> The reason not every company does it to all its employees is probably that for those employees, it wouldn't affect incentives much and it would make payment subject to the vagaries of the stock market.
Pleast don't be so naive. The reason not every company does that is that giving ownership gives power and dilutes your own, reduces the chances at doing humongus profits that can be hoarded by a minority. Business owners are not operating out of sympathy for the workers, they are operating for themselves, by design
I'm not naive. Owners also don't pay wages out of sympathy for workers. When they give away wages, they give away profits directly. If anything, short-termist managers might prefer to give away rights to future profits, rather than profits today. Also, you're assuming that small shareholders exercise power via their voting rights - nope, most small shareholders don't vote, not surprisingly since small voting blocs would rarely change outcomes.
And yet people overwhelmingly prefer to work for these non-employees owned companies instead of working in cooperatives - how do you explain that? They could take those humongous profits for themselves but they don't do that.
My answer to that question is that organizing people is much more difficult than everybody thinks and politics is the biggest source of inefficiencies on any human organisation bigger than a few persons. And cooperatives introduce additional political layer.
Risk. Risk is the reason people aren't constantly demanding equity.
Equity is great when your base salary covers your comfortable life.
Equity is not great when your salary or hourly doesn't afford you much, and having inaccessible capital that very well may be worthless in the future is not desirable.
When people talk about this topic they hyper focus on success cases. But HN should be intimately familiar with how well start-up equity offers usually pan out.
And large stable companies usually do offer equity to employees, but that slow stable growth equity is not going to make you rich.
Employment is already a pretty bullish position on the employer. Adding equity is doubling down. If the company goes under, you lose your future wages and the investment in the equity.
Totally agree. And this is why companies should really profile when hiring to attract the right people with the right risk profile given the stage of the company.
Early on when we were just starting out (context as a founder), I used to think that the only types of people who would take on this kind of risk were young 20-something’s who had time and space and no significant other. Then we hired 2 early engineers in succession who were older.
One was just made for startups. He could never work for a large company, and he was ok with the risk and lower pay because it was still quite high relative to his cost of living in Europe.
The other already had kids who were older and independent. He always wanted to take a swing at a “Silicon Valley” startup, and he just cared deeply about that experience and could do so without having to worry about his kids financially relying on him.
They were 2 of the best engineers we had ever hired and stuck with us through thick and thin from a team of < 5 engineers through us scaling to 80+. When we got bigger, one left because we were once again too big for him (process, minor politics popping up, spending more and more time teaching newcomers how to own and operate a bigger codebase safely, etc.). The other left because of similar reasons but at a later scale.
I started the journey starry-eyed/overly-optimistic in both directions. Hiring people early on who obviously did not have the risk tolerance or an understanding of how much work was needed early. Holding on to people for too long who weren’t enjoying the new environment. Now I’m much more even about this - there is a right place and time based on what the individual wants, and being open and honest and kind about it is always the best path. Equity is simply a lever to compensate risk, but the appetite to take on the right amount of risk is the most important thing given the company’s scale.
you? Maybe. Me? I have about 15k in credit card bills, $20 in the bank, and my current rent/utiliies take up ~60% of my monthly income. I also have no leverage to be trusted to run a co-op, so I can't attract proper talent to realize the business.
Maybe in a decade when the market and my debt recovers? But I'm planing to work for myself anyway. I have no issues with a co-op if I ever make enough to bring someone else on.
Good idea, I'm gonna quit my job today and start my own coop with all the earnings my current employer shared with me! Oh, wait...
Seriously though, most people cannot afford to just quit. You at least need savings for that, and you need to be fine with burning through them and still failing, cause that's a very real possibility.
Please, again, don't be so naive. You know that creating a company requires capital (not just financial, all of them), which only the richest have. By design.
> And yet people overwhelmingly prefer to work for these non-employees owned companies instead of working in cooperatives - how do you explain that?
Easily: there are far more non-employee owned companies than employee owned. Thus this isn’t a preference at all, it’s merely the availability of the market.
Now you could say that entrepreneurs who start companies have a preference for non-employee owned, thus explaining the aforementioned market allotment. Again that’s pretty easy to explain, because of course such an entrepreneur would give up ownership in an employee-owned arrangement. It’s also just the de facto paradigm most are aware of in news cycles and business schools, and is easier to setup and support.
> yet people overwhelmingly prefer to work for these non-employees owned companies instead of working in cooperatives - how do you explain that?
Really? Or are there simply far more non-coop job openings available? Is there data on the applications per listing that directly compares ownership structures to normalize for workforce size?
Pleast don't be so naive. The reason not every company does that is that giving ownership gives power and dilutes your own, reduces the chances at doing humongus profits that can be hoarded by a minority. Business owners are not operating out of sympathy for the workers, they are operating for themselves, by design