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To me this is crazy - it's the most obvious choice to be generous with equity, with so little downside and such immense upside. Who cares how much of the company you own if it's worth nothing? And surely there's nothing more risky to an early-stage startup than unhappiness; if the founders and early employees have disagreements, or harbour any resentment that will cascade out of control.

Generosity begets generosity; treat your team better than they expect and the rewards will come naturally.

I agree completely, but I'll add that equity feels weird to spend. You've got a fixed quantity of it, it has to last you forever, you're spending it on things with hard-to-predict values, everybody wants some, and an important aspect of the fundraising game is protecting equity from predators. At least for me, these things activated my scarcity-related cognitive biases. Suddenly the obvious choice gets a lot harder to see.

Don't think of it it as a % amount but a $ amount - this better matches the reality equity (as dollars) grows as the company grows, and thus isn't finite. Obviously i'm not saying equity is cash, but it IS a high risk investment worth a quantifiable amount of cash.

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