What do I do when my staff is trying to blackmail me for more equity?

Someone asked: I run a business with less than 20 employees. Two of my top staff who have been with me for 4 years want more equity or they are threatening to leave and start a competing business. I don’t want them to leave but I’m not sure if giving each of them 30% of the equity is reasonable.

What should I do?

My Answer: I can’t answer accurately until I know the full story since there is more to this than you have explained. Here is my suggestion, take it with a pinch of salt since I’m not your certified advisor.

1. Decide if the value they bring to the business is equal to the equity they are asking for. If not, let them go. If they are that valuable, then you should have given them that equity a long time ago.

2. Be careful about HOW you do this. If the rest of your team sees this as weakness, others may demand for more equity as well.

Firing 1:I got fired sometime ago and the boss simply called me into the conference room at around 11a.m. He said “I’d like us to divorce our work relationship but I want us to remain friends. Please leave your work laptop. We will pay you for the rest of the month.”

Firing 2:The next time I got fired, it was a partnership of sorts. The person I was working with simply sent me an email. He talked about how we didn’t have the same vision and that he had even spoken to his father about it etc. In that instance he immediately cut off my salary. lol

Both experiences weren’t great but at least it made me respect the first CEO more for having the boldness to tell me to my face. Last thoughts: Think about their value to you if they stay and if they were to leave. That will help you make a wise decision.

Email me at jeff@growingstartup.com if you have any questions that we can't address here.