Philosophy

Levels is a venture-backed startup, which leads to an incentive and compensation structure optimized for the long-term interests of our business & members, employees, and investors.

Our total compensation philosophy includes:

equity ownership in the company (on a vesting schedule),
a base salary (paid in cash twice monthly), and
employee benefits (including health insurance)

Equity Principles

As a venture-backed startup, equity ownership in the company is part of our compensation package. At a high level, we believe:

All full-time employees should be owners in the business and have an equity stake. This promotes a healthy culture that doesn't divide classes of employee. It also encourages long-term thinking and decision making "as an owner, not a renter".
We use equity primarily as a way to attract high talent individuals who believe in our mission and want to help us build the company towards it for the long-term.
We compensate with equity as a percentage of cash compensation at the implied value of the company at the time of the offer (more on this below).

In general, we believe in being generous with equity grants for people who join Levels — especially early on. Early employees take on almost as much risk as Founders, and at many tech companies, they're often wildly under-compensated for it.

We'll also aim to share as much information as possible with candidates who receive an equity offer, including a pro forma worksheet so they can better understand each potential scenario.

We compensate as a percentage of salary in order to keep the value of the total compensation package consistent, and we determine the value of the shares based on the implied value of the company. So, for example, a senior hire might receive total equity compensation that is valued at 120% of their annual salary (i.e. 30% of salary compensation for 4 years) (e.g. $100k annual salary would mean $120k in total equity compensation) whereas a junior employee might receive total equity compensation that is 25% of their annual salary (i.e. 6.25% of salary compensation for 4 years).

<aside> 💡 Implied value is defined as the value of the most recent SAFE note or term sheet received by the company, regardless of whether the terms were accepted. E.g. if a firm offered us terms at $100M after the last raise at $50M, we would use the $100M value as the implied value. We do this because the value of the company increases very quickly at our stage and we want to be fair to people who joined early.

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We use this methodology rather than something like basis points or arbitrary number of shares because it keeps things fair as the company grows and makes progress (early employees take more risk and should be compensated for that risk) and it's more transparent because it gives a better sense of what the shares are currently worth (as opposed to an arbitrary number of shares or percentage ownership).

Index Ventures recommends handling equity compensation as a percentage of base salary. and has a good article on it, as well as a handy calculator. The main reason we calculate compensation as a percentage of salary is that it's nearly impossible to create a fair offer that is both 90th percentile salary (more on this below) and 90th percentile equity. The reason this isn't possible is because the firms that cannot afford 90th percentile salary generally offer much more equity, so there's an adverse selection problem in using percentiles for both values.