Culture doesn't just happen. You build it. You have to be intentional.
Patrick Lencioni's "The Advantage" shaped how I think about culture. Values have to be real, not aspirational. They have to mean something. They can't be corporate nonsense that no one believes.
One of our earliest values at Matterbeam is: we authentically care.
If you're rolling your eyes right now, that's exactly the symptom I'm talking about. Everyone says they care about people. Almost nobody makes decisions that cost them something to prove it.
Startups aren't families. You don't fire your sister when times get tough. But you can treat people with respect. You can err on the side of investing in them. When hard decisions have to be made, you can honor what people have contributed and lean toward being more generous than less.
I believe this pays off in the long run. It attracts people with the same values.
I'd seen people end up in genuinely unfair situations, often because they didn't understand ISO options, tax implications, and 90-day exercise windows.
I read Sam Altman's post about employee equity (pre-OpenAI fame) and Steve Blank's piece about why startup options don't work and a lot of other posts on this topic. Steve's analysis really stuck with me. The social contract has changed. It used to be that founders and employees had the same type of stock, just different amounts. Everyone made money at the same liquidity event.
Founders now get restricted stock agreements. Employees get options. Companies stay private for 10-12 years instead of 5-6. Founders can often cash out in secondary offerings while employees are stuck waiting. Early employees take real risk but get significantly less equity and less possible upside.
Dalton Caldwell and Michael Seibel have a whole show dedicated to not innovating on things that aren't the core of your startup. I really thought hard about whether I was being stupid.
But getting equity right would be a force of alignment around a value that mattered to me. When Matterbeam is successful, I want early employees to have the same deal as mine. Not similar. The same.
Here's what that looks like: My guiding principle was the earliest employees owning ~20% of the company. That meant 2-6% grants for the first people in, the founding engineers (with a choice to take less salary for more equity). These are RSAs that reverse vest, where the company repurchases unvested shares upon leaving. The same instrument used for founder shares with the same terms. In fact, the exact same legal documents.
We structured a bonus program to cover the cost of exercising and taxes. It's framed as a hiring bonus. Our 409a valuation is still low enough that this bonus is a reasonable amount.
What this does practically: if you've been at the company for a year past the cliff and leave, you keep the vested shares. You continue QSBS and long term capital gains clocks. The mental model aligns with reality. You own something, not just the option to buy something with gotchas and caveats.
When share value goes up at the next round, we'll reevaluate the bonus. The specific execution might change, but the value drives the decision.
Matterbeam is solving a generational problem with data. We're rethinking infrastructure built on assumptions from the 1980s. This is a big swing with a long time horizon.
So we made another choice. More equity and a different structure should come with a longer vesting schedule. We chose six years instead of four. If you're building something with a genuine long time horizon, a longer vest makes sense. For founders as well as employees.
Did it cause more work? Yes. Standard four-year ISO options would have been easier. But easier isn't always better.
You have to be about something.
Will founders have more equity than early employees? Of course. But there's no reason the structure needs to be different. No reason early employees should be playing by different rules, waiting for different outcomes, or carrying different risks on their personal balance sheet.
Same game. Same terms.
Your lawyers are probably pushing you toward the standard four-year ISO structure because it's what everyone does. Maybe that's right for you. But maybe the default doesn't actually serve what you're trying to build.
Culture doesn't just happen. You build it. Equity structure is one of the earliest and most tangible ways you signal what you actually believe. Values have to drive decisions. They have to cost something.