Why you should give your engineers more equity

Scaling hurts. For the first time in my life, I’m scaling a startup with significant hype from funding/launch to prodictable, measurable growth. The only way to do this is with a killer team, and with building a killer team comes hard questions about compensation and equity. I’ve believed for a long time that everyone at an early stage company shouldn’t just get equity - they should get a LOT of equity. I think it’s good for the company because I believe people with significant equity do dramatically better work. However, in all discussions about equity for new hires the question has to be asked: what makes you so sure that people with more equity do better work. As I was pondering an answer to this question yesterday, the perfect example of why you should give engineers more equity played out right in front of me.

Before founding Knox, I helped start Coffitivity.com, a popular ambient coffee shop noise player designed to help people be more creative. The site and apps have hundreds of thousands of users a month, and the whole product is currently in the middle of a renaissance into something much larger. Part of this process included a rebuild of the iOS app to eventually support in app purchases and a more stable mixing of third party music apps such as Spotify, Pandora, iTune, etc. Before stepping away to focus on Knox full time, I “helped” my roommate Matt rebuild the iPhone App (I deserve no credit because I did almost nothing - hence the word “helped” being in quotes) to get this build stable. About a month ago, we launched the new version of the app - and the reviews jumped from being 2.5 stars and full of bug reports to being a full 5 stars in the App Store. We had a few minor problems, but after a minor bug fix release, the app seems to work great! I had a few minutes this weekend to check in on Coffitivity this weekend, so I opened up my Google Analytics app on my phone to see what the results on usage had been - fully expecting a pretty massive jump.

To my surprise the app had shot down 95% in usage in just 28 days according to GA. I was horrified. This had to be one of the worst app updates of all time. We had failed - BIG TIME. I sent a panicked messaged to the whole team on Slack, and nobody had any ideas. The whole product was screwed.

Or was it?

I had an idea: we did an entire rebuild of the app from scratch, so what if Google Analytics was never actually configured in the project. What if every time somebody updated the app, their traffic was no longer registering on GA? I brought this up to Matt, who is paid as a contractor not a partner with equity, who immediately said: “Damn I hope I didn’t forget to install analytics - that’d be a pretty big screw up.”

I didn’t even understand what he was saying for a second - you’re saying you hope our redesign is so bad that 95% of visitors had abandoned it? Matt’s an awesome dude who understands business - so he corrected himself pretty quickly and said “well, I guess that’d be better than the users hating the app!” Hell yeah it would! But it’s amazing to realize that to him, the first thing he’s worried about is looking bad as a programmer - not that the business might be in trouble. His SECOND instinct is to worry about the business and the project, but it’s not the first thing he thinks of. For me, it’s the only thing I think of even though I’m not actively involved anymore - because I have equity in the project.

If you want to do what it takes to make a dream into a reality, you need other people to share your dream. The best way to do that is to share it with them - not a little piece, but a big piece. Remember: your equity is worthless without your team, so don’t be stingy!

If you enjoyed this, do me a favor: go to [thesimpledifference.com](thesimpledifference.com) and donate $1 (or whatever you like) to a non-profit and help us make Knox Payments better. The more payments we run, the better we’re able to make our system - and if you have feedback and send it to tommy@knoxpayments.com that would be just incredible. Remember: Knox NEVER stores your username and password or any information that isn’t written on a check. I’m on Twitter or Hacker News if you want to chat.