Somehow I forgot to hit upload yesterday, so this is a day old. And today, after the Badminton yesterday, I had no energy to have any thoughts this morning, other than how much my muscles hurt! So nothing for today.
- Shares are an interesting thing. In the startup scene, it’s tempting to always give out shares to employees. In Silicon Valley, for example, you probably can’t get away with running a startup and not giving shares.
- It’s important not to just copy this model and apply it outside. In SV, people have a clear understanding and belief that the business could be worth a billion dollars, and they feel motivated to work towards that objective and “get rich”. And there’s a chance they might be right.
- Outside of SV, the thinking is that you want to make people feel empowered, that they’re owners of the business, etc. If they’re deep in the startup scene that may well work, though if they’re smart and skeptical they will see that the chances that this works are very slim. People will naturally be more skeptical of that “dream”.
- So the goal of making people feel like they’re owners of the business is not so clearly achieved by giving out shares.
- I’ve asked people at events, would they feel they’re owners of the business with 0.1% of the business? No one raised their hand. Same for 1%, 5%, 10%… it’s only at 20% that people start to feel they “own” the business. You can’t afford many employees at that rate!
- Shares are treated as a shortcut to make people think they own the business, but doesn’t really work outside of SV.
- But there are other methods. You can make people feel that they are in control of the business, that they are able to make decisions, etc, without giving them shares.
- Instead of using the shares shortcut, focus on learning to build a company where people really do feel that it’s their business, via transparency, responsibility, open cultures, etc, then the shares can be a validation of that.