

Thoughts on 'The Equity Equation' - brett
http://www.venturehacks.com/articles/equity-equation

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pg
His argument that you have to pay market rate regardless of the equity
equation is false. If a transaction is a net loss for the company, you
shouldn't do it.

If your situation is so desperate that you feel _forced_ to hire someone (or
take more funding) at what seems an excessively high price, then what's really
going on is that you're overvaluing the company. If your situation is
desperate, your value is low.

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asdflkj
What about the other half of his argument, that you shouldn't pay more than
market rate?

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pg
That's already covered in the original essay:

"How much of an additional margin should the company need as the "activation
energy" for the deal? Since this is in effect the company's profit on a hire,
the market will determine that: if you're a hot opportunity, you can charge
more."

