[ojosilva]

My startup does not fit well with Joel's model of employee layered risk. I've bootstrapped early and every layer the last 3 years got payed a normal, market salary, and on time every month. We also payed bonuses and the CTO even drives a company car from day one. Almost everyone was hired either straight out of college or was unemployed, although that was not intentional but probably my subconscious deflecting the extra pressure of being responsible for screwing up someone's career. Now I'm boarding our first investor and we're planning what our option pool will look like. I feel nobody but myself took any considerable risk coming to work here, and whenever there were troubled waters, my compensation was the only one that suffered.

I finally decided I favor giving stock as bonuses based on individual merit, as a payback for any extra effort and dedication in the past and as a motivational tool in the future. Unlike Joel, I'm reluctant to see employee risk-taking as relevant or even measurable or fair, and I wonder if that is really the case at other startups. I mean, can one say their new hires are actually assuming uncompensated risk, beyond the reasonable risk anyone assumes switching jobs, as to be entitled to equity mainly for that reason.

Employee risk seems like an oxymoron to me.

[Taek]

I think it really depends on your agreement with your employees, more than the risk. Do they feel like they are being treated fairly?

For me personally, I want my employees to feel vested in the company. They are helping to build it, they are helping to mold it and shape it into something that will hopefully be very great. I want them to have equity because it gives them responsibility. (We don't have any employees at the moment, so it's easy for me to say this now).

Most importantly, I want the employee to feel like they are in an arrangement that they are comfortable with. If they are doing it as just a job, working exactly 40 hours per week, then a salary without equity makes sense.

[peterjancelis]

If you were profitable when paying that company car and those salaries, and your cash flow was secure in that you either had a lot of clients or long terms contracts, then yeah I agree your employees did take on zero risk.

If you were profitable from day one, I assume you run a services business?

[ojosilva]

It's a product business bootstrapped with consulting.

If we were not profitable, we would not be able to hire them or pay salaries etc. so most of them would probably leave or sue. The resillient ones that stay behind would be given IOUs. I don't see much risk taking, unless you're really working for future pay that may never come, which may be the case for employee 1, 2, 3, but I doubt that's the case for layers and layers of new hires.