Morgan Freeman worked as a relatively unknown actor for more than 20 years before landing his breakout role at the age of 49

Today’s email:

Now deciding on employee equity comp is tricky.

As a general rule, allocating around 10% of your company's equity to your first 10 employees is a good starting point. Remember, your early employees are taking a risk by joining your startup in its early stages, and it's important to ensure that if the company achieves financial success, these early employees achieve financial success.

Employees financially sharing in the success of a company is a top priority for me, so I favor the higher range.

I hear too many founders in Silicon Valley dodge this and act as if a successful financial outcome isn't important or a priority...let's be clear it is.

Average Benchmark
Hire 1: 1.27%
Hire 3: 0.52%
Hire 5: 0.34%
Hire 7: 0.24%
Hire 9: 0.20%

Ultimately, the key is to strike a balance between attracting and retaining top talent while also ensuring that the company retains enough equity to continue to attract investment and grow over time.

Hopefully, this info is a helpful starting point for both founders and potential first hires to establish a fair compensation package that both sides feel good about.

Good Luck 💙