The Myth of “Skin in the Game”

“I want to make sure you have some skin in the game.”

This is one of those phrases that entrepreneurs love to throw around, but when you peel back the layers, it rarely means what they think it does.

When someone comes to you as an agency, consultant, or any other kind fo service provider and says they want you to have “skin in the game,” what they’re often really saying is: “I’d like you to work for free”.

Now, they may not mean it that way. In their mind, they’re offering you the opportunity to share in the upside. It’s the “If we all grind we’ll all get rich” mindset. But let’s be honest with ourselves - what they’re asking is for you to take on risk without compensation.

A mentor of mine once told me to treat bonuses like a happy surprise. Lovely when they happen, but never expected because someone, somewhere, is always going to try to spreadsheet it into the ether. Another colleague put it even more bluntly: equity is worth nothing until it isn’t. Until there’s a check to cash or an option to exercise, it’s Monopoly money. So when a founder tells you that you’ll get rich when they get rich, they’re asking you to build their dream on spec and trust that maybe, someday, you’ll get yours too.

Here’s the thing: a salary is the ultimate skin in the game. That’s what pays a mortgage, buys food, puts shoes on feet. When you’re compensated fairly and consistently, you’re invested. Because if you don't perform - especially in a small, early-stage company - then the whole thing might fall apart. And then there’s nothing. 

Now that’s pressure. That’s accountability. That’s real skin in the game.

What’s not skin in the game? A phantom equity promise that only pays off if everything goes exactly right. And even then, it pays off for the lucky few who can afford to wait. Or who haven’t been diluted or straight up removed from the cap table. When startups lean too hard on equity as motivation, they filter for a very specific kind of person. That person is someone who doesn’t actually need the job. Someone who can afford to take a financial hit in the name of optionality. That person that you think has skin in the game actually has less skin in the game than a person with a salary. Because if I don’t need a salary then I probably don’t need things to work out in the end. And that person? Probably not who you want on your team in a pinch. They’re probably not going to be the one grinding through customer feedback on a weekend or fixing a late-night production issue.

If you want people who are truly invested in your company’s success, pay them. Compensate them in a way that makes their success aligned with yours today, not some hypothetical tomorrow. That’s how you build commitment. That’s how you get real skin in the game.