A company keeps 100% ownership but gives employees phantom equity worth 10% that vests only on exit, plus quarterly profit distributions. Employees feel ownership without diluting the cap table, aligning incentives while founders stay in control.
So even though my co-founder and I combined own 100%, we do give our employees a version of equity that's phantom, that is equivalent to 10%. If they leave, it's gone. Yeah. We have an exit, they get paid out, and on a quarterly basis we distribute out the profits and they take their percentage of the profits and it goes into their bank account.
Brilliant. I think that's an amazing way to structure an employee incentive. You got your phantom or ghost shares and they also get profit sharing on a sort of almost like a dividend basis. Keeps everybody incentivized. They feel like they own a part of the business, but they're not on the cap table.
Don't make this mistake when hiring executives or you'll pay dearly for it - Jack Newton
She didn't know she was pregnant for 7 months because she was going THAT hard 😳
