[veyron]

For private companies with no plans to sell, ideally it would be an arrangement where the engineer receives shares (in a C corp) or is written into the operating agreement as a partner (in an LLC or LP) but a profit sharing agreement would have the same effect.

In major law firms, the associates aspire to become partners in the firm, which is analogous to my interpretation when saying "equity".

[wanorris]

Actually, setting up software firms where the best developers can "make partner" would be quite an interesting approach.

I'm not sure it would work, but if it did, it could be a perfect solution for keeping a great team together for the long haul.

[hammerdr]

See: Accenture.

It's a consulting company not a product company; it may be significantly different when "making partner" at a product company. However, from what I've heard, each partner at Accenture essentially runs his or her own business within the larger scale of the organization. Success is directly tied to the success of the internal mini-businesses. It is, however, an example of a company where IT professionals can become equity stakeholders in a private firm.

I imagine a product company would need to make the partners in charge of one product each (or maybe a couple of partners on one product) in order to avoid the "Too many cooks in the kitchen" problem.

[mathattack]

Though your premise is correct, Accenture is public, not private. They (like many others) wanted to expand beyond pure consulting, and the partners wanted to cash out.

Accounting and law firms may be a better example, though even they aren't as entrepreneurial as you think. They have their own regulations and internal politics.

[tptacek]

The amount of politics and backbiting and sabotage that gets mixed in with partner-track programs is horrifying. Find an incentive scheme that empowers first-year hires to do amazing things for your company.

[nostrademons]

That's sorta the YCombinator model, isn't it? If you do really amazing things, you get acquired for a few hundred million. If you do somewhat amazing things, you get acqhired for a million or so. If you don't do anything, you get nothing.

Seems to be largely working within the specific space of Silicon Valley YCombinator-funded startups, but I'm not sure how well it scales. There's a pretty sharp filter for getting into YC, and for someone without access to PG's connections, the chance of hitting it big or getting acqhired may not be worth the risk they take.

[anothermachine]

But YC invests in technically-competent businesspeople, not engineers

[rayiner]

As someone who left software engineering for law, I have to say that partnership is a great motivator.

I don't want an incentive scheme to help make you money. Pay me 20-25% of the revenue I generate for the company and give me a non-zero chance to be a stakeholder and I'll work my ass of for you.

[wallflower]

Most traditional firms, to make partner, you have to be personally responsible for a large amount of business.

At Andersen, at one point, I heard the number was $10M/yr of revenue.

It would be harder to figure out how much revenue is generated by an individual contributor (even if they are a superb coder).

Also, partnership usually involves leadership decisions