Efficient Startup Growth – Trial Periods For Staff To Protect Equity And Finances
- Sep 6, 2024
- 6 min read
Updated: Jan 31, 2025
Lauren Anders Brown is an award-winning documentary storyteller who uses film, photography, audio, and her writing to focus on issues of global health and human rights. She has captured content in over forty countries, including conflict zones, in order to amplify the voices of others and especially women.
Starting a business is both exciting and challenging, but one thing most founders quickly realize if they are to survive is the importance of conserving resources, especially cash and equity. I’ve taken this approach with my startup, PadsPass, and so far, it’s working. I’m going to explain what has made it work so far.
Photo credit: Fiander Foto
The concept of the lean startup has gained popularity for a good reason: it’s a method that emphasizes efficiency, minimal waste, and maximizing learning. One often overlooked strategy for lean startups is the use of trial periods with team members before offering full-time positions or committing equity. This approach not only protects the company’s limited resources but also ensures that the right people are brought on board.
What is a lean startup?
At its core, a lean startup focuses on getting a product or service to market as quickly and efficiently as possible with minimal upfront investment. The idea is to test assumptions, gather feedback, and iterate, making improvements and adjustments without wasting resources on ideas that don’t work. Lean startups thrive on agility and flexibility, cutting unnecessary costs and focusing on what's essential to bring the idea to life.
I’ve done a lot with a little in my other line of work as a documentary filmmaker. You could say I have a lean approach to that as well with being a self-shooting director which means I interview, record sound, and roll cameras all at once. But I learned in that career as well, I can’t do it all – no one wants to hear me attempt to compose music or hack away at visual effects. This is where a team comes in, and even the film industry is no stranger to asking for crew members to work on low or no budget films.
Why conserving equity and funds is critical
In the early stages, every dollar counts. Spending too much, too soon, can drain a startup's resources before it even has a chance to find a product-market fit. Similarly, equity—while not a direct cash expense, has tremendous long-term value. Giving away large portions of equity early can leave founders with little control over their company and dilute their own stake in the business.
Key reasons to conserve equity and funds
Flexibility for Future Growth: If you burn through cash quickly, you may not have the capital needed for later stages of growth, such as scaling, marketing, or hiring key personnel.
Avoiding Unnecessary Dilution: Giving away equity too early or to the wrong people can make it difficult to offer stock options to critical hires or attract investors later.
Sustainability: By keeping costs low, your startup has a longer runway, giving you more time to experiment, test, and find the right business model or product offering.
Why use trial periods for team members?
When you’re building a team for your startup, it’s tempting to bring on full-time employees or offer equity-based incentives right away. After all, you need talented people to grow the business! But that can be risky. The reality is that startups often pivot, and the skills or personalities that seem like a good fit today might not align with where the company goes tomorrow.
Trial periods give you a low-risk way to assess team members before making long-term commitments. Here’s why this strategy works:
1. Assess fit and performance
You may have a stellar candidate on paper, but startups often require a unique mindset—adaptability, creativity, and the ability to wear multiple hats. A trial period allows you to evaluate whether a team member truly thrives in the fast-paced, ever-evolving startup environment. It’s a chance to see how they handle real challenges, collaborate with others, and contribute to the company’s mission.
I have also witnessed how it offers opportunities for team members with potential but without the stellar candidacy on paper to grow into a position and become a valuable part of the company.
2. Conserve equity for high performers
Equity should be reserved for the people who are going to bring long-term value to your business. By using trial periods, you can ensure that the people you offer equity to have proven their commitment and value. Not everyone is ready to stick with a startup through the inevitable ups and downs, this approach helps you avoid giving equity to those who might not stay for the long haul.
Before founding PadsPass I worked at a friend’s startup for two years which was an extended trial period. I was never offered equity, not because my friend didn’t appreciate my work or felt I wasn’t a good fit. He had to conserve his equity for the future, and I knew that. To be honest, in hindsight I’m a bit relieved I never took equity in that company because it would have prevented me from starting my own startup if I felt financially tied and obligated to another company.
3. Minimize financial risk
Bringing on full-time employees comes with financial commitments—salaries, benefits, and sometimes severance if things don’t work out. Trial periods reduce this risk by allowing you to onboard people temporarily, paying them on a project or freelance basis, and then deciding whether to extend a full-time offer based on performance.
4. Adapt to the startup’s changing needs
As your startup grows, the roles and responsibilities of your team will likely shift. Someone who seems like a great hire today might not have the skills needed when your company pivots or scales. Trial periods help ensure you’re hiring for the present and the future. If things change, you haven’t over-committed to someone who may no longer be the right fit.
Structuring a trial period
When implementing trial periods, transparency and clear expectations are essential. Here’s how you can structure an effective trial process:
Set specific goals: Define the responsibilities and objectives for the trial period. This allows both you and the potential team member to have a clear understanding of success. I’ll put this in a Letter of Intent I send a new team member so we both know what we’re working toward.
Time frame: Establish a specific duration—whether it’s 30, 60, or 90 days—depending on the role and your needs. The first time frame I established with a team member was 6 months, and therefore the second member adopted that precedent as will the third. It’s helpful having a precedent as a starting point.
Compensation: While trial periods should not necessarily come with equity, fair compensation is important. Paying team members on a project or hourly basis ensures commitment and effort without overextending the company financially. If it’s appropriate I usually do this in-kind, as I find it’s more comfortable for us and allows other work opportunities like covering the costs for team building events.
Frequent feedback: Regular check-ins and feedback during the trial period can help address any concerns and ensure alignment between the team members and the startup’s goals. It can be hard to complain about a person’s work if they’re working for free, and likewise easy to complain about a leader who’s asking too much when there’s so much to accomplish in startups. Being able to have check-in points is important in this arrangement.
Trial periods in action
Many successful startups have used trial periods to build their core teams while maintaining a lean approach. For example, Airbnb was notoriously scrappy in its early days, bringing on contractors and temporary hires before expanding to a full team. The strategy allowed them to maintain agility, spend wisely, and eventually hire individuals who were deeply aligned with their mission.
Conclusion: Keep it lean, keep it smart
In the early stages of my startup, especially in my pre-seed fundraising round, every decision matters when it comes to cash and equity. I realised while it might feel awkward asking people to work for free, using trial periods for potential team members is a smart, low-risk strategy that has helped me preserve both while ensuring the right people are in place to drive my business forward.
In being thoughtful with my resources, I can only hope it allows me to extend my runway, protect my equity, and build a more sustainable startup at PadsPass.
Lauren Anders Brown is the founder of PadsPass, a tech startup for pet travel and pet care. Learn more by clicking here.
Lauren Anders Brown, Tech Startup Entrepreneur
Lauren Anders Brown is an award-winning documentary storyteller who uses film, photography, audio, and her writing to focus on issues of global health and human rights. She has captured content in over forty countries, including conflict zones, in order to amplify the voices of others and especially women. She produces work through her own production company colLABorate: ideas and images, works as a consultant for the United Nations, and is Creative Director of the e-learning startup Gamoteca. She is a true artivist: an artist who uses any and all of her available platforms to creatively advocate for human rights.
Lauren is an entrepreneur, founder of her tech startup PadsPass and digital pet passport helping people travel with their pets.
