Paul Erlang, co-founder and CEO of the trading app FOMO, isn't playing by the typical startup equity rules. Most founders hoard equity, doling out small percentages with complex vesting schedules to early employees. Erlang and his team did the opposite, taking a bold bet that radically reshaped their early culture and long-term trajectory.

Erlang explains, “We gave nonfounders a percentage of the company that usually founders get.” This wasn't a standard employee option pool; it was a deeply ingrained ownership stake. But here's the kicker: it came with a significant upfront commitment. For the first eight months, no one on the team, including the founders and these highly-equity-compensated non-founders, took any pay. This created an immediate, visceral sense of shared risk and reward, especially among the senior engineers who made up the core team.

This unconventional approach wasn't just about saving cash. It was a calculated move to filter for true believers and forge an "extended founder team" from day one. “All those people feel like owners of the business,” Erlang says. He believes that if this small, core group of five to ten people dedicates a decade to building FOMO, “there's literally nothing stopping us.” The result? A highly autonomous team, resilient through market swings, that genuinely treats FOMO as their own.

Key Takeaways

  • FOMO gave key early non-founder employees equity percentages typically reserved for founders, rather than standard option grants.
  • The core team, mostly senior engineers, worked for zero pay for the first eight months, betting heavily on the company's future.
  • This deep, founder-level ownership stake fostered extreme autonomy and a long-term building mindset among the early team.
  • Paul Erlang credits this unique structure, which he calls the “Extended Founder Team Equity Rule,” with building a resilient and highly motivated team during volatile market periods.

The Extended Founder Team Equity Rule

Here’s how FOMO built a highly invested core team, straight from Paul Erlang:

  • Give non-founders founder-level equity: We gave nonfounders a percentage of the company that usually founders get.
  • Focus on core original team: it was mostly this core group of original people that didn't take any any pay
  • Foster a sense of ownership: all those people feel like owners of the business because if those five to seven to 10 people build this business for the next 10 years, there's literally nothing stopping us.

When This Works (and When It Doesn't)

This rule shines when you're building a highly technical product that requires deep expertise and long-term commitment from a small, senior team. As Erlang puts it, it works “if you give a lot of ownership to a team that takes a lot of ownership, right? Like these people are fully autonomous and they really care about what they're doing, they all feel like they're owners of FOMO.” It's particularly effective for driving motivation and resilience when the market gets shaky, because everyone's in the same boat, deeply invested.

However, this approach isn't a silver bullet. It's difficult to apply if you need to hire many junior roles that can't afford a period of no pay, or if your talent pool isn't primarily senior, autonomous engineers willing to make such a bet. Over-diluting early could also become an issue if not applied to a very select, core group. This is for the true believers, not just anyone looking for a job.

What to Do With This

If you're a founder in your 20s or 30s trying to hire your first critical engineering lead with limited cash, apply the Extended Founder Team Equity Rule directly this week.

1. Give non-founders founder-level equity: Identify that one indispensable technical hire who can shape your product's core. Instead of offering a standard 0.5-1% vesting over four years, consider a 2-5% stake, delivered with the same directness and expectation as a co-founder's share. Frame this as a true partnership, not just an employment package.

2. Focus on core original team: In your recruitment conversations, be brutally honest about your early cash constraints. Explain that you're seeking a specific type of builder – one who is senior, autonomous, and willing to make a financial bet on the company's future alongside you. This isn't for everyone, and that's the point.

3. Foster a sense of ownership: Once you've identified a candidate open to this model, shift the discussion from 'employee responsibilities' to 'co-owner contributions.' In the interview, walk through your 5-year vision and directly ask how they, as an owner, would approach key architectural decisions, product roadmap challenges, or even fundraising strategy. Make it clear they're building their business for the next decade.