I built a company that went public for a billion dollars. My equity netted me $30,000.
I was 22, a college dropout, employee #83 at Imagine Media. I envisioned the thing that became IGN. I frequently slept under my desk. I hand-rolled the HTML. I talked the company into letting me steal Colin Campbell off a failing fax news service so we could launch the first daily-updated video game news site on the web.
Within two weeks we were doing 25,000 visitors a day. Every ten minutes, I had to reboot the Mac clone (running WebStar) sitting under my desk because the load completely overwhelmed it. Within two years we were a top 50 site on the entire web. CNET, Yahoo!, Ask Jeeves, IGN.
Then Chris Anderson saw CNET go public for $4 billion and decided to spin IGN out as its own company. He never talked to me about it. He brought in a guy named Mark Jung to run it.
Mark got 15% of the company. I got less than 0.1%.
We IPO'd a week before the dot-com crash. By the time the lockup expired, my equity was worth $30K.
I was furious for seven years. There was a voice in my head every single day telling me I'd missed my one chance. That I was stupid. That I was worthless. That these guys had stolen what I built.
It took me a decade to admit they were right.
I was the right founder for the messy startup phase. I had a massive vision for what digital publishing could look like and boundless energy to make it happen. It was fucking everything to me.
And...
I was a terrible manager. My entire team once walked over to IGN's business manager and begged to work for him instead of me. I couldn't stick to plans I'd made. I couldn't put anything on rails. I couldn't operationalize a thing. Mark and his team could. And they did — they navigated the crash and got the company acquired four years later for $650M.
Here's the truth I hate, that I've now lived on both sides of:
Equity is an incentive for future contributions. It is not a thank you for past work.
When they spun IGN out, the calculus wasn't "what did Eric build over the last three years?" The calculus was "what can Eric build over the next three years?" And the honest answer was: not much. So they gave me equity that was more or less in line with useless.
That's not a sob story. That's just the math.
If you're a founder reading this and about hand equity to a co-founder or you're negotiating refreshes for your earliest employees, get your head around this right now. Every share you give out is a bet on what that person does next. Not a reward for what they already did.
The cap table doesn't care that you slept under the desk.