Why I Stopped Asking Founders for Equity

When I first started this business, I asked founders for a mix of cash and equity. I now think the equity part was a mistake.

In conversation with founders, equity seemed like the cleanest possible alignment of incentives — we both win when the company wins, so let’s tie our outcomes together. Everyone nods. It sounds right. It took me a few years to understand why it wasn’t.

The honest version of “skin in the game”

The first problem is that it’s genuinely hard to price the value of our work. But the deeper problem is about stakes, and I want to be honest about it.

Startuplandia works very hard and takes real ownership over the long run. But I don’t carry the same stress and pressure our founder clients do. As a family man trying to build toward being a “million-dollar dad” — a business that nets seven figures a year, on my terms — I don’t, won’t, and can’t work nightly until 2am. And that 2am is what earns the equity. It isn’t my 2am to claim.

So I stopped advertising that I work for cash and equity.

Why giving it up costs me nothing

Here’s the part that made the decision easy rather than noble.

If you’re a student of the time value of money and discounted cash flow, at a certain point you see that an equity stake and a long-lived customer relationship — a perpetuity — don’t actually differ that much. Both compound. Both produce a great deal of value over a long horizon. The math doesn’t care which label you put on it.

But only one of them aligns me with you. A perpetuity only pays off if you keep choosing to work with me. That single difference is the whole thing.

What reputation actually demands

The second shift came from Charlie Munger, in Poor Charlie’s Almanack. He writes about reputation as the ultimate business asset, and the longer I run this company the more literally I take it.

Because choosing a perpetuity over equity is really choosing to protect a reputation — and a perpetuity and a reputation turn out to be the same shape. Both only pay off if I stay trustworthy over a long horizon.

People assume giving up the equity lowers my stakes. It raises them. It means everything I say or do has an exit. I can’t hide behind the front side of a recommendation, an action, or an expectation, because over a long enough horizon everything comes out in the wash. It forces me to be measured about the perspectives I offer, the certainties I claim, and the recommendations I make. That discipline is worth more to me than a cap-table line.

We make it easy to leave

This is embedded deeper than a business model — it’s part of why I started Startuplandia in the first place. I want to be able to walk away from things I don’t enjoy, and I give my customers the exact same option. We don’t do long-form contracts. Every engagement behind the last $4M in sales has been cancelable at will.

I don’t think many people in this industry could stomach that. It removes the one thing consultants usually lean on: the lock-in. But it’s the honest expression of everything above. If the only reason you’re still working with me is that you signed something, I’ve already lost the reputation I care about. The relationship should renew because it’s worth renewing — every month, on purpose.

The proof is in how long people stay

I don’t have to argue this in the abstract. Across our founder relationships, the average founder stays with us about four and a half years — and that’s a floor, not a ceiling, because most of those relationships are still active and still compounding.

Several have grown past the three-, four-, and five-year mark. Our oldest dates back to 2016 — roughly ten years now. That founder got his business acquired while we supported him the entire way through. He’s still a customer.

That’s what a perpetuity looks like in practice. Not a clause in an agreement — a decade of someone continuing to choose you.

I don’t ask founders for a piece of what they’re building anymore. I’d rather earn the version of the relationship that only exists if I keep being worth it.