Since the hi-tech industry is a far cry from zero-sum, each success story heats up the competition for talent. Salaries and perks have all been leveled to the point where the previously novel have become the standard. Struggling to stand out from the growing crowd, companies have come to stress on how you’ll work on challenging problems.
“Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?” – Steve Jobs to then Pepsi Executive John Sculley
This is hardly a new technique for headhunters but, within tech circles, it refers more to the technical stack rather than the underlying product or service the company has to offer.
“We use Hadoop, Hive and Pig for analytics but are looking into Cassandra as well” – Your favorite social network for pets
There comes a tipping point where the opportunity to use interesting technology to solve challenging technical problems outweigh the otherwise dull initiative of the company. For those who take the plunge, they craft elegant solutions, ones that deserve more than the problems they solve.
We can’t keep ignoring the impact (or lackthereof) of these ‘challenges’.
The phrase ‘Sweat Equity’ gets thrown around a lot, especially within the tech startup community. According to the Merriam Webster dictionary, the origin of the phrase goes all the way back to the (then) new found American dream of homeownership.
As more homeowners went the DIY route to enhance and in turn, add more value to their houses on their own toil, they earned sweat equity.
Sweat Equity : An interest or increased value in a property earned from labor toward upkeep or restoration. The term is used to describe the value added to real estate by owners who make improvements by their own toil – Wikipedia
Despite its frequent use within tech circles, the phrase seems to lack. The sweat doesn’t seem to add much value to equity. Why? Let’s look at how a modifier before equity could assist in specificity (among other things).
You’re sweating away because you’ve been given stocks in exchange for services that you have agreed to fulfill
A vested equity plan has got you sweating – You need to keep working for X years before you’ll have actual ownership of all the stocks you were promised
You have direct influence on the stock value and you’re sweating away to increase their long-term shareholder value (Ugh, it feels dirty to sound like a Wall Street banker)
You’re receiving only equity and no pay
You’re receiving below-market / depressed wages and equity
The list goes on, so the next time you’re chatting about equity over a no-whip skinny vanilla latte, be smart: Leave it at “equity” or use modifiers that add value (such as “vested” or “contingent”) or are more specific (“stock options”, “warrants”, “convertible notes”)
Tonight at our Technori get together, I had the pleasure of meeting Narimon Safavi, who was in the jewelry business for several years until he dived into diamond mining in West Africa. He had come across the opportunity to mine and worked around the insurgencies/warlords to differentiate his product. It marked the beginning of the movement against blood diamonds.
He is currently working on an incubator for cultural startups, as in startups that are around cultural/exotic paintings, teaching dances, etc. Very cool idea but kind of hard to follow up on the blood diamond bit 🙂