Basic Startup Dilution Model

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1	Welcome to the Basic Startup Dilution Model (by Ben Yoskovitz)
2	Please subscribe to my weekly newsletter at https://focusedchaos.co
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4	I believe early startup employees deserve more equity (which is often ~0.5-1% if not lower.)
5	I wrote about this here: https://www.focusedchaos.co/p/early-startup-employees-deserve-more
6	A number of people asked me for recommendations on how much equity to offer early employees, or to show a model where this was possible. So I built one (see the 2nd tab of this spreadsheet.)
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8	A few key things to note:
9	* The spreadsheet is built on a number of assumptions, including how many people you hire, at what stage, etc. These assumptions won't necessarily match your real situation. But feel free to COPY/DOWNLOAD the spreadsheet and change it as you see fit
10	* It's very difficult to design a model that takes every variable into account; so I didn't. It's not a super sophisticated spreadsheet with a bunch of "what if" scenarios
11	* Any variable that you can edit is in green, everything else is calculated
12	* I'm in no way suggesting that the numbers shared are exactly what you have to offer early employees, but I do think the spreadsheet demonstrates it is possible to reward employees with more equity.
13	* The spreadsheet does not take into consideration top-ups (where you give people more equity later)
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15	Who are the typical early hires?
16	* The first 1-10 hires will vary from startup to startup, and so I haven't made any assumptions on that in the spreadsheet.
17	* Also, some believe that you should give more equity to early employees REGARDLESS of their seniority, whereas others believe more senior employees deserve more. That's up to you to decide.
18	* The list below is in no way meant to suggest this is the precise order or equity ranges you should provide, but hopefully it's helpful.
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20	Some common early hires include:
21	Title	Equity Range	Reason
22	CTO	4-5%+	Non-tech founder(s) need to bring in a tech leader; may be as high as 10%+ depending on stage of the startup
23	Senior / Principal Developer	2-3%	CTO/tech founder needs senior level dev help
24	Developer(s)	1-2%	If they're early, they deserve more equity, even if they're not super senior
25	VP / Director of Product	2-4%	CEO needs someone to lead product, so s/he can focus on the rest of the business
26	VP / Director of Marketing	2-4%	CEO needs someone to focus on marketing and growth engines; might be more junior to focus on execution and less strategy
27	Designer (Director/Senior)	1-1.5%	Design is potentially run by committee early on (CEO/founders + product) but still often in the first 10 employees
28	Customer Success Lead	1-1.5%	Startup needs someone dedicated to providing customer support, driving renewals, etc.
29	Sales / Biz Dev	1-1.5%	Most startups seem to bring in sales/biz dev people a bit later (CEO is largely responsible for this initially)
30	In a quick survey of founders I found that quite a few are hiring more junior people early on (not at the VP or Director level.) In these scenarios, you have to decide if you want to provide more equity because of how early those employees are joining, or not, because they're not senior.
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