I plan to bootstrap and keep my company private with no plans on selling. What's an alternative to equity based compensation that recruits, motivates and retains employees? Should we increase benefits?
A lot of great answers.
It's been my experience, that a lot of solid feedback and encouragement goes a long way. I want my team armed with all the skills they need or want to do a great job and if they want to pursue something on their own, then I've done a great job as their "boss", because they've grown. If they leave for another job, then who am I to tell them they should stay. Something wasn't motivating them or I was doing something wrong. That said, I have had a lot of people go away in situations where it wasn't my company and then when I went out on my own, they came back to work for me again.
I challenge my teams to grow beyond their comfort zone and I reward them for accomplishing growth. Sometimes the reward is simple and enthusiastic acknowledgement to them or the company and sometimes its financial or perk based.
I do think profit sharing in one form or another is a great way to help motivate your team, but it will never be enough alone to motivate people.
One of the benefits of being growth minded for your team, is that no matter what happens, you know that you've been a part of helping them as a person.
I once worked for a woman that reprimanded me as a VP for being friends with my team, while I watched everyone around them fleeing the sinking ship except for my friends on my team. Everyone is different, but I can't help but become involved in my team's lives and for that I get a lot of rewards.
As a startup, you have a lot to consider and it depends on the talent you need. If you need developers for a technology product, then you are going to have to compete on wages and benefits and it may be difficult to recruit without equity unless you have a solid and followed profit sharing plan. You can though also compete on culture, atmosphere and team dynamics. If someone interviews with you and your team and walks away excited about your mission, your product, and your people, then it may follow that higher wages and equity aren't required initially. If you are a one-man band and bootstrapping, you are going to have to also prove that your vision has legs and that you can drive revenue. Lots of folks will join a risky startup, if the backend rewards can be significant, but you will have to prove a little more potential stability if you want them to invest their career in you.
Sorry for the rambling brain dump. Feel free to follow-up with me if you have any questions.