the startups.com platform about startups.comCheck out the new Startups.com - A Comprehensive Startup University
Education
Planning
Mentors
Funding
Customers
Assistants
Clarity
Categories
Business
Sales & Marketing
Funding
Product & Design
Technology
Skills & Management
Industries
Other
Business
Career Advice
Branding
Financial Consulting
Customer Engagement
Strategy
Sectors
Getting Started
Human Resources
Business Development
Legal
Other
Sales & Marketing
Social Media Marketing
Search Engine Optimization
Public Relations
Branding
Publishing
Inbound Marketing
Email Marketing
Copywriting
Growth Strategy
Search Engine Marketing
Sales & Lead Generation
Advertising
Other
Funding
Crowdfunding
Kickstarter
Venture Capital
Finance
Bootstrapping
Nonprofit
Other
Product & Design
Identity
User Experience
Lean Startup
Product Management
Metrics & Analytics
Other
Technology
WordPress
Software Development
Mobile
Ruby
CRM
Innovation
Cloud
Other
Skills & Management
Productivity
Entrepreneurship
Public Speaking
Leadership
Coaching
Other
Industries
SaaS
E-commerce
Education
Real Estate
Restaurant & Retail
Marketplaces
Nonprofit
Other
Dashboard
Browse Search
Answers
Calls
Inbox
Sign Up Log In

Loading...

Share Answer

Menu
Startups: If a startup is bootstrapping, and it's already profitable after one year, how much stock should a founder offer a key hire?
TW
TW
Tom Williams, Clarity's top expert on all things startup answered:

The answers so far are generally what I'd agree on but two points I'd add. First, it always makes me nervous when a company that is bootstrapping is adding "Two Vice Presidents" It raises some flags around the structure of the org. Really, in a bootstrapped org, there should be a max of three key people. Sales, Tech & Growth (previously known as Marketing).

As a general rule of thumb, creating a Stock Option Plan worth 15% of the total shares of the company all of which vests over a 3 or 4-year period is par for the course and most hires, even great hires can be granted equity from that pool.

However, the point that hasn't been made here is that it all depends on the talent you're recruiting. More specifically, it depends on how much value you expect each contributor will make. In other words, I would dilute 20% if I was recruiting someone who could add significant, transformational value to your enterprise.

It also depends very much on where you're based and how competitive a market there is for this same kind of talent. Finally, if you're paying below market rates, you should always be adding a premium equity component, even if the premium component is only earn-able as bonus.

I think if you're able to recruit "VP" level talent at under market rates with only a small amount of equity, you're probably not going to be hiring the best talent to grow your company.

Happy to talk with you in a call so that I can understand your location, business, and staffing plan a bit better and provide more actionable advice on how to optimize the recruiting packages and also ensure you're hiring the best talent for your objectives.

Talk to Tom Upvote • Share
•••
Share Report

Answer URL

Share Question

  • Share on Twitter
  • Share on LinkedIn
  • Share on Facebook
  • Share on Google+
  • Share by email
About
  • How it Works
  • Success Stories
Experts
  • Become an Expert
  • Find an Expert
Answers
  • Ask a Question
  • Recent Answers
Support
  • Help
  • Terms of Service
Follow

the startups.com platform

Startups Education
Startup Planning
Access Mentors
Secure Funding
Reach Customers
Virtual Assistants

Copyright © 2025 Startups.com. All rights reserved.