Friends,

Street Fighter might be out at the movies, but there’s only one fight I want to see, and it’s this one.

In a few weeks, the third Great HR Debate is happening (!!!) and this time we’re talking build vs buy.

Join me as I moderate six feisty People people, as they fight to the death (ok maybe not) on whether we should be buying or building our tech stacks.

It’s on at 3am for me (RIP), so please at least join just to help encourage me through the whole damn thing. kthxbai

Enjoy this week’s edition ✌️

Matt

In case you’re new here (or just missed it) here’s the past three editions of the FNDN Series:

Leapsome studied 100 high-growth tech companies, from OpenAI to Zapier, and more than 5,000 data points to see how their People teams work.

The findings: 72% of their open People roles are talent work, and admin is down to 28%. 81% already expect AI skills in HR. And 56% put a VP-level or more senior leader in charge of HR.

The 2027 Workforce Trends Report shows what these teams do differently, and what it takes to build a People team like theirs.

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Know a startup Head of People looking for answers 🙋 why not forward this to them for some instant karma? ✨

Equity can be one of those weird grey areas of responsibility.

In some companies, the People team is responsible for the whole cap table. In others, it’s Finance (or even Legal).

What’s true for all companies though, is that the People team should own how a workforce interacts with equity.

Let’s look at the five areas the People team owns, whoever holds the cap table, for equity to function as a successful tool for your business.

I once had a candidate prepared to decline after telling me that a competing offer was for a higher volume of options. For example’s sake, let’s say one offer was 10,000 options, and ours was 5,000.

What they didn’t know was the value or percentage ownership either offer represented.

A number of options on its own doesn't tell anyone very much, because it's missing a denominator.

To understand what a grant represents, you need two other numbers alongside it:

Divide the options by the fully diluted shares and you have the percentage of the company the grant represents. That's the number to compare offers on, with the strike price beside it so people know what it'll cost them to buy in.

It's tempting to put a dollar value on a grant instead, but at an early-stage company that number is essentially fiction. The equity will end up in one of two ways: either worth nothing, or worth far more than today's share price suggests, and a neat dollar figure hides that risk.

A dollar value only starts to mean something once the company is mature enough that its trajectory is clear.

Back to my candidate: once you compare on percentage, the bigger number of options can easily be the smaller slice of the company.

If you can't run that sum for your own offers, you’ll lose candidates who are comparing on the wrong number.

Whether your cap table sits with Finance or with the People team, the hiring plan is yours, which makes you the best placed to know whether there's enough equity to fund it.

The check itself is a simple burn model:

Then compare that total to what's left in the pool.

I've worked with companies that ran dry halfway through a hiring plan and had to go back to the board for an unplanned top-up. At one, the pool was so small they couldn't make competitive offers at all, so candidates pushed for more salary instead (not great for cash-scarce companies).

At one company I joined, we benchmarked cash and equity every time a role came up. The result was wild inconsistency across levels and countries, and a grant budget no one could forecast.

Our fix in this case was a grant table: a set grant amount for each job level, benchmarked once and reviewed from time to time.

Building one comes down to two decisions:

Either can work, as long as it's a choice you've made on purpose and can explain.

Equity only motivates people while they understand it, and most companies explain it once (at offer), and never again.

I've been on both ends of this.

One company gave me a large grant of options, and it was promptly never mentioned again. And while it looked cool at the time (ooh big number), I quickly forgot about it.

Another revisited what our options were worth every year, and used town halls to connect our work to the company's value.

Watching two up-rounds lift the value of my options was a real motivator (even if I'm still yet to see a cent from it).

The difference is having a plan for the three moments that matter:

Most early-stage companies put their equity effort into getting people in the door. What happens after that tends to be an afterthought, and two problems follow.

The first is the drop-off once the new-hire grant fully vests.

Around year three or four (depending on your vesting schedule), there's little left to vest, and for your people, a big reason to stay goes along with it.

The second is promotion.

Someone hired at level 1 and promoted to level 2 keeps their level 1 grant, while a new hire at level 2 walks in with more. (It's not a fun conversation to have with someone you've just promoted.)

The fix is a refresh policy that starts before the drop, and a top-up for promotions. As an example for how you could size a top-up, take the grant a new hire at that level would get, subtract the unvested equity the person already holds, and grant the difference on a fresh vesting schedule.

Don’t forget to factor these things into your forecasting in section 2, too.

Equity is an expensive program for a company to set up, and to run.

When it's done well, it gives people a deeply vested interest in the success of the company, because it connects their work to the value of the organisation (in turn generating value for the employee).

The issue I see in many companies is that no one is clear on who owns which parts of it, and that erodes its ability to attract, retain and motivate the people you need.

So be clear on the split. Whoever holds the cap table, the People team owns the five things above: what a grant represents, whether the pool covers the plan, where your grants sit in the market, how the story gets told, and what happens after the first grant.

The rest can sit elsewhere. Finance often holds the cap table and the company valuation, Legal looks after the plan documents and board approvals, and your people should get tax advice from someone qualified to give it.

Which of the five is your strongest right now, and which needs the most work?

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A roundup of the most interesting stuff from the week:

When you’re ready, here’s three ways I can help you:

1. Tools & resources
Resources and tools that give you what you need to build your own startup compensation practices.

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