treated unfairly, they will bolt when a better opportunity comes along.  The subject of equity can be the most important conversation you have with your employees, be transparent and be fair.

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Google Glass Comes Close

After a week with Google Glass, I’m reminded of that  Bob Uecker line from Major League “Juuust a bit outside!” (here’s a clip with the line if that was too esoteric.)

I’m generally excited about Glass, and I loved a few things about it. But  I struggled to find opportunities to use it. Currently, Glass feels like a really great prototype of something that’s going to be smaller, sleeker, less obtrusive and more useful when it hits the market. But unless the device is delivered in a contact lens version, I think it’s unlikely to hit scale adoption as a product that we wear on our faces.

If you’re wearing Glass, it can be pretty disruptive to the people around you. It feels a little rude to have them on in most situations because it draws a ton of attention and people struggle to look past them, so most of the time I found myself leaving them on my desk.  In my experience, the disruption was two-fold: the first was that people stared at the device because it looks unusual.  I think we can all get passed that eventually, but I’m not sure people like having a camera pointed at them all of the time, it makes them generally uncomfortable.

Also, you can’t really ‘compute’ and talk to someone at the same time, so Glass doesn’t yet solve the problem of people staring at their phones in a graceful way. I get the sense that Glass was created, in part, to solve the problem of us all staring at our phone screens instead of at each other, but it doesn’t really help you stop doing that. I  found myself either computing or talking to people, and it tended to make both a little more difficult and a little more awkward.

Google took the first real swipe at wearable computing in a big way. There is no question that this product has opened up the door to a platform of game-changing devices that we will command with our voices, eyes and even our thoughts. Taking a photo or a video, or surfing the web using Glass was a magic experience and something that felt completely new.  I’m long on the category and I think Google will eventually  figure out a product that solves for the social awkwardness. Glass is close.

Using Every Canvas In Marketing

I had breakfast with my friend and schoolmate Jon Steiman this week, and we got onto on the topic of the iTunes app store. Jon is at TalkTo and we share some of the same challenges around product marketing. Being who he is, Jon had some great thoughts for leveraging every opportunity to build a brand. [As a promotional aside, TalkTo is absolutely awesome – it lets you text businesses that you would normally have to call. I’ve used it five times this week.  Try it].

Jon used Chuck Lorre as a benchmark for his latest tactic. At the end of his television shows, Mr. Lorre posted short essays on his production company’s Vanity Cards. At first, they were ineffectual because they flashed on the screen too quickly for people to read, but as DVR usage increased, the impact of Mr. Lorre’s essays increased exponentially. His Vanity Cards have become relevant enough to be a published book.

So where did TalkTo find its latest canvas? They tapped into the “What’s New” section of the Apple iTunes store. The conventional wisdom is to use the What’s New space to explain the minute details of a new release. Typical notes include copy like “Speed and improvements and bug fixes” or “Lots of new features.” Informative, but not much of a page-turner.

Two updates ago, TalkTo posted the following notes:

details

Cheeky, branded, fun.  It also drove some buzz for them (which TalkTo was nice enough to provide when I told them I wanted to post about it):

handley

cutler

 

I agree with Jon – never let a canvas go blank. If you’re in product marketing, take occasional stock of your communications and  make sure you’re leveraging every opportunity to communicate your brand and product benefits.