Part 3: Creator Equity From A Creator Perspective

Hi All,

In Part 1, we covered the basics of four common equity compensation structures—RSUs, Stock Options, Warrants, and Phantom Equity—and how they work.

In Part 2, we looked at these structures from the company’s perspective, breaking down how businesses evaluate equity compensation when working with creators.

Now, in Part 3, we’re flipping the script and looking at equity compensation from the creator’s perspective. If a creator or agent is exploring equity deals, the key question isn’t just, "How do I get equity?"— it’s:

1. What structure works best for the creator?

2. What is realistic from the company’s perspective?

As we've said repeatedly, there’s no one-size-fits-all approach to equity compensation. Our analysis and focus is on the 99%+ of long-tail creators, not the top 1% that can dictate their own terms. In this piece, we’ll break down why we believe phantom equity is most often the best fit from a creator perspective as well. We will also discuss when other equity structures may make more sense for a creator.

Enjoy!

Get our free newsletter straight to your inbox.

Let’s Take A Step Back

One of the most important aspects of being a creator is independence—it’s why they become creators in the first place. They don’t want a boss. We find ourselves explaining this reality to companies over and over again. But, creators and their agents must understand giving out equity—especially for startups—is a big decision. They need to be sure that the creator will create real value and be invested in the company’s long-term success. This creates an inherent tension:

• Companies want commitment. They want to ensure that giving equity translates into a real commitment and meaningful business growth.

• Creators want independence. Creators value flexibility and don’t necessarily want to be tied to one company. Their main priority is to build their own platform.

For most creators, simply participating in marketing campaigns or posting a few times won’t move the needle in today’s increasingly competitive market. Meaningful equity compensation requires more than just promotion.

What Companies Look For When Offering Equity To Creators

If a company is considering an equity deal with a creator, they’re typically evaluating three key factors:

1. Significant Authority & Trust – Is the creator seen as a true expert or leader in their category?

2. Significant Distribution – Does the creator have a large enough audience to drive awareness and interest to make a difference? Do they have influence over other creators in the category to cross-promote?

3. Deeply Committed Communities – Does the creator have a highly engaged audience? Is that audience relevant for the company?

A creator must be realistic about what they bring to the table. Most importantly, if creators want an outsized outcome, they have to truly believe in the mission of the company and the problem the company is solving. Equity isn’t just a paycheck—it’s a long-term bet on a company’s success. If a creator is not aligned with its vision, it’s unlikely to be a valuable deal for either party.

Creators Don’t Want To Be Employees—So Why Take Equity Like One?

As we discussed in Part 2, most traditional equity structures were designed for employees, not independent creators. Employees work full-time at a company, receive salaries, and typically vest into their equity over time in exchange for long-term commitment.

But as a creator, the situation is different:

✅ They’re building their own brand—not just working for the company.
✅ Many likely can’t afford to work for free while waiting for equity to vest.
✅ They don’t want to be locked into a rigid corporate structure that limits flexibility.

That’s why traditional equity compensation models most often don’t make sense for long-tail creators—especially in the early stages of their relationship with a company.

When creators (or their agents) expect equity grants out of the gate, it often leads to wasted time and stalled negotiations. The logic makes sense—equity is valuable, so why not ask for it? The reality is companies, especially startups, are cautious about giving away ownership without first proving the partnership creates real value.

Refresher On Equity Compensation Structures

Here’s a quick refresher on the four most common types of equity compensation:

For most long-tail creators, phantom equity is the most flexible, risk-free, and cash-friendly option. It’s also a structure that a larger percentage of companies will be open to. Let’s explore why.

Why Phantom Equity Is An Interesting Fit For Creators

Phantom equity isn't necessarily the best for every creator—we just find that is solves some of the biggest structural challenges we see between companies and creators when the topic of equity compensation comes up. It also takes into account what most creators and their agents don’t understand - the company’s perspective. It’s a really big deal for a company to grant equity in their business, especially earlier stage start ups. We want creators and agents to remember this key piece:

Below is a more nuanced breakdown of when phantom equity can be a great fit for creators and when other equity structures may be better.

When Phantom Equity Is A Great Fit

✅ Financial Upside Without Ownership Complexity - If a creator doesn’t want to deal with taxes, exercising options, or managing shares, phantom equity lets them benefit financially without those headaches.

✅ Near Term Cash Flow - Phantom equity can be structured to offer periodic payouts or profit-sharing, which is important if creators rely on consistent income (as most creators do).

✅ Don’t Want to Be Locked Into a Company - It allows more flexibility than traditional equity, meaning a creator can work with multiple brands while still benefiting from the company’s success.

✅ Allows Creator and Company to Test the Relationship - If the company values a creator’s contributions and they deliver real value, phantom equity can be structured to convert into actual shares later, giving creators actual ownership only when the partnership proves successful.

When Other Equity Structures Might Be Better For Creators

Stock Options work well if:

• Creators believes in the company’s long-term potential and are willing to invest in ownership.

• Creator can afford to pay for shares when exercising options.

• Creator doesn’t need immediate cash flow and are comfortable waiting for an exit event (IPO, acquisition).

RSUs work well if:

• The company is later-stage and more stable (so stock actually has predictable value).

• Creator is being brought at the beginning to have deeper, long-term involvement with the company.

• Creator is comfortable with potential tax implications when shares vest.

Warrants work well if:

• There is a negotiation-heavy deal where the creator wants custom terms beyond what stock options allow.

• Creator wants longer expiration periods and lower upfront costs compared to stock options.

To sum it up - for most long-tail creators who don’t want to deal with stock, exercise prices, or long vesting schedules, phantom equity is often the most flexible and low risk option for both the creator and company. But, if a creator wants true ownership right away, is comfortable with long-term equity, and is okay with delayed rewards, stock options, warrants, or RSUs might be better. Below is an equity compensation cheat sheet we put together for creators:

Bridging The Gap Between Agents, Creators, and Equity

One of the biggest challenges we’ve seen in creator equity deals is the disconnect between creators and their agents. Many agents filter or withhold key information when evaluating equity opportunities because long-term incentives aren’t always aligned between creators and their managers. This creates a major inefficiency, leading to a ton of wasted time and phone calls between creators, agents, and companies.

We have found much of this comes down to how agents are trained - especially at the larger agencies. Many still operate under the traditional Hollywood model, where short-term deals and cash commissions take priority over long-term wealth-building. Historically, equity opportunities would be handled by a talent’s business manager—but the long-tail creator can not support both a talent agent and business manager.

To truly build generational wealth, long-tail creators need to start having deeper conversations with their agents—not just about sponsorships and brand deals, but about real business strategy and long-term planning. In many ways, the talent manager and business manager must become one for the long-tail creator. It needs to look much more like the 1-1 model that dominated the 1970s entertainment industry.

More on that later.

Have a great day and remember to Go Direct!

Jordan & Scott

We are putting this newsletter out for free. Hit the subscribe button below and get it straight to your inbox!