Should You Give Equity to Regular Employees? Founder Perspectives on Stock Options

This question has been a throughline across my entire career — which now spans more than 20 years working on large private ventures and my own projects. Every time a new project kicks off, I find myself returning to the same dilemma. And I still don’t have a clean answer.

A Question That Follows Every Founder

Whether you’re working inside a large corporation or building a small business from scratch, the question surfaces every time: should you give people a stake? Could it help cut operational costs and get you into the black faster? Or would it slow everything down?

I’ve tried both approaches. The results were different every time. I haven’t found a pattern.

So recently I started interviewing business owners to hear how they think about this.

First Perspective: Employees Aren’t Ready for Equity Options

One prominent entrepreneur shared his view — and I actually agree with him on this one. In his experience, most employees simply aren’t prepared for stock options because they lack the entrepreneurial mindset and instincts that come with them. But the more important point is this: the moment you give someone options or a stake, they stop taking risks. Because now they have something to lose.

They can’t feel the difference between reckless risk and entrepreneurial conviction — the kind that makes you grit your teeth and crawl on your knees over broken glass for as long as it takes, with no finish line in sight.

Second Perspective: A Pragmatic Case for Employee Equity Options

Another founder of a large company offered a more measured view, shaped by 15 years of experience. His position depends heavily on what stage the business is at.

In his view, equity options are ineffective in the early stages — when the business could still fail, when nobody knows how much longer you’ll be crawling on broken glass. At that stage, it’s better to motivate people with fixed salaries and performance bonuses. Carrot and stick. Just to keep them moving forward.

When Stock Options Actually Pay Off

What matters is catching the right moment — the moment when the company is crossing Moore’s chasm. The gap is still beneath you, but the other side is already visible. It looks like you’ll make it across. But right now you need one serious push: to not give up, to grab the edge at the last second, pull yourself up, and climb out. That’s exactly when equity options become genuinely useful.

There’s another insight worth noting here. Options, perhaps counterintuitively, work best for the short term — when the next milestone is visible to the employee and they can picture what’s coming. Long-term vision belongs to entrepreneurial visionaries, because the volatility of the external environment makes it simply too unpredictable for anyone else to hold onto.

What’s your take? Would you give employees a stake in the business — or not?