Short excerpt from a YouTube video by Mike Andes arguing that equity often doesn't produce cash distributions in the first 3–5 years because founders reinvest earnings into growth; therefore equity value is unrealized until a sale, and he prefers profit-sharing for more immediate generosity to contributors.
The problem with equity is really the values there. Only if you sell, because for the first three to five years, you're taking all the money and putting it back into the business. So there's not really distributions from equity. There's really just. You're growing up. The net worth of the asset, the value of it, unless you sell, they never actually realize that. Yeah. So I like to be more generous on profit sharing.
