#employee equity

[ekremdum-blog]

How startup employee stock options work, from option pools and strike prices to vesting and exercise, and how founders can design grants that genuinely motivate.

Employee Stock Options Explained for Startups

[olivetoreview]

What we need is empathy and structure that respects everyone’s time, energy, and choices. If the workplace truly wants to be inclusive, then policies, attitudes, and benefits need to evolve beyond one narrow definition of “family.”

Childfree vs. Parents: The Workplace Double Standard

[pavel-nosok]

7 ways to educate new hires about employee equity compensation (Sponsored)

7 ways to educate new hires about employee equity compensation (Sponsored)

You’re ready to onboard some new employees. Congratulations! If your company is like most, part of your onboarding process probably includes some education about your employee equity compensation plan. After all, the plan provides your new staff with the unique opportunity to participate in your company’s long-term success—making not only an attractive recruitment and engagement tool but also a…

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[managermint]

TechCrunch: Is blitzscaling killing early employee equity opportunities?

TechCrunch: Is blitzscaling killing early employee equity opportunities?

Silicon Valley has many dreams. One dream — the Hollywood version anyway — is for a down-and-out founder to begin tinkering and coding in their proverbial garage, eventually building a product that is loved by humans the world over and becoming a startup billionaire in the process.

The more prosaic and common version of that Valley dream though is to join an early-stage company right before its…

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[keyvanfirouzi]

A (difficult) framework : Swapping equity for employees / partners / investors

You and your friend started a company, and are ready to bring on employee # 3 ("Lena"). Exciting times. Time to loosen the bag and give Lena some equity. But how much? Like other things, there are two methods:

1. Rule of thumb (i.e. "this is what everyone else is doing")

2. Calculation

I'll leave rule of thumb be. That is the forces that is the market.

Paul Graham has done an excellent job at quantifying a framework for this calculation. To me, Paul Graham is God, and I am in no position to judge his work, so I'm going to judge his work.

Paul's suggestion is that if Lena can increase the value of the company by 5%, then it is fair that the company give her 5%. Seems straight forward:

Here's the problem of thinking about this when you are hiring Lena: You've just rolled out the product, and you barely have any customers or distribution channel, and you have not really gone up against the true competition. You may fall into the trap of thinking of "5% increase" in today's terms, and that is quite dangerous (i.e. you would think "well, we have 100 customers, and if Lena can bring in 5 more customers, then we are 5% better". Right? Wrong). Paul's view is that if Lena can increase the value of the company by 5%, then give her 5%. But what is the value of the company? The value of the company is all the hopes and dreams of the future, the ups and downs, the challenges, the potential customer acquisitions, the deals that are going to go through, the bugs that you'll be able to find and fix, the daily motivation of the employees, the ability to grind it through, the shape of the industry, your position in the industry, and, at the bottom, all the money that you're going to make (in today's terms, adjusted for risk and probability). The value of your company is all of that (whatever it is) and you have to be able to say that by bringing on Lena, you'll be able to, on average, do all of those things 5% better, or do at least do one thing a lot of percentages better, so that it increases the value of the whole company by at least 5%. So I introduce graph 2:

In Paul's framework, you have to make a guess about all of the things that make up your company's value (and the bottom-line dollars) with your gut. It would be similar to doing high-frequency quantitative trading with a free e-trade account. The framework is fundamentally sound, but nearly impossible to implement. It is similar to Bernoulli's expected utility hypothesis, in that it helps define and think through a very complex problem, and yet it is quite difficult to get any real value out of it. I'm leaving this thought process for now and returning to it later . . . 

[latestvcnews]

Employee Equity

Longtime readers will know this is a topic near and dear to my heart. I did a whole MBA Mondays …

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