The Recruiter's Guide to Selling Pre-IPO Equity with Hannah Spellmeyer, Slingshot Aerospace

Equity can be the difference between losing your best candidates and closing them.

Hannah Spellmeyer, Chief People Officer at Slingshot Aerospace, joins Shannon to break down how recruiters can confidently sell equity and compete with larger companies. She shares what most teams get wrong, the key numbers every recruiter should know, and how to position equity based on what candidates actually care about.

Hannah walks through how to make equity tangible, from explaining intrinsic value to using real market signals, such as secondary offers. She also explains how to enable teams with simple tools and stories so recruiters can speak with clarity and build trust in every offer conversation. 

Key takeaways:

1. Know the core numbers: Understand strike price, preferred price, and intrinsic value before every offer conversation.
2. Lead with candidate motives: Tailor equity positioning based on whether a candidate values upside or stability.
3. Make equity tangible: Use calculators and real examples to turn abstract value into something candidates can grasp.
4. Practice builds confidence: Role play and shared examples help recruiters speak clearly without overpromising.

Timestamps: 

(00:00) Introduction

(00:52) Meet Hannah Spellmeyer

(01:39) Why recruiting teams need to get good at selling equity

(04:55) The key inputs recruiters must know to close

(06:49) When to share equity details with candidates

(08:58) Handling “equity is fake money” objections

(11:49) How secondary markets create early liquidity

(13:22) Using equity calculators to enable teams

(17:52) What great equity selling unlocks for hiring teams

(21:09) Advice for recruiters

(23:10) Where to connect with Hannah

Transcript

Hannah Spellmeyer (00:00):
So in order to remain competitive, you have to be able to close that gap and equity is the most important way to do that. And it is the most valuable thing that your company has. So also don't give it away willy-nilly. There is an opposite end of this, and I don't even think you and I prepped it, but giving away options like their candy is insanity because that will become the most valuable asset that you have.

Shannon Ogborn (00:27):
Welcome to Offer Accepted, the podcast that elevates your recruiting game. I'm your host, Shannon Ogborn. Join us for conversations with talent leaders, executives, and more to uncover the secrets to building and leading successful talent acquisition teams. Gain valuable insights and actionable advice from analyzing cutting edge metrics to confidently claiming your seat at the table. Let's get started.

(00:53):
Hello and welcome to another episode of Offer Accepted. I'm Shannon Ogborn, your host and this episode is brought to you by Ashby, the all-in-one recruiting platform empowering ambitious teams from Seed to IPO and beyond. I could not be more excited to one be at Transform. We are also here with Hannah Spellmeyer, who is currently the chief people officer at Slingshot Aerospace, but she earned her stripes as the founding recruiter at a startup that she helped scale from 80 to 800 people in just four years.

(01:17):
I'm sure that was no stress at all. How did she and her team convince talent from top tech companies to take a risky bet on what is now an $8 billion company by leveraging the power of equity, which we're going to talk about today with candidates who are already bought into the company's vision. So Hannah, thank you so much for joining us today.

Hannah Spellmeyer (01:34):
Thank you for having me. I'm so excited to be here at Transform and also on Offer Accepted.

Shannon Ogborn (01:39):
Yay. Well, again, we're talking about equity today. And in my experience, there has always been a gap between how recruiters sell equity and what they know. So I guess kind of starting at the beginning, why do recruiting teams need to get good at selling equity, particularly for private companies?

Hannah Spellmeyer (02:02):
Right. Well, equity is the most valuable thing that private companies own, right? And it tends to be one of those things that is intangible. It's non-liquid, meaning that it doesn't turn into cash right away. And so typically, folks who haven't experienced that upside, their eyes start to glaze over and they're like, "Yeah, sure, sure. Monopoly money." But in actuality, equity is one of the most powerful levers you have to not only build wealth, but more importantly for recruiters, close that total compensation gap for the candidates that you're trying to pull who are a little bit above your fighting weight in terms of who you can close.

Shannon Ogborn (02:40):
And this is important because in order to build generational companies, you need to be punching above your weight. That's exactly right. Punch above your weight unless you know what you're selling.

Hannah Spellmeyer (02:50):
That's right. That's right. This is kind of a hot take and I may catch flack for this, so sorry for the spicy take, but that same founder at the company we grew so much said to me at one point, "We need to hire candidates who make us look better, not who we may look better." So if you were hiring candidates who your logo elevates their LinkedIn profile, then should probably aim a little higher so that in the market and the network effects, you're saying like, "Oh, that person used to work at Stripe or Square or Coinbase, whatever your industry is.

Shannon Ogborn (03:24):
" This is definitely an interesting topic because ... So I've worked at startups and I've also worked at Fang type companies and you're really not comparing apples to apples here.

Hannah Spellmeyer (03:35):
No.

Shannon Ogborn (03:35):
You're comparing apples to grapes or broccoli, like blueberries. They're completely different,

Hannah Spellmeyer (03:41):
Right? Right. They are. And that's by design. When you are at an early stage startup, you don't have a lot of cash, right? And you see this naturally occur over the evolution in that you joined at an early stage, you take likely a lower cash salary. However, you're putting a bet on a higher equity grant so that over time, the equity grant you received at series A is exponentially larger than what someone will receive at series D when their risk that they're taking as much less. And so over time, your recruiters will deal less with closing that gap and trying to illustrate the value of equity. But in the beginning, you're never going to be able to compete with the cash on hand that larger companies have. And so being able to sell the vision, the future value and that candidate's direct impact on that value creation is really critical to getting folks to get on board and sign on and not feel like they're taking a huge hit.

Shannon Ogborn (04:37):
Totally. And this is the importance of the key inputs we're going to get to here in a minute that you're presenting facts. You're not overselling.You're presenting information, but there is a certain level of information that talent people need to know in order to be successful in this. So if I'm a recruiter, which I was, if I'm a recruiter or someone, even a hiring manager, honestly trying to sell and close a candidate, I'm walking into that offer call, what are the key inputs? What do I need to know when I walk in the door in quotes?

Hannah Spellmeyer (05:13):
Yeah. There are some table stakes. And I want to say too that until you've lived this and you've had a great experience, it is hard to make it tangible. It feels very hand wavy, but there are some core data points, right? You need to know your strike price, which is the amount that your candidates will have to pay to buy their options. Options are not shares. They are a contract to buy those shares at a particular price. So you have to know what that is and you have to be upfront with candidates, particularly who have never had ISOs or incentive stock options or NSOs before to let them know that because that's a real bait and switch if they start and they're like, "What do you mean have to buy these?" So you got to know your strike price. You also need to know your preferred price from your last round.

(05:56):
That's what your investors paid for their preferred stock. And then you need to know the delta between those two because that's the actual intrinsic value of that grant. So to make it easy, let's say that your strike price is a dollar, your preferred price is $5. Well, the intrinsic value there is only $4 per potential share because you've got to shell out the money to purchase those. And being upfront about the risk that people are taking is important, as you said, not trying to oversell that you're going to buy an island and a sailboat at the end of it.

Shannon Ogborn (06:33):
The delta is the most important piece because someone looks at this and they're like, "Oh my God, it's already $20 a share. I'm getting all these shares." But that's not your gained value in theory, right? In theory, there is still-

Hannah Spellmeyer (06:48):
Some upside,

Shannon Ogborn (06:49):
Sure. There's upside, but there's also the conversation around this is not a guarantee and there are some disclaimers in there. I guess my question is, do you think recruiters should just offer this information when they're giving offers or should they wait until it's asked?

Hannah Spellmeyer (07:04):
It depends on your culture, but I'm always of the mind to offer that information. One thing that I don't share, and this is probably another podcast in and of itself, but is percentage ownership and sometimes you'll find, if you're an executive recruiter, people will ask about BIPS and what they're getting and that is a fair conversation to have at that level. But for most employees, the value creation they see is going to be that intrinsic value. So there's no need to go into what kind of dilution happens at every round. It just doesn't matter. But when you're talking about like, "Oh, well, my strike price is $20," imagine that you're a recruiter and your candidate has a competing offer, ask them, ask them what their other strike price and preferred price is. So they may be like, "Well, this strike price is $5." And you can be like, "That's worse." You're not going to make as much money.

(07:57):
And then you can start qualifying like, "Well, what is the revenue that that company's bringing in? We're bringing in this revenue, or you have the potential to end up with X number of dollars because of where our strike price currently is. Hopefully you're on the cusp of a race, so you've got some urgency you can build in there so they keep it, but it's important to know those tent poles so that you can help educate your candidates as well, because sometimes it's their first time interacting with that as well.

Shannon Ogborn (08:27):
That and it also pushes candidates to try to seek that information from other companies because not every company ... So I worked at a previous company who would not give that information to candidates. And to that I say a big red flag, if they can't give you that information, as a recruiter, I would be concerned about that if I were you, just human to human, that would be a concern. And yeah, there's a lot that goes into this, but one of the common rebuttals ... So when I was at Google and we would be working with candidates who would have an offer from us and maybe other fang companies and then a startup is they'd be like, " Well, that's just fake money, but there's actually two fundamental things and outcomes that can happen before an exit. "Tell me a little bit about that and how recruiters should think about positioning those.

Hannah Spellmeyer (09:22):
Right. I'll tell you a wild stat too that I heard it Transform yesterday. So there are about 1500 private companies that have a billion dollar valuation. How many publicly traded companies would you imagine have a billion dollar valuation or more? Unicorns, publicly traded unicorns.

Shannon Ogborn (09:39):
Probably a lot.

Hannah Spellmeyer (09:40):
1500, the same amount, which was wild to me. And so there's this idea, and listen, RSUs are immediate liquidity depending on vesting. That's 100% true. But this idea that they are somehow more equipped to generate wealth as a misnomer, especially because of the advent of all of these websites, equity be equities in and all the randos that DM me on LinkedIn, I see you. And what they're doing is they are participating in a secondary market. So they're saying," Hey, I've got this family investor, I've got this individual who wants to buy pre- IPO stock and whatever it is, if you've exercised your shares, we'll take that off your hands before the company even goes IPO. "And so you may think like, " Oh, while you're five, seven years away from IPO, you're not going to get any liquidity from this equity, "but that's simply not the case anymore.

(10:36):
Further, as companies get further along in their fundraising and they want to clean up their cap tables, they want to bring some shares back for whatever reason they have, they'll offer tenders to their employees and say," Hey, we'll trade you X number of dollars per share to buy these shares back that you've exercised or vested. "And you can see liquidity in that way too. So you're not necessarily asking candidates or employees to sit on this value for five, seven, 10 years. There are mechanisms that enable them to cash out much sooner and not financial advice. Sometimes that's more advantageous. I come from crypto and you've seen it go like this. There are many times I look back and think, if I'd have only taken that secondary offer when Bitcoin hit 100,000 or whatever. So I say for people who work in very stable corporate jobs, I'm like, " You go to a job every day, I kind of go to a casino, but I get to influence what the outcome is and I think that that's a very cool lever to have.

Shannon Ogborn (11:49):
Yeah. And with the secondary markets, I know one thing we talked about previously, I guess just in terms of being able to sell that, the best time to service that, especially if you're talking to candidates is after a fundraise because they can see more what the secondary market is offering.

Hannah Spellmeyer (12:06):
Yeah, that's exactly right. So you'll see a lot of activity on the secondaries after your company completes a fundraise. And again, that's when the folks start sliding into your DMs and sending you messages, but it's a good way to really market check the value of your options as well. And as a recruiter, I mean, I would have no qualms about saying, listen, I can't guarantee the price because you and I both know that that will change. But what I can tell you is that I have teammates and colleagues who are seeing offers in the X, Y, Z range right now. And to ground that, what that would look like is I joined a business with Penny stock. They were 15 cents. And so we were recruiting when crypto was through the roof and I'd be like, "We're getting secondary offers at $30 a share." And so that is a great return and that's a tangible thing that you can say like, "Somebody today will buy this on the secondary for $30 a share and you paid 15 cents for it.

(13:02):
" That also requires your recruiters and your recruiting team though to be pretty well networked internally, to understand those conversations and to be getting that peer knowledge from the folks around them if they haven't been there long enough to be getting those offers themselves.

Shannon Ogborn (13:19):
Yeah. The knowledge of power is definitely true there. When it comes to enabling your team for this conversation, what needs to go into that, especially if you're a talent leader or talent manager, how are you enabling your team to have this conversation well?

Hannah Spellmeyer (13:35):
One of the most powerful tools that you can give to recruiters and also candidates is an equity calculator. And so work with your finance team to build something that shows candidates, what their upside could potentially be. So this is your strike price, let them play with the preferred price. If you want to get fancy, you can do it based on multiples of revenue. I do think that can get confusing for folks. So keep it simple, stupid is probably the best strategy there. And then the caveat is always like, this is not a guaranteed result. This is based on benchmarked companies. Things can change. Your equity can go underwater and that is a real thing that you have to be honest about, but it does enable them to not just try to hold 15 numbers in their head at the same time, but to really manipulate what their potential outcome could be based on the valuation of the company.

(14:26):
And that's really powerful. That can be really, really powerful.

Shannon Ogborn (14:30):
Yeah. You certainly don't want to get sued. So yes, please put the disclaimers on. Again, this is not financial advice. There's this interesting motivation that comes with that because when I ... So I started Ash before years ago.

(14:45):
I was like two or three weeks before the series B, whenever I look at this spreadsheet and I see the potential outcomes, you just want to work so much harder. And you were kind of alluding to it earlier. It's sort of these personal stories of these outcomes where like, could it be a wash? 100%. I've worked at companies where it's a wash and guess what? There's a tax write off right there and it is what it is. You're taking a risk. It's a bet that's what it is, but you have direct influence at the company at this level of getting to that outcome that you want. And I think that's such a powerful selling point for recruiters to make. It's like you're not at a big post IPO company, tech giant where you're like, you're just a grain of sand on a beach. You're like half the beach.

Hannah Spellmeyer (15:36):
Yes. And

Shannon Ogborn (15:36):
I think that's so cool.

Hannah Spellmeyer (15:38):
Well, I think it's the closest you can get to being an entrepreneur without taking on an exceptional amount of risk and heartache to be able to say, "I built this. I built this feature that was released and helped generate X number of dollars in revenue." You have to be at a pretty high level at a large company to be able to say that. And so in terms of targeting candidates, if you can find the folks that that really resonates with, that's who you sell the vision to. That is who you sell it to.

Shannon Ogborn (16:09):
Yeah. Not every place is going to be for everybody. Like we talked about earlier, it's not apples to apples and that's okay, but you need to find the people who like the grapes or the broccoli or the blueberries and they're not looking for an apple, they're actually looking for something different and you really have to get people to buy into that.

Hannah Spellmeyer (16:31):
So I think that there's a component of knowing who you're selling to and how to position that message. So for some folks, it is going to be about wealth creation and upside, right? So sure, your RSUs are worth X number of dollars and that's what they are. Those are never going to 10X. I mean, not financial advice, highly unlikely that they 10X or 100X, which I've seen. So that's one selling point. The other selling point is helping folks who are further along in their career. They don't need as much liquid cash, but you want them to be able to not feel like they're losing something, right? So if you can calculate that intrinsic value and incorporate that into their total compensation, it's easier for them to leave a company where their total comp is, I don't know, $800,000 a year to come to your lower salary, less competitive benefits, but understand that if their equity 10X is their total annual comp actually turns into $875,000 a year.

(17:37):
And you're like, see, you're not necessarily losing anything and you have so much more impact and influence over where the value of that stock goes.

Shannon Ogborn (17:46):
What do you think happens when a company really gets this right or a work fruit or really gets this right?

Hannah Spellmeyer (17:53):
Oh, I think that you exponentially raise the caliber and the bar of talent that you're able to bring in. And I don't say that to say that one human is necessarily better than another, but there are sets of experiences and people who have seen certain journeys that will accelerate the trajectory of your business because, I mean, you and I know, we've been in startups, you do things for the first time. It's a little bumpy as you teach yourself how to do it. And then you do it the second time and it's 10 times faster and easier. So if you can start hiring folks who have seen it at great logos and you can do that faster, then you're talking about revenue acceleration, you're talking about faster product releases, you're talking about better credibility with enterprise customers. And those are the things that your C-suite cares about.

(18:40):
But in order to do that, you have to have a compelling reason for that person to join and it's not going to be your 50th percentile comp, which no shade. So

Shannon Ogborn (18:53):
That's a percentile, someone has to be

Hannah Spellmeyer (18:55):
It. 50% of us are there. Just kidding. That does not reflect any compensation philosophy, but it's illustration purposes only. So in order to remain competitive, you have to be able to close that gap and equity is the most important way to do that. And it is the most valuable thing that your company has. So also, don't give it away willy-nilly. There is an opposite end of this, and I don't even think you and I prepped it, but giving away options like their candy is insanity because that will become the most valuable asset that you have. And so it's a delicate balance. You're going to spend high on critical roles early on, and then you got to reign that in.

Shannon Ogborn (19:39):
Yeah. You mentioned it earlier, but compensation philosophy evolves as the company evolves. Exactly. The way you structure offers at Series A is not the way you structure offers at Series D is not the way you structure offers before you're about to IPO. When sometimes ISOs go to RSUs and that's a whole nother thing, but your philosophy evolves. You can't be giving Series A equity to people at Series, that's just not how it works.

Hannah Spellmeyer (20:05):
No, I mean, you'll run out of ... It's finite, right? Yeah. You will run out of things to give. And I've actually been in a business where we transitioned ... Listen, we were ambitious. And before I joined, the company gave single trigger RSUs to everyone, which was unsustainable. And so we moved that back to ISOs or incentive stock options. But as you get further along in maturity, remember that strike price and that preferred price, the bigger the delta is, the bigger your return is. And that represents the amount of risk that you've taken on and how early you joined the business. Well, as your revenue starts to increase, as your valuation gets closer, those numbers start getting closer together. And so the intrinsic value is less and less. And that's when you start seeing companies start move to RSUs instead of incentives. Because people

Shannon Ogborn (20:52):
Would it possibly be able to afford?

Hannah Spellmeyer (20:54):
No, you couldn't buy them.

Shannon Ogborn (20:55):
You couldn't buy them.

Hannah Spellmeyer (20:56):
No. And I wouldn't buy them for an extra $5 or whatever. It's just not worth the heartache. The heartache, the ANC- There is heart ache potentially. There's such a

Shannon Ogborn (21:05):
Heartache in this.

Hannah Spellmeyer (21:06):
There are sure. You know what? There is, and you have to be honest about that.

Shannon Ogborn (21:09):
Yeah. Well, any last thoughts as we wrap up this topic?

Hannah Spellmeyer (21:18):
Listen, you get a lot of notes, but the more you practice, the better you'll get, and you'll bring on some really great people that you will see change the trajectory of your company.

Shannon Ogborn (21:28):
I do think there is a little bit of anxiety for recruiters in this, and that's, I think, part of one of the struggles is I don't feel confident talking about this and I don't want to say the wrong thing. It's not going to feel comfortable until you do it. It's never going to be something that you're going to walk into your first conversation with a candidate being like, "Today is the day I'm going to start really selling this storyline and this equity and the upside. It's going to be tough and it's going to be bumpy and that's

Hannah Spellmeyer (22:01):
Okay." Yeah. And there's something about the earnestness of a recruiter saying, "I'm not sure." I was just thinking at one point, a candidate had a competing offer and they were saying, I can't remember the exact language, but basically that their equity was priced at a penny a share. And I was like, "They're what? " And they said the term again, and I was like, "Hold on one second." And so I paused on the call and was like, "Let me look up what that is. " Well, it turns out the equity hadn't even been priced yet. And so that person was thinking that the intrinsic value was exponential. And I'm like, "Oh, no, no, no. Just like human to human, you have to understand this hasn't been priced yet. There is no market data for how much this could even potentially be worth." And I didn't know that without looking it up and that builds trust with you and the candidate too to know that like, "Hey, I'm not BSing you.

(22:48):
There are things that I don't know as well." And then just a plug for Ashby and their other platforms, BrightHire as well, like record your best interviewers talking about equity and make that part of your recruiting enablement so that folks can see those questions, see how they're handled and just get more confident in doing it.

Shannon Ogborn (23:07):
Yeah, that's a brilliant idea. Good idea. Well, we are going to move on to our final three questions. These are now living on our YouTube extended version. So if you are curious to hear Hannah's recruiting hot take, what hiring excellence means to her and one thing she would tell her earlier career herself, please head there. Well, we are coming up on our time. Where should people go to learn more about you and your work?

Hannah Spellmeyer (23:31):
So as you mentioned, I'm with Slingshot Aerospace. We are hiring. We're a space operations intelligence and autonomy company that is helping space be more safe and secure. And you can always follow me on LinkedIn as well. I don't probably post as much as I should. Maybe this is the impetus to do that, but always happy to chat and connect and so excited to be a part of Offer Accepted.

Shannon Ogborn (23:52):
Thank you. And I think that this is going to be so helpful and people, especially recruiters who are feeling a little bit self-conscious or scared to sell the equity piece to feel more comfortable and at least go in knowing what they need to know so that they can be successful. That's

Hannah Spellmeyer (24:08):
Right. Strike price, preferred price, intrinsic value. Minute.

Shannon Ogborn (24:13):
Amazing. Well, thank you so much for joining us.

Hannah Spellmeyer (24:14):
All right. Thanks, Shannon.

Shannon Ogborn (24:17):
This episode was brought to you by Ashby. What an ATS should be: a scalable all- in-one tool that combines powerful analytics with your ATS, scheduling, sourcing, and CRM. To never miss an episode, subscribe to our newsletter at www.ashbyhq.com/podcast. Thank you for listening and we'll see you next time.