– Donald Farber

Bill Gross, founder and chairman of IdeaLab, writes in Harvard Business Review how, for tax reasons, he reluctantly kept only 19.9 percent of equity in a new spin-off company and turned the rest over to employees:
“Within a year, [the company] grew almost as large as [the parent company] itself. Its employees seemed to rise to new heights of creativity and passion – putting in Herculean efforts to close deals, to improve the product, and to recruit star employees. My earlier reluctance suddenly seemed laughable; instead of owning 80% of a $5 million business, [I] now owned 19.9% of a $77 million business…That’s because we gave employees near total ownership…and unleashed a new level of performance, building economic value that more than made up for the fact that [I] had kept only a fraction of the equity.”










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