Hello everybody. Today, we’re talking about the shares outstanding in job offers. In today’s environment of very high valuations, some founders try to hide the total shares outstanding from potential employees and instead focus on share price — this is usually because you don’t want a potential employee to know the pretty low percentage of equity they’re getting and the massive valuation you will need for that equity position to grow. Don’t do this. You took a high valuation. Own it.
Here’s why trying to hide the shares outstanding often backfires.
- Transparency — Your lack of transparency will be immediately noticed, drastically reducing trust and the chances this potential employee will join your company.
- Discovery — Not if, but when this employee does find out their equity percentage, they’re likely to be disappointed. This may cause them to leave or their sharing the issue with other employees could cause wider culture problems.
- Future crises — Getting into the habit of hiding basic info from employees now will make it much harder to share information and get help from the team during a crisis. Most startups have near death experiences where employees saved the company.
Alright, thanks a lot for watching and best of luck out there.
