I go out of my way to ensure I explain the nuances in each case, and these potential employees are so happy someone has finally explained this to them.Įmployees should be informed, not duped. I can’t tell you how many times I’ve made an offer and a potential employee does not know the right questions to ask in order to understand the true value being offered. There are a lot of very savvy startup employees out there who know to ask the right questions, but there are also many who don’t know which questions to ask.

So he ended up with less ownership of the company. What he failed to understand was the 10,000 options represented 1% of the fully diluted shares of Startup #1, whereas the 20,000 options only represent 0.5% of the fully diluted shares of Startup #2. He thinks “wow, that’s double the stock!” Uh, no. Let’s say Calvin decides to leave Startup #1, where he has 10,000 stock options vesting over 4 years, to join Startup #2, where he has been offered 20,000 stock options vesting over 4 years.

More than 90 days to exercise after departure.There are four specific areas of focus that I think are ripe for change: Note: I originally posted this on Medium here if you'd like to see the comments.Īfter 7 startups full-time and another 20+ as an investor/advisor, it’s become clear to me that startups should do a better job with all aspects of their incentive stock compensation, and not just follow conven tion because it’s “what we’ve always done.” This has been on my mind for a while, and after a recent Twitter exchange with a few VC/angel friends, I’ve been thinking about how startups can adjust certain aspects of incentive stock compensation to be more favorable to employees as well as the company.

Skype stock option buyback