On Risks and Rewards

Jan 16, 2026

Who really takes the risks at work, and who gets the rewards? A deep dive into ownership, compensation, and the case for worker cooperatives.

This is a very personal writeup in the line of the 8-hour myth where I try to understand a concept that looks very simple at surface level but that in reality has a ton of nuances and is often very emotionally charged, making it hard to grasp and discuss.

Having said that, or maybe because of that, this article draws me in every time I start talking about it with friends and colleagues. Today’s topic is risk.

To start talking about it I need first to set some common ground so I’ll start with a boring section just to make sure we all are on the same page.

TL;DR An exploration of how risk and reward are distributed between owners and workers, and why cooperatives might be a fairer model.

Definitions

Here are some dictionary-level definitions that will help us build an intuition at base level of what risk is. I only include here the definitions closer to the economics world to keep things focused.

Wikipedia¹: Risk is the possibility of something bad happening, comprising a level of uncertainty about the effects and implications of an activity, particularly negative and undesirable consequences.
Cambridge²: the possibility of something bad happening.
Merriam-Webster³: the chance that an investment (such as a stock or commodity) will lose value.
ISO 31000 ⁴: effect of uncertainty on objectives.

I think we get the idea. We all have taken risks, to a greater or lesser extent, when it comes to our personal lives. In fact, every decision we take entails a risk. Examples of them are:

Switching jobs.
Moving to another city/country/neighborhood/house.
Meeting new people.
Marrying someone and/or divorcing someone.
Purchasing something from Kickstarter.
Driving.
Doing sport.

All of these come with many risks we evaluate before making a final decision:

The possibility of not liking your new life.
Not adapting to the new situation.
Not being able to afford the new cost of living.
Missing your friends and family.
Purchasing something you will never use.
Getting a ticket.
Injuries.

In this non-exhaustive list of risk-inducing actions, and potential consequences, there are some concepts that complement the meaning of risk: uncertainty, impact and expectations.

I apologize for the crude oversimplification here but, for me it helps me visualize how we take actions as if it were a simple code snippet representing how we evaluate different situations. This includes also some of these related concepts and how they interact with each other:

function act(
  state_of_my_world,
  action
) {
  /**
   * We can have some idea what the result of a prediction will be,
   * but we will never be a 100% sure
   */
  const {
    good_outcome, // othertimes called reward
    bad_outcome,  // a.k.a. risk
    uncertainty   // this a probability describing how possible we think the good outcome is
  } = predict(
    state_of_my_world,
    action
  )

  /**
   * We then put the simulation in a mental balance and try to
   * decide if running the action in the real world is worth it
   */
  const is_it_worth_it = evaluate(
    state_of_my_world,
    good_outcome,
    bad_outcome,
    uncertainty
  )

  if (is_it_worth_it) {
    take(action)
  }
}

When we want to try our luck in some scenario, we mentally imagine as if we did something, and we’d get a probability of the expected outcome to happen. Then we’d weight the impact of the reward, the risk, and the different probabilities in the function. The result of this calculation will give us insight on what to do next. Keep in mind we do this all the time. The thing is we do it so naturally we don’t even think about it explicitly in most situations.

Sometimes the risk (i.e. the bad outcome) is us just wasting time making all these calculations and worrying about it for no reason 😅, and sometimes it’s something more. The important take is that taking a risk always comes with an expectation (a reward or a loss), their associated impact in our lives, and a pinch of uncertainty.

Risk at work

Now that we have gone through some definitions and connected some dots, it’s time to apply it all to a specific context: work. I’m focusing on tech because that’s my salsa and because there are some specifics here and there (like stocks, investment rounds, etc.) that make this market different.

I’ll start by describing here what I initially thought about risk at work, before truly surfacing the question and thinking “harder” about it:

Founders take a lot of risk by spending months, if not years, building a product or a company, most of the time without a salary, not knowing if they will get anything in return.
The high risk of founders is usually compensated with shares for three main reasons:
1. Reward: To reward the time spent until the company gets money somehow (e.g. investment rounds, selling the company, going public, finding product market fit, etc.).
2. Alignment: To incentivize founders to work in benefit of the company (i.e. to align incentives).
3. Cash flow: Because there is usually no money to pay when a company starts. Even when the company is running and in good health, it’s a great way to reduce cash spending.
Employees get decreasing stocks the later they join, and/or the lower their position in the company hierarchy. Reasons 2 and 3 for founders still apply, but reason 1 slowly mutates when the company grows to “attract and retain talent” rather than purely rewarding risk.
There are different types of stock: common stock, preferred stock, stock options, RSUs, etc.
Employees’ stock usually is of “worse quality” meaning they can only be exchanged or used under certain circumstances and have lower priority than other stock⁵.
Most companies don’t make it through. Survivor bias is very present here, the risk of not becoming profitable is very real.
Compensation in tech companies is usually composed by salary + equity. Salary is safe, can buy you things. Equity is air , until (or should I say if) a specific event happens (e.g. stock repurchase, company is sold, company goes public, etc.), then it’s money with a multiplier.

Some of these are plainly naive, products of my inexperience, others I still believe, and others are just a description of the current system, there is nothing wrong with them. The issue with these beliefs to me is that they leave us with no room for imagination, no possible improvement. As with the 8-hour workday, it is what it is.

But is it truly a fair system? Can’t we think of anything better? In the next section, we will dissect some of these points and evaluate them to try to find a better understanding, and maybe find fairer ways, to compensate people.

An illustration of 3 people under an umbrella while it rains

Dissecting risk

Before jumping into the different risks we all face at work, I’d like to acknowledge again that these lists aren’t (and can’t) be exhaustive, if only because risk is highly contextual. For example, income instability can have an effect on one’s personal relationships, mental wellbeing, and even views of the world.

With that being said, let’s first focus on the different risks a founder is exposed to:

Financial risk: Capital invested in the venture can be lost.
Income instability: There might be long periods without stable (or any) income.
Reputational risk: Personal credibility and image can take a hit if the project fails.
Role/job ossification: Founders often become irreplaceable (for better or worse), making it harder for them to step back even if they want to.
Legal/liability exposure: Personal guarantees, lawsuits .

Now it would be naive to think the only ones taking risks are the founders of a company. Workers also take a risk when working for a company, for example:

Job insecurity: The possibility of being fired at any moment. Sometimes for reasons out of one’s control.
Income loss: Workers are generally paid less than founders, assuming the company thrives, which is not something to overlook.
Loss of autonomy: Albeit having some agency depending on the company, in general workers do not decide how to spend their time while working.
Role stagnation: Workers are hired for their current or prospective skills. Once a worker has a clear role assigned, changing hats is usually frowned upon or not allowed at all.
Skill depreciation: Working on proprietary tech that doesn’t transfer to other domains.
Geographic lock-in: Relocating for a job that might disappear.
Information asymmetry: Workers often don’t know the company’s true financial health, runway, or likelihood of exit. They make career decisions based on incomplete information.
Equity illiquidity: Stock options may never be exercisable, making the compensation component of salary+equity largely theoretical.

Here is an interesting first insight: some risks are shared, specifically, those that affect the company itself:

Continuity: Companies shut down all the time for whatever reason, and that affects both workers and founders.
Reputation: People working in/for a company somehow attach their public image to the company.
Opportunity cost: The possibility to let go of other professional opportunities.

There is an interesting point to be made here: as opposed to founders, workers don’t have much to say when these risks are part of the equation. They can convince/influence to the best of their ability, but they do so from a powerless position.

We can continue talking about risks and expectations here, but there is one important concept we already mentioned that plays a huge role here: impact.

According to data founders and entrepreneurs have stronger safety nets ⁶ ⁷ ⁸. This is not surprising, people with financial stability can overcome the survival instinct and take risks that others simply cannot afford to consider. This is not to say that all founders come from privilege, many don’t, and the impact of taking risks is very real. But when we look at the aggregate data we can see a pattern: the typical founder is better positioned to absorb failure than the typical worker ⁹ ¹⁰.

And this all matters when we bring back impact into the picture. A founder who loses their company faces a painful setback, nobody denies that. However, research suggests that for many, the material consequences are softened by the same circumstances that enabled them to start. Meanwhile, studies on job loss paint a stark picture for workers: long-term earnings losses, declines in mental and physical health, family disruption, and in some cases, lasting psychological harm ¹¹. The system, it seems, treats founder failure as valuable experience and worker displacement as damaged goods.

The risks may look similar on paper, but the aftermath can be radically different. This reframes the usual narrative. Founders are often compensated generously for “taking on more risk”, but if we account for impact, the playing field seems different from what we assume . What remains uneven is the reward.

On reward

Even though risk appears to be shared, workers bear disproportionate impact from that risk while receiving disproportionately less reward. At the same time, workers have less (sometimes zero) agency over what to do with the company and how to spend their time there.

At this point my intuition is screaming at me that there is a contradiction here somewhere. Let’s recap and dig into some of the nuances from this entire system to see if we can find a fairer (hopefully better) way to compensate work and risks.

Here is a list of the statements we are working on here:

Both owners and workers face risks in their work-life. Some of them are different by nature, but also in their impact. More importantly, some of them are shared by both sides (i.e. company risks).
Owners have more (sometimes all) levers to deal with the direction of a company. They are the ones deciding on company risks that affect all, owners and workers.
Owners are better compensated for their work, or for having the idea, or by risking capital when uncertainty is really high (and this is praiseworthy!), and only when the company succeeds.
When the company becomes profitable, owners see their compensation grow exponentially. Workers’ compensation… not that much. The difference here is in magnitude .

We spend a lot of energy trying to make workers feel like owners without actually making them owners . Stock options, equity packages, bonuses tied to company performance, mission statements, OKRs cascading down from leadership. These tools exist because we recognise that aligned workers perform better. But they’re workarounds. Attempts to simulate ownership through incentives rather than just… ownership.

An illustration of a blindfolded man with others around deciding his future

What do we do about it?

If we were to design a system from scratch to address these imbalances, what would it look like? I can think of a few ideas:

Shared ownership from the start would align everyone in the company to work for a shared goal.
Decision-making distribution to those who bear the risks, and that would be everyone. No more opaque decisions.
Rewards that scale with contribution over time, not just initial capital/idea.
True accountability of leadership to those affected by decisions.

This isn’t hypothetical. It’s called a cooperative. Companies owned by workers, by default. Not as a perk or a retention tool, but as the foundational structure.

Ownership should be shared from day one . Everyone who makes the company work has a stake in it. But that doesn’t erase the founder’s contribution. Starting something from nothing, often without income, under high uncertainty, deserves fair compensation. Generous, even.

The question is “what form should that compensation take?” Here is one simple approach: founders receive a risk premium, calculated as time invested multiplied by a meaningful rate, plus a multiplier reflecting the uncertainty they had to face and endure. This could be paid out over time as the company becomes profitable, or structured as a larger initial equity share that dilutes as the company grows and more people contribute. The key difference from the current system is that this premium has a cap. At some point, the founder’s early risk has been fairly rewarded. What remains is a company built by everyone who works there, and ownership should reflect that ongoing reality, not just the historical moment of inception.

This shift in ownership naturally extends to other aspects of the company. Agency: all workers have a say in how the company is run. Profit sharing: everyone who makes profit possible participates in it. Accountability: leadership can be questioned, and changed, by those affected by their decisions. Compensation itself: set transparently, with input from all.

A fair warning here: democracy doesn’t mean consensus. It doesn’t mean endless meetings or decisions by committee. Frederic Laloux’s Reinventing Organizations¹² explores this distinction well. Small groups can be trusted to make decisions in their domain, and those groups can be formed and dissolved as needed. What emerges isn’t slow bureaucracy but something closer to trust: transparency, distributed authority, and yes, genuine alignment. Not the manufactured kind.

This model I’m describing isn’t a thought experiment. It already exists, and has for over a century. They’re called cooperatives, businesses owned and governed by the people who work in them. They come with their own set of problems and challenges, but if we want to build a fairer work-life, I think this is the way to do it.

”Yeah that’s great and all but…”

Before wrapping up, I want to address some great counterarguments I’ve heard from others, but also questions I’ve asked myself. This section is as much a conversation with past-me as it is with anyone else.

“Workers trade risk for stability”

This is probably the most common response, and on the surface it makes sense. Workers get a predictable salary and founders get equity upside in exchange for uncertainty. A fair trade, supposedly.

But as we’ve seen throughout this article, the stability side of that bargain is shakier than it appears. Workers face job insecurity, layoffs, company shutdowns. Risks they are exposed to that are often overlooked, and that they have little power to influence. And when those risks materialise, the impact falls harder on workers than on founders who often have stronger safety nets. The “stability” being traded for is, in many cases, an illusion. Both sides are exposed to risk. Only one side gets to decide how to navigate it.

“Founders deserve more because they had the idea”

Ideas matter. No one is discussing it. There needs to be a creative spark to start a company, or the conviction to pursue it. But an idea without execution is just a thought, just as execution without an idea is wasted time.

The question isn’t whether founders deserve compensation for their contribution. They do, no doubt about it. The question is whether that contribution justifies permanent, exponentially-growing rewards while everyone else’s contribution is compensated linearly. I’m not sure it does.

“Workers can leave anytime”

True. But switching jobs has real costs: time spent interviewing, potential relocation, lost equity that hasn’t vested, the risk of jumping to somewhere worse. It’s not a frictionless market.

And if we’re using “you can leave” as the answer to structural imbalances, that argument applies both ways. Founders with safety nets can also step back, hire a CEO, or become workers themselves. Mobility isn’t unique to one side.

“Some workers don’t want to participate in running a company”

This is fair. Not everyone wants to be involved in strategic decisions, attend governance meetings, or think about profit distribution. Some people just want to do their work well and go home. That’s a completely valid choice.

The argument falls into one common misconception though, cooperatives enable participation; they don’t force it. Having a voice doesn’t mean you’re obligated to use it constantly. In most cooperatives, workers can engage as much or as little as they want. Small groups handle specific domains, representatives are elected for broader decisions, and day-to-day work continues uninterrupted for those who prefer it that way.

I find it interesting we don’t question this logic in other contexts. Democratic countries don’t require citizens to be politically active. You can choose not to vote , not to attend town halls, not to follow policy debates. But we’d find it strange to argue that because some citizens are disengaged, we should abandon democracy altogether and let a single person make all the decisions.

Most companies today are, structurally speaking, closer to autocracies than democracies. That’s not a criticism of the people running them, it’s just a description of the system¹³. Cooperatives bring to the workplace the same model we already use to govern our societies: distributed power, accountability to those affected, and the option (not the obligation) to participate.

“What about investors?”

This is probably the hardest question for cooperative models and for myself. I want to be honest here, I don’t have a clean answer. Investors provide capital and take real financial risk. In a traditional structure, they’re compensated with equity and potential upside.

I’m not going to pretend I have the expertise to design a financing model. Ni loco. But I don’t think the difficulty of this question invalidates the broader point. We managed to invent venture capital, convertible notes, SAFEs, and a dozen other financing instruments. If we decided “making work more fair for everyone” was the goal, we could probably invent instruments to support it too.

I find these counterarguments interesting because they often frame the relationship as inherently adversarial: workers versus founders/owners. As if improving conditions for one must come at the expense of the other. But that’s not what I see, that framing misses the point entirely. Cooperatives don’t eliminate founders or devalue their contribution. They simply ask once the initial risk is fairly compensated, why should ownership and decision-making remain concentrated indefinitely?

It’s not about tearing down. It’s about building something that works better for everyone involved, where all sides share the risk and the power to navigate it.

If you’ve thought about this too, I’d love to hear from you.