Owning equity in your company should be as common as owning equity in your home

2011-09-12

What belongs in common to the most people is accorded the least care: they take thought for their own things above all, and less about things common, or only so much as falls to each individually. – Aristotle *

A major policy goal of capitalist countries in the 20th century was to encourage home ownership. It is widely believed that owners take better care of their homes than renters as they have much more at stake financially. There is also evidence that home owners are happier, healthier, and participate more in civic and political life.

The desire to create an “ownership society” led to some smart policy decisions like the mortgage tax deduction and some bad decisions like hazardously low interest rates that contributed to the housing bubble. Home ownership is a noble goal even if home ownership fueled by excessive debt can be disastrous.

Entrepreneurs figured out a long time ago that the benefits of having equity in your company are similar to the benefits of having equity in your house. Silicon Valley expanded this concept by making it standard to grant equity to non-founder employees. It’s no coincidence that Silicon Valley continues to innovate and create jobs while the rest of the economy is stagnant.

Some people think we are in a startup bubble, and that once the bubble bursts people will run back to the supposed safety of non-startup jobs. I’d prefer to think we are at the beginning of a movement to create a true ownership society, where people own stakes not just in their space but also in their time.

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