Marty Byrd trying to understand his equity grant
When candidates evaluate job offers, equity can feel like a black box—some mystical asset tied to your company’s future success, with promises of riches or, sometimes, little more than a framed certificate. As a CFO, it’s your job to demystify this value. The challenge? Explaining it in a way that’s both inspiring and realistic.
Curt Sigfstead, CFO of Clio, joined me on the pod to share his four-step framework for making equity resonate with potential hires and employees. It’s a masterclass in combining logic, optimism, and transparency—essential ingredients for converting skeptical candidates into enthusiastic team members.
Here’s how Curt positions equity not just as compensation, but as a stake in something bigger:
Set the stage with vision and TAM. Start with the company’s purpose and market opportunity to make the equity story compelling from the outset.
Build trust by addressing stability. Lay out the company’s financial fundamentals to reduce anxiety.
Educate on the mechanics of valuation. Explain how 409A and historical rounds come together to create value for employees.
Inspire ownership. Invite them to connect the dots themselves, making them feel like co-creators of the company’s success.
And here’s where it gets really interesting: Curt’s method isn’t just for recruiting—it’s a playbook for reinforcing an ownership culture across your entire organization.
Let’s break down Curt’s framework in full detail so you can use it in your own equity conversations.
Step 1: Set the Stage with Vision and TAM
Curt emphasizes starting with the “why” before diving into the “what” of equity. Begin with your company’s mission and Total Addressable Market (TAM):
“I don’t start with the value. I start with our mission and TAM... I want them to understand that the opportunity is immense, and it’s about us executing rather than worrying about competitors or limited TAM.”
The goal here is to inspire. By anchoring the equity conversation in your company’s purpose and potential, you help candidates understand why they should care—and why your company is uniquely positioned to win.
Step 2: Build Trust by Addressing Stability
Let’s face it—many candidates are cautious, especially in a post-pandemic world where equity at some companies has evaporated overnight. Curt leans into transparency by addressing the company’s financial health directly:
“We talk about our growth, profitability, and the fact that we have substantial cash and no debt.”
This isn’t just about numbers. It’s about creating confidence. Employees want to know their equity won’t be a victim of speculative business models or unsustainable burn rates.
Even if you are burning cash, speak to why you’re doing it, how long you plan to operate in the red, and the cash backstop you have.
Step 3: Educate on the Mechanics of Valuation
Equity can seem intimidating or opaque to candidates unfamiliar with terms like “409A” or “down rounds.” Here’s how Curt simplifies it:
Explain 409A: Start by explaining how 409A valuations are set and why they matter.
Compare to Recent Rounds: Provide context by showing how the latest preferred round aligns with the valuation.
Share the Growth Story: Walk through your company’s historical funding journey.
“We’ve raised Series B through F, and if you look at our history, we’ve achieved consistent revenue growth. This instills confidence that, as long as you believe in our TAM and our leadership, that the value creation is ours to deliver.”
This education builds credibility. It shows that your company values equity as much as external investors do.
Step 4: Inspire Ownership
The final step? Let candidates make the leap themselves. Provide them with the logical pieces, then allow them to envision their role in creating value:
“It allows the person to make the mental leap to, ‘Wow, I can be part of this.’”
By empowering candidates to connect the dots, you shift the conversation from transactional to aspirational. Equity becomes less about numbers and more about joining a mission they believe in.
Reinforcing the Message Internally
Equity conversations shouldn’t stop with prospective hires. Transparency is equally critical for your current team. Curt shared how Clio remains consistent in its messaging:
“We are as transparent with internal employees as we are with external parties when talking about the value of options and potential upside.”
Whether during all-hands meetings or smaller sessions, employees need to understand how their equity fits into the company’s success story.
Closing Thoughts: Building an Ownership Culture
Explaining equity is more than a numbers game—it’s a storytelling exercise. By grounding the conversation in logic, transparency, and purpose, you’re not just selling stock options. You’re creating a culture of ownership that aligns your team’s aspirations with the company’s success.
Share this with your team or a fellow CFO who could use this framework.
