[jamesblonde]

"Now that we have a fair system set out," I had to laugh at that line. Our IT startup model is the poster child for the inequality that defines our age. Founders own 50%, everyone else should be happy on the crumbs.... There's got to be a better way. Hang on, there is. It's called the partnership model, from the Law Industry. If you work really hard, you can become a joint owner (no matter when you start), and share in the profits. When you leave, you get nothing. That model is fair!

[tptacek]

It's fair for law firms. It's not fair for product companies:

(a) It only works when employees have control over revenue; the partner model disenfranchises important company roles that happen to be distant from revenues.

(b) It rewards the best salespeople and punishes people who prefer less business-facing and more technical-facing work.

(c) It works for investments/companies who are valued on continuing revenues from services, but breaks down totally when the company is valued based on forward revenues, which almost every software firm is.

(d) It creates an up-or-out model in which it is almost axiomatic that team members who fail to make partner will leave; in other words, it creates teams comprised of short-timers led by an aristocracy of long-term strivers. It also begs for churn and selects for ladder-climbers.

Even lawyers don't like the biglaw partner model. It does work, but know what you're getting into.

(I co-manage a consultancy that is larger than most YC companies).

[patio11]

Our IT startup model is the poster child for the inequality that defines our age.

Funded startups end with a pretty radically egalitarian share distribution by the standards of other industries. They'll generally IPO with regular working stiffs owning ~10% of the company. Do you know how much of the company non-management employees own at e.g. McDonalds? Wal-Mart? FedEx? The New York Times? NBC?

The only major industry which has as high a degree of employee ownership is -- and I'm aware of the irony -- finance.

[n72]

So, as a founder I quit my lucrative job, max out my credit card, work 18 hour days for a year giving up a social life, vacations etc. Once we're making money and I hire you to do QA where you work 8 hours a day and take no risk. There is no circumstance under which you should get even close to what I as founder get.

[msandford]

Law is consulting. The business is selling hours. You can only sell as many hours as you have lawyers. Highly motivated lawyers might bill 2-5x the hours of less motivated ones, or at a much, much higher rate.

The "enterprise value" of a law firm is very near zero because as the partners stop paying attention to everything the company falls apart.

Most startups make a product which can be sold largely independent of the number of hours worked by the employees. Certainly in a non-linear fashion. As a result a startup might have a substantial non-zero enterprise value.