Younger employees, who are the most common form of talent in the start-up world, may not understand the idea of receiving an equity stake in your venture in lieu of a competitive salary. At the end of the day, they can’t use an equity stake to pay rent or put food on the table. Its naïve to think that all potential employees interviewing at your venture are of a silicon valley mindset, with a keen understanding of how non-cash compensation will balance the opportunity cost of working at a start-up. In reality, people looking to work at a start-up are just like any other person looking for a job, they’re looking to get paid and hopefully have some fun while receiving that paycheck.
Avoid This: Try to avoid creating a standard compensation program and offering it to all employees. It would likely be more beneficial to tailor individual compensation programs (with or without equity compensation) to specific employees.