2Bobs—with David C. Baker and Blair Enns When a Key Employee Wants Equity
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Aug 27, 2025 Discover the nuances of a key employee's request for equity, compared to a marriage proposal, and the critical conversations it sparks. Unpack the balance between personal interests and business dynamics, emphasizing the need for transparency. Explore the hidden downsides of equity ownership, revealing eight significant challenges. Learn about contract equity as a simpler alternative, offering a taste of ownership without the full complexities. Finally, navigate the tricky waters of equity distribution, ensuring clear agreements to protect all parties.
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Proposal At A Closed Restaurant
- David recounts how his partner told him they'd marry and he later proposed at a closed restaurant, ending up at Pizza Hut.
- The story underscores unpredictable, awkward moments when major life decisions crystallize.
Require Proven Leadership Before Equity
- Don't be surprised by the request; leaders typically show leadership before they hold the title.
- If the request is a surprise, decline it and insist you must work together first to prove fit.
Explain Ownership Downsides First
- Explain downsides of ownership clearly so the employee understands obligations they likely haven't considered.
- Offer a simpler alternative afterward so the conversation doesn't just end in disappointment.