[state_less]

I'd prefer plain old stock without restrictions and a larger proportion of it.

I think we ought to target a controlling interest for the employees (i.e. employees own over 51% of the company) and shareholders vote on the weight of their shares, like they normally do.

In sum, I'd rather see a founder worth $100 Million and 999 employees worth $900k than a $800 Millionaire and 999 employees worth $200k. And I actually think this would have an important impact on the economy by balancing out the income inequality. In other words, not only would we see far more ~$1 Millionaires, but also more $100 Millionaires because now the money is moving faster with all the fresh Millionaires buying goods/services.

[blennon]

The problem with plain old stock is the tax implications. Suppose you join my company when our last round valuation was $10M. Let's also say you negotiated 1% equity. If we granted you 1% equity, you would have a $100,000 tax liability. We just gave you something worth $100,000 so you have to pay taxes on it. You'd be crazy to be willing to pay taxes on risky equity that's theoretically worth $100,000. The company won't pay your taxes for you either. That's a huge waste of money. That's why stock options exist, to give employees the upside and minimize the tax liability.

[warcher]

As somebody who's founded a couple companies, there just aren't enough people with the appetite for risk and drive needed to manage a controlling interest in a company.

And on an economic level, if the net compensation level, including crushing levels of stress and overwork, was so bad between founders and employees, you'd see a lot more founders until the system balanced itself out. And you do not. Most real good engineers just want a fat paycheck and a clear delineation of responsibility. Trust me, a senior valley level salary and not riding that ride is a good gig.

That said, the side of the bread with the butter on it is pretty clear. The reasons for that are less clear until you've done it, but nobody's standing in your way-- you want to be the daddy/get really rich, found a company.

[pbecotte]

Come now, you believe that more people don't found companies because of the stress? It seems far more likely that most people don't have the capital assets for that to be an option, except three groups... 1. The very young who have very low expenses, the ones who cashed out already, and the ones who started rich.

[warcher]

Untrue. Also untrue that you need funding-- you can replace funding with a brutal workload and a lot of patience. I did it, ask me how, haha.

I mean, don't get me wrong, you are gonna sign up to be broke. For a while. A lot of people have kinda boxed themselves in with a very comfortable middle-to-upper-middle class lifestyle that closes a lot of doors via their household burn rate. That's not the system being out to get you, that's a perfectly valid life choice that you and you alone are responsible for.

[warcher]

Not that there isn't a whole industry revolving around bleeding you white, keeping you chained to the oars by debt until you're no longer useful. Those issues are orthogonal.... I think.

[state_less]

One reason you don't see founders is that, it is so brutal. The odds are stacked against you. Even if I buy lotto tickets with a positive expected return, the variance can make it untennable/unworkable. One would hope the VC comes in and smooths this situation out some, so that more people participate. You're going to have a lot of brilliant people going down dead ends on no fault of their own, why not cushion the blow? Give entrepreneurs, yep give, the money to them to make their product. Let them own >51% of the company. Offer to pay them fully in their own shares or some split between the fund shares and their own company to cushion the blow. If I'm starting a company, I'd take my own shares mostly but I'm not arrogant/foolhardy enough to put my chances of success equal or greater than a whole pool of my peers. I'd bet some of us will be successful, I just don't know who.

To answer another response on this thread about taxes, if it were in fact market value, I'd sell the shares like any other share and pay the taxes owed.

Note: I know there are issues surrounding the number of private owners a company is permitted and other regulations. I'd simply invite a corporate lawyer to take a stab at it. Maybe a large holding corporation that would be public and issue shares to you related to your stake in startup sub corp(s) (akin to paychex, trinet, etc...)

[warcher]

More and more I find myself reasoning about competitive advantage and stuff like that-- whenever I put up with something really unpleasant, I think "Hey, how many of my competitors did I just shake off?"

If everybody got funded, I think the market would just devalue ownership of a company, since, with the barriers to entry knocked down, it wouldn't mean as much. Think about the erosion of the market value on a college education over the years.

[gech]

There are plenty of people, especially on here, that want to maintain the ever widening gap between the many and the few. You make a great point about how more even distribution would increase the participation in the economy leading to more activity naturally.