What is the Equity Culture?
If you are in-charge of a new startup it’s most likely you simply do not have enough money to hire employees of the level you are requiring. Or you wish to motivate them even harder to do their job better. If that is the case. Than equity is just the thing to do such a trick (or outsourcing, yet that would be a fairly different topic). You will be offering your employees a share of your startups stake in business. An approach that was absolutely shocking to the entire business community even a few years ago. But still an approach that has already became a common and well-known practice.
How will such an approach do for a business that is already in the market?
Sure, the approach may sound nice and well-motivated, as your employees will be after hearing the news you are giving stock away. But you are to consider the following:
- Your company is already there, it has a name, a reputation, and business partners. Your stakes in business are already worth money, unlike the same ones of a new startup, that may skyrocket or it has the potential of dying with practically the same odds. A 1% of your company is huge, when 1% of a startup may even turn out as foul-spent investments rather than profit. Those 1%’s are extremely different from each other as fire and ice.
- When a startup is going for the equity approach it wishes for its future employees to invest in the startup but literally earning way less than they could elsewhere. Does your business require such an investment and are you willing to pay off the extra couple of thousands in a few years just because you were beginning to pay less, than you could have had?
- You are basically giving away a piece of the company you have worked so hard for without any visible reason except, perhaps, motivation of your employees as there are no other visible bonuses noticed. But is there but one way of motivating workers and does it has to be as radical? Doubtful.
After considering all the data it may occur that, perhaps, some things created in the Silicon Valley are the best to stay in the Silicon Valley.