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Options are the right to buy shares at a frozen (& cheap) price. Incentives are aligned because, if the employee helps make the company more valuable, the share
by lmeyerov 11y ago
Options are the right to buy shares at a frozen (& cheap) price. Incentives are aligned because, if the employee helps make the company more valuable, the share value goes up, and they get to walk away with the difference. (A slight oddity is that technically their value needs to go up to be worth exercising, but because of how they get valued -- ~20% of price early VCs pay ~ as soon as VCs would make money, so would anybody owning options.)
Independent of my desires for reform around taxes and illiquidity, offers should be made in terms of the current system, not a make believe one.
You may want to read up on this stuff, esp. if you want to work in startups..
- lifeisstillgood 11y agoSo the existence of, if not the acceptance of, forums like equidateinc.com that do run secondary markets in stock options, to me seem a good thing. They mark options as more liquid. One thing that strikes me about all this is that if capital is and remains much easier to access, then the risk of entrepreneurship is diminished, and the reward to founders seems likely to drop too - presumably being shared more with early employees?