[Hermitian909]

I think it's worth remembering that these kinds of inefficiencies can last for years, maybe decades before correcting, this post has some good examples: https://danluu.com/nothing-works/

I think there are a few things that explain the phenomena:

1. You're asking rich and powerful people to give up control. Everyone hates giving up control, but my experience is that people accustomed to control hate it more.

2. It's not familiar, which means it feels risky.

3. It objectively lowers total payout in the best and worst case scenarios for power, and it's not actually clear the E(V) for the capital class goes up. It might, but no one knows apriori, and it's expensive to test.

This mix of low information, a small number of potential actors, and feelings of anxiety around uncertainty and loss of control is a pretty potent mix for inefficiencies like this to persist IMO.

[sokoloff]

Alternatively (which is probably a variant of 3), you’re asking someone to give you 10x or more the shares of what they have reason to think their next-best alternative is.

If an employee #1 share grant isn’t for you (as it isn’t for me), there are plenty of other capable engineers out there who are willing to take a lower stake for a variety of reasons.

[Hermitian909]

> you’re asking someone to give you 10x or more the shares of what they have reason to think their next-best alternative is.

I don't think this is an accurate representation of my views. I'm happy to take more in the 2-3x range so long as I'm protected from the founders cashing out while screwing me out of my paper gains.

> there are plenty of other capable engineers out there who are willing to take a lower stake for a variety of reasons.

Maybe, but they can't always find them! Businesses rarely fail for one reason but maybe 1/3 of the startups that approached me and failed were bogged down by poor technical decisions made early on (what's that? your engineering lead with 3 years of experience set up a totally custom kubernetes cluster and it's slowing down your execution? Man that's rough!)

[lotsofpulp]

That link is an interesting read. Thanks!