Robyn Shutak is a Partner at Infinite Equity and one of the sharpest minds in equity compensation. She joins me to talk about what happens when equity stops working the way it was designed to - and whether it was ever designed well in the first place.

We get into underwater equity and the real cost of doing nothing about it. Vesting schedules built for a tenure reality that no longer exists. The gap between telling employees they are owners and what the cap table actually says. Why equity in VC-backed companies functions more like a lottery ticket than an ownership stake. And whether giving employees structured choice within their equity grants can close the gap between perceived value and actual value.

We also explore a harder question: if equity compensation depends on stock price cooperation to feel real, what does that tell us about the instrument itself?

Takeaways

• Underwater equity is not a passive problem - inaction sends its own signal and concentrates retention risk among the people you can least afford to lose
• Vesting was designed to protect the cap table, not retain employees - and there is little evidence it does
• Most employees in VC-backed companies hold less than 20% of shares collectively - calling that ownership is a stretch
• Structured choice within equity programs can increase perceived value without increasing spend
• Equity works best when companies treat it as trust, not control

Chapters

• 00:00 Understanding Underwater Equity
• 42:23 Equity Compensation and Volatility
• 51:21 Employee Ownership in VC-Backed Companies
• 01:20:52 The Skeptical Side of Equity Ownership