I get paid a salary to work X hours a week. If you want me to be "all in" and go the extra mile, you need to align my interests with that of the company — through equity or other means.
You should be getting paid to get your work done and perform at a certain level. Everything above that is hopefully grounds for a bonus, salary bump, promotion, and/or equity. Hopefully it's not X hours a week as the criteria.
Equity allotments for employees in typical VC-funded startups are pathetic, and have to be that way because VCs set such a small option pool.
Also, payment occurs at profitability (and is immediate and continuous from that point) rather than liquidity so there's an incentive for employees and founders both to do this unstylish (in VC-istan) thing called actually building a great business.
>Actually, I think profit sharing (properly structured) is a lot better than equity.
Towards the end of last year, I spent quite a few hours thinking about a compensation structure that wouldn't completely screw over non-founders in a start-up -> small size company setting.
A "profit sharing" style set up is exactly what I came up with after several days of considering the subject, with departing employees selling their "shares" back to the company at some pre-arranged multiple of earnings or book value.
