A ways back I awoke to the news that the Lakers passed on hiring Phil Jackson back, and instead, opted for Mike D’Antoni instead, apparently to save about $6m a year, a percent or so of equity, and a bunch of other conditions.  Too much, apparently, to get The Best of the Best.  And the Lakers just gave up any chance of a championship that year or next.

Here’s what I think really happened.  Phil Jackson brought the Lakers 5 World Championships.  Five.  World.  Championships.  (And 6 before that with the Bulls.  11.  World. Championships. Total.  Ahem.).  He even came back after he was basically fired to go on to win the latter two for the Lakers.

And he wanted to be paid fairly given not just what he would accomplish, but also given what he had already accomplished.  Does he deserve an equity stake after that?  I think so.  A market salary, or higher?  Why not.  The best staff in the world, no matter what it took to get them, and no matter how crazy some might sound (e.g., Scottie Pippin)?  Yes.  Maybe even to be cut some slack (e.g., travel)?

You can ask people to sacrifice in your start-up for the greater good, if they know you have to (e.g., you only have $500k in seed funding).  You can ask people to take some equity instead of cash.  For a while.

But you have to Pay People Right, at least when you can.  And Pay Them Back once you make it:

  • Finally raised that Venture Capital?  You may need to not just make those new hires, but set aside some cash to bring the early guys back up to market.  Or higher.
  • Your best old timers getting pretty well vested?  Don’t forget to give them more grants.  I know they already have plenty of equity compared to the new timers.  But they already earned that.
  • And the guys that are really, absurdly great?  The true Super Highs?  Pay them Anything You Possibly Can, Once You Can.  They are so accretive, it doesn’t matter.  You’ll still come out ahead.  See, e.g., Phil Jackson.

The best hires are looking to you to have their back.  And they’ll eventually quit on you if you don’t have it.  That means paying them as much as you can at first, even if it’s not enough — and paying them right when you finally can.

Phil Jackson image from here.

P.S.  If you want to read one of the most interesting leadership bios, check out Phil Jackson’s bio on Wikipedia.

(note: an updated SaaStr Classic post)

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