Startups are raising more money, more often, and taking longer to pursue exits. There are reasonable explanations for this evolution, which we won’t get into, it’s just the new reality in Silicon Valley. But generally speaking, employees have been saddled with most of the downsides (or, at least employees with traditional forms of equity: common shares, options, RSUs, and so forth). Old approaches to equity suffer in the new reality.
Column has the freedom (and privilege) to re-examine assumed norms, and we believe the old equity structures can be debugged for the world we live in. We wanted to figure out if we could build an equity structure for employees that is non-dilutive, liquid, with no pref stack or exercise costs.
But before we skip ahead, let’s examine how we got here, why it matters, and why we’re doing this. Starting with a few hard truths about startup equity today:
Fundraising has a massive impact on your initial grant.
When Google went public, they’d raised $26M. Amazon raised $8M. NVIDIA, $22M. Back then, employees didn’t have to worry about dilution: maybe they’d lose 10% of their ownership before liquidity. Today, companies raise billions before going public. An average employee will likely dilute 4–10x before liquidity. Your 1% of the company quickly becomes 0.1% or less after multiple funding rounds. A capital-light business model — or better-aligned fundraising models — can matter much more than the size of your initial grant.
You’re last in line.
As an employee, you’re given the lowest-quality class of shares. When startups raise capital, they agree to return all of the money (and sometimes more) to investors before employees get anything — known as non-participating preferred shares. Let’s walk through an example: you’re employee #1 and got 0.5%. Your company raised a $3M seed, $20M Series A, $100M Series B, $200M Series C, and a $400M Series D at the peak of the market — pretty great situation! If your company sells for $1B, that sounds amazing — that’s a .0001% outcome. You may think you’ll get your ownership times $1B. Actually, VCs get first dibs on either their pref or pro-rata share, and if they take the pref (which most would given this outcome), that $723M comes straight off the top, so you only get your percentage times whatever’s left ($277M). You likely have no clue how high the pref stack is. And in case you’re wondering, yes, the venture associate who was cc’d on that one email five years ago and forgot what you do gets paid before you, at a higher valuation, and likely takes home more.
You pay to play, with real cash downsides.
Founders get founder shares for fractions of a cent. VCs play with other people’s money. But you, the person doing the work, have to actually pay cash to access your equity. Exercising your options once they vest often requires writing a massive check to convert those shares into real equity. Moreover, if you leave, you usually only have a 90-day window to pull the cash together. For early employees, this can mean hundreds of thousands or millions of dollars — for shares that could very well end up worth nothing.
So your startup experience can literally cost you money.
You should plan on not seeing liquidity for 10–15 years, if you do at all.
Most startups never exit. And companies that do exit are taking well over ten years to get acquired or IPO. Google only took six years to IPO at $23B, Meta took eight years to IPO at $104B. Today, your liquidity could come 15+ years after you join, if it comes at all. The time value of money is real, and money that you could use in your 20s and 30s to invest, buy a home, or start a family is locked up for a decade or more.
Our industry hasn’t been entirely intellectually honest about how tech capital structures have evolved. Most early-stage equity now requires a parlay of optimistic, outdated assumptions to pay off for employees: the company has to grow faster than the Magnificent Six, be thoughtful about how much money it raises, successfully exit, and you personally need enough cash to exercise before it all happens — during a low tide in M&A and generationally-long IPO timelines. Most of these factors are outside your control.
The game has fundamentally changed, and the rules were never rewritten.
It’s time for something new. Since Column was founded in 2019, one of our core values has been to think from first principles (cliché, we know, but still remarkably rare in practice). We apply this not only to our technology, infrastructure, and business model, but also to our employee experience. Can equity be non-dilutive, liquid, with no pref stack or exercise costs?
Yes. We’ve structured our equity to put employees first, ahead of any outsiders or investors — giving our team real skin in the game to build a company for the next century, and reliable cash for their lives today.
It works like this: equity at Column rewards employees when the company’s value appreciates above a strike price (fixed to the company’s valuation when you join), a bit like options. Unlike options, you never have to pay exercise costs. What you see is what you get. If the appreciation in your equity is worth $50,000 — you get $50,000. No exercise costs, no dilution from investors. And if things go south, you don’t lose anything.
We offer annual secondaries where we use our cash to purchase employee equity at the market price (we optimize for profitability, so we have non-dilutive cash to do this, and determine market price by a blend of market signals and comps analysis). This means the team can cash out a portion of their vested equity each year: real money that they can use in real life for a down payment, investing, putting money towards their kids’ education, or just having more financial flexibility.
Any approach to equity has trade-offs, and ours is no different. It’s unconventional and, similar to RSUs, is taxed as ordinary income when cashed out — in California, roughly 7–13% higher than long-term capital gains (like you’d get with options). But equity at Column is non-dilutive. If you join a startup at the seed or Series A, you can expect somewhere between 70–80% dilution. So 7–13% tax vs 70–80% dilution. I’ll let you do the math.
Column can do this because we aren’t burdened by the standard playbook. We have two constituents: our customers and our employees. That’s it. Turns out KISS works just as well in company building as it does in engineering. We build products our customers pay for, then return that value to our employees and founders. We don’t optimize for outside investment, so there’s no preferred shares stack to worry about, no debt to repay, no late-stage investors to please. Employees do the work. So employees participate in the success.
If this resonates, or if you’re interested in building the foundational infrastructure for any company globally to move, hold, and lend the dollar at scale — we’re hiring. Check out our open roles at column.com/careers.