When Should Startup Founders Hand Out Equity and Titles?

Don’t Let Leadership Overload Sink Your Company

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When you’re a first-time startup founder, it can be tempting to start building the organizational structure of your company a little too early. If you’re a serial entrepreneur like me, you probably go the other way, and delay conversations about roles, equity, and titles until they can no longer be ignored.

There’s a happy medium in there somewhere.

And after 20 years of founding startups myself — or sliding into a startup’s org structure at various stages of growth, or even just participating at arm’s length as a startup advisor, consultant, or board member — I’ve discovered that the timing of when you dole out equity and titles is often as important as how much and to whom.

If you get it wrong, you either won’t get the early talent you need to succeed or you’ll wind up with underperforming team members who own way too much of the company to smoothly remove them.

So before you create your cap table or offer your first option grant, check these boxes.

Rule#1: Equity Is Not Paper

This is by far the most important rule. An equity structure is deceptively easy to create. You fill out a few official…