The problem: runway anxiety
Start-ups are inherently unstable. All hires should know this going in, but will have differing levels of commitment. The CEO faces a tough trade-off in disclosing the start-up’s financial situation. Keep things close to the chest and the team can focus on their work, but may be caught by surprise if funding runs out. Transparency is nice, but if the situation begins to look dire employees may begin to jump ship — further increasing the chance of bankruptcy.
A possible solution
What if employees were incentivized to save? It seems to me this situation could be improved if all employees had an emergency fund — enough for a 3-6 month cushion. Receive an extra $1,000/month in compensation so long as you put that $1,000 plus $500 of your starting salary into a savings account that you can only access if the start-up folds or if you leave.