Startup Values at the Early Stage: What Actually Matters

TL;DR: Early-stage startups don't need a values document at 5-20 people — they need founders making consistent, costly decisions employees can copy. Based on 200+ founder interviews on the PMF Show, values work when encoded in trade-offs: Float gave every employee equity and paid 80th-90th percentile salaries to enforce "only work with the best." Write values down after you've lived them.

After interviewing 200+ founders on the PMF Show, a clear pattern emerges around startup values at the early stage: durable cultures almost never start with an offsite and a slide deck. They start with a founder making a hard call — paying above market when cash is tight, firing a customer that doesn't fit, waiting longer to hire — and the team learns the values by watching. Meanwhile, data from Carta's 45,000+ US startups shows the early hiring environment has changed dramatically, which changes how founders should think about values, compensation, and who they let onto the team.

Do Early-Stage Startups Really Need Written Values?

Not in the way most founders think. What early-stage startups need is a small number of non-negotiable principles that show up in real decisions — especially about money and people. Written values matter only insofar as they describe behavior that already exists.

The clearest example comes from Float. As shared on the PMF Show episode with Float, Robert — who spent five years in private equity before joining Uber, where he says new hires took 75% pay cuts as "a badge of honor" — built Float's entire compensation system around one value: work only with the best people, and don't pretend that value is free.

"We only want to work with the best people, we want to be extremely picky and stubborn about talent. We don't want to sacrifice. You have to pay well." — Robert, Float

That value forced two concrete policies. First, everyone at Float has equity — no exceptions. Second, Float pegged cash salaries to the 80th-90th percentile for its cohort (a seed or Series A technology company in Canada), and Robert walked every candidate through their offer personally. He even took the decision to the board:

"I'm telling you, I've done this before. I saw this at Uber. We have to be thoughtful about cash conservation, but it's also just not worth it because if we don't work with the best people, we're not going to have success anyways." — Robert, Float

The value isn't "excellence" on a wall. It's a 90th-percentile salary benchmark, a 100% employee equity policy, and a founder defending that spend to his board. That's what a real early-stage value looks like.

Key stat: Float benchmarked cash compensation to the 80th-90th percentile for its stage and geography, and every single employee at the company holds equity — a deliberate cost taken on to enforce a "best people only" value.

Is Startup Culture What Founders Do — or What They Write?

It's what founders do. At 5-20 people, employees learn culture by pattern-matching the founder's behavior, because the founder is in every room. This is why early-stage investors study the founder, not the values page.

According to Aydin Senkut, founder and managing director of Felicis — the fund that invested in Canva, Notion, and Shopify at its Series A, when Shopify was a $25 million company — the culture of an outlier company is inseparable from how its founder personally operates. Describing his early meetings with Shopify's Tobi Lütke on the PMF Show, he put it this way:

"Tobi was a special person. He was like a savant. I felt like I was talking to an outlier founder... the way they speak, the way they make decisions, the way they do things does not fit status quo. It's borderline crazy, borderline insane; they do things that make you scratch your head, but somehow it works." — Aydin Senkut, Felicis

The Shopify numbers show how far founder-driven culture can compound. Shopify went from a $25 million company at its Series A to a $100 billion company — and as Pablo Srugo notes in the episode, $20,000 invested at the 2015 IPO would have returned roughly 50X, becoming $1 million in about eight and a half years. Notably, Shopify never had explosive 10X growth years; it compounded steadily — itself a cultural choice.

The lesson is uncomfortable but freeing: your company's values at 10 people are simply your habits, made public. Want a culture of rigor? Be rigorous in the next hiring decision. Want candor? Deliver the next hard message yourself. The poster comes later, if at all.

Key stat: Felicis backed Shopify at a $25 million valuation at Series A; it became a $100 billion company, and $20,000 invested at the 2015 IPO would have grown roughly 50X to $1 million in about eight and a half years.

How Do Your First Hiring Decisions Encode Your Values?

Your first hires — when you make them, who you choose, and what you give them — are the most legible values statement your startup will ever make. And founders are now making that statement later and more deliberately than ever.

According to Peter Walker of Carta, founders are waiting longer from incorporation to their first hire than they have in a long time. On the Carta Q2 2025 episode of the PMF Show, he explained why:

"Founding teams getting together saying, we have an idea. We can build it ourselves and we can start selling it ourselves. And we don't actually need to hire until we really feel that pull from the market." — Peter Walker, Carta

What hasn't changed is what those first hires get: a first engineer still typically receives 1.5% to 2% of the company — Carta's 2024 data, with 2025 numbers "right in line" — even though teams are smaller. Engineers are not, as Walker notes, "getting five percent of the company on a regular basis."

That's where values come in. Solo founders — now 36-37% of new companies joining Carta, roughly a quarter of venture-backed ones, up from about 10% a decade ago — have a unique opportunity to encode generosity into their cap table:

"What I hope happens is that these companies built by a solo founder grant equity to their early team in a different way. Higher levels of equity granted to those founding engineers... So that's a shout to solo founders: if you have that extra forty percent of equity, use it on the early team." — Peter Walker, Carta

He adds that Carta really hasn't seen it happen yet. The standard 1.5-2% grant is a default, not a law — and a founder who deliberately breaks it is making a values statement every future hire will hear about.

Key stat: First engineers typically receive 1.5-2% of the company, while solo founders — now 36-37% of new Carta companies, up from roughly 10% ten years ago — hold an extra ~40% of equity they could redeploy to early teams, but per Carta's data, largely don't.

Does Today's Hiring Market Change How You Hire for Values Fit?

Yes — it makes values fit more affordable and more important at the same time. The market has shifted from a hiring frenzy to a buyer's market for talent, so founders can finally be as picky as their stated values claim.

According to Peter Walker of Carta, on the first Carta episode of 2024, the swing has been dramatic. In the beginning of 2022, the roughly 45,000 US startups on Carta collectively hired nearly 60,000 people net of departures, when "head count was really important to show off." In the most recent nine to twelve months of that data, net headcount change across Carta was effectively flat: startups were replacing leavers, not growing.

"Startup salaries have basically remained flat over the last 18 months and startup equity packages are actually down over that same period because the supply and demand dynamic, there's just not as many people being hired. There's a ton of great people that are out there looking for a job." — Peter Walker, Carta

Flat salaries, lower equity packages, and abundant talent mean the era of panic-hiring is over. You can afford a values screen on every candidate — and you should, because at a 10-person company, one bad values fit is 10% of your culture.

But there's a flip side. Walker is blunt on the PMF Show that for an early employee, "the expected value is much higher at Google" — so values, mission, and agency are your actual compensation edge. Startups offer more fun, agency, and upside, but pure money favors big tech. If your culture is generic, you're offering Google-minus economics for a Google-minus experience. Your values are the product you sell to your first ten hires.

Key stat: Carta's ~45,000 US startups hired nearly 60,000 net new people at the start of 2022; over the following period net headcount went effectively flat, salaries stayed flat for 18 months, and equity packages declined.

What Happens When Your Values Cost You Real Revenue?

That's the only moment values actually get set. A value that has never cost you anything is a preference. Early employees watch what founders do when a principle collides with revenue — and that decision propagates through the culture for years.

According to Pierce Ujjainwalla of Knak, the company deliberately moved upmarket — from charging about $100 per month to roughly $5,000 annual contracts, then quickly raising prices further — which meant intentionally losing customers who no longer fit. As shared on the PMF Show, that decision hurt:

"It's very uncomfortable for me anyways to lose customers, especially even if it's intentional, which it was. It goes against everything at my core to lose the customer, even if they're not the right customer for you anymore. You have to look at the longer term." — Pierce Ujjainwalla, Knak

His broader reflection is about patience as a value he had to learn: "You learn so much on the journey that is building a company, even when you fail or when things seem like they're going backwards." He describes enterprise sales as "major peaks and valleys and lots of time in between," where landing perfect ICP customers at high ASPs "makes up for a lot in between." Notably, raising prices roughly 50X didn't slow sales down at all.

For a team of 5-20 people, this is culture-defining. Everyone at Knak saw the founder give up real, countable revenue for a long-term conviction. No values workshop teaches that lesson as effectively as watching it happen once.

Key stat: Knak moved from roughly $100/month customers to $5,000+ annual contracts — a ~50X price increase — accepting intentional customer churn, and found it didn't slow sales at all.

Key Takeaways: Startup Values at the Early Stage

1. Values are decisions, not documents. Float's "work only with the best" value existed as an 80th-90th percentile salary benchmark and universal employee equity before it was ever written down.

2. At 5-20 people, the founder is the culture. As Felicis's Aydin Senkut observed about Tobi Lütke, outlier companies mirror how their founders speak, decide, and act — Shopify compounded from a $25M Series A to $100B that way.

3. Your cap table is a values statement. The default first-engineer grant is 1.5-2%; solo founders sitting on an extra ~40% of equity who break that default upward send a signal every future hire will hear.

4. Hire slower, screen harder. Founders are waiting longer than ever before a first hire, until they "feel the pull from the market" — so you can afford a strict values screen.

5. You can't out-pay Google, so out-mean it. With startup salaries flat for 18 months and expected value "much higher at Google," your mission and values are the real compensation for early hires.

6. Values get set the first time they cost you money. Knak's founder intentionally churned customers while moving from $100/month to $5,000+ annual contracts — his team learned more from that than from any offsite.

7. Write values down late, not early. Codify what your team already does under pressure. A written value that contradicts founder behavior is worse than no document.

FAQ: Common Questions About Startup Values at the Early Stage

Q: Do early-stage startups need formal written values?

A: Not before the values exist in behavior. Effective startup values at the early stage start as concrete, costly decisions — like Float giving every employee equity and paying 80th-90th percentile cash — and get written down afterward. A document that precedes behavior tends to be ignored.

Q: How do I set startup values early stage with only 5-10 employees?

A: Pick two or three principles you're willing to pay for, then enforce them in real decisions: who you hire, what you pay, which customers you keep. Knak set a long-term-focus value by intentionally losing $100/month customers to win $5,000+ annual contracts. Your team codifies what they watch you do.

Q: Should I hire for values fit or for skills at the early stage?

A: Both, but the current market lets you demand both. Carta data shows net startup headcount has been effectively flat, salaries flat for 18 months, and "a ton of great people out there looking for a job" — so there's no need to compromise on values fit to get strong skills.

Q: How much equity should early employees get, and does it reflect culture?

A: The market standard is 1.5-2% for a first engineer, per Carta's 2024-2025 data. Granting above that default — as Peter Walker urges solo founders holding an extra ~40% of equity to do — is one of the strongest cultural signals a founder can send.

Sources: Listen to the Full Founder Stories

• Peter Walker (Carta) — first Carta episode of 2024 (Season 3): The hiring market reset — 45,000 US startups going from ~60,000 net hires to flat headcount and flat salaries.
• Peter Walker (Carta) — Season 5: Solo founder trends (36-37% of new Carta companies), founding engineer equity, and why expected value is higher at Google.
• Carta Q2 2025 with Peter Walker (Season 4): Why founders are waiting longer than ever to make their first hire, and what first engineers get paid.
• Float (Season 2): Robert on a "best people only" compensation system — universal equity and 80th-90th percentile cash, defended at the board level.
• Knak — Pierce Ujjainwalla (Season 3): Moving from $100/month to $5K+ annual contracts, intentionally losing customers, and patience as a value.
• Shopify + Felicis — Aydin Senkut (Season 3): What an outlier founder looks like up close, and how Tobi Lütke's operating style became Shopify's $100B culture.

Last updated: July 2026