The most volatile challenge
One of the biggest challenges—and also one of the biggest blind spots—when building a startup is the team. Not the discourse around “people,” “culture,” or “talent,” but the operational, economic, and strategic reality of attracting, paying, and retaining competent professionals in an environment of limited resources.
In a startup, initial resources are usually scarce. In early stages, the focus is on surviving the initial turbulence with limited fuel: validating a value proposition, building an MVP, securing the first customers. Later, if things go reasonably well, successive funding rounds arrive—and with them, critical decisions.
Where does the money go?
Depending on the industry, the type of solution, and the company’s stage, raised capital is usually allocated across three main blocks:
- Product: development, technology, infrastructure.
- Marketing and sales: acquisition, growth, go-to-market.
- Team: people, structure, capabilities.
The problem is that this third block is sometimes treated as secondary, when in reality it is structural. Products do not build themselves, marketing does not execute itself, and sales do not close themselves. Everything runs through people.
Talent has a price
Accessing good professionals has a very clear equivalent: cost. In the form of salary, bonuses, benefits, stability, and career prospects—what we call the compensation package.
This is the total set of compensations a company offers an employee in exchange for their work, generally consisting of:
- Fixed compensation (base salary).
- Variable compensation (bonuses, performance incentives).
- Benefits (insurance, car, vouchers, training, pension plans, etc.).
- Compensation in kind and other non-monetary benefits (flexible hours, remote work, additional time off).
- Long-term compensation, such as stock options, shares, or equity stakes in the company.
A startup is not exempt from defining this. It may be in a position where it cannot pay market salaries—common in early stages—and broadly has two legitimate options:
- Accept that limitation and adjust the profile it can attract.
- Compensate the salary gap with other elements of the compensation package.
This is where equity comes into play: stock options, phantom shares, RSUs, vesting—depending on the role and, above all, the level of seniority within the organization.
In a compensation context, equity is compensation linked to company ownership, granting employees economic—and in some cases voting—rights through shares, equity stakes, or stock options, aligning their compensation with the company’s future value and performance.
Attracting a junior profile is not the same as attracting a key senior hire; execution is not the same as leadership. Equity cannot be open to all profiles indiscriminately.
Neither market salary nor equity
There is a particularly damaging—and surprisingly common—mistake: doing neither. Salaries below market. Equity that is nonexistent, symbolic, or poorly explained. Vague promises about “what the company will become.”
The outcome is predictable: major difficulties in attracting talent, or attracting profiles that fall short of what the project actually requires. This is usually a symptom of foundational errors that were never properly addressed.
“Project attractiveness”: a dangerous alibi
One of the most naïve—and most deceptive—narratives in the ecosystem often appears:
“The project is very attractive.”
Believing that project attractiveness consistently compensates for a weak economic offer is, at best, naïve—and in many cases, self-deception.
Project attractiveness cannot serve as an alibi. It does not pay the rent, it does not offset life risk, and it certainly does not replace a poorly designed compensation package.
Moreover, it is usually a one-sided narrative: attractive to the founder, but not necessarily to someone with real market alternatives.
This is often where the road to failure begins
These situations rarely explode overnight. They deteriorate progressively:
- Suboptimal hiring decisions.
- Misaligned expectations.
- Early turnover.
- Defensive culture.
- Founders exhausted, constantly “putting out fires.”
And finally, a conclusion that comes too late: “We made mistakes building the team.” It was indeed a mistake—but not an isolated one, nor something that can be blamed on others. It was a flawed approach from the outset.
Coherence, realism, and the market
Building a startup team cannot be driven by epic narratives or inspirational speeches. Those may come later—or not—but they must always be decoupled from compensation. This is about realism, coherence, and respect for the market.
If we cannot pay market salaries, we must compensate with equity in an honest and proportional way. If we can do neither, expectations should be adjusted—but never hidden behind “project attractiveness,” which, incidentally, is not exclusive to startups and exists in many other contexts and business models as well.
