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In episode 1 you hinted at more tax friendly ways to exercise your options. I was hoping to see this covered but assume you are referring to exercising when valuation is lower or before a fundraising round so that the capital gains tax impact is less? Additionally, if I do exercise my options and my company is purchased in the future, is there ever a scenario where the purchasing company will not pay me for the shares I hold?

Great info. Very technical. Thank you for sharing!👍

ESOP cant stop wont stop ;)

Great videos. Super informative

Just discovered this content - Great stuff

This was super helpful, thank you! Would be curious to hear your thoughts on Angels. I think what you advise is wise (not to take money) but I also think there are cases where, for example, the entrepreneurs are stuck with very little income at their jobs and they can't leave because it's a matter of survival. These are points where even just a little bit of money, like income for a year so they could quit their jobs, would be helpful. To be clear, I'm not talking about comfy Google jobs where someone makes $300K a year. I'm talking about minimum wage or less than that. So in those cases, would you advise searching for angel investors? Or does that also come with the baggage of losing control and all the other VC stuff?

Hey Chris, just wondering - you said that in reality one might not actually have to write the $10,000 check, and the lawyers would compute and eventually $90k just shows up. But later you say that if you don't have $100k then you won't be able to exercise your options...so just wanted clarity on whether one needs the cold hard cash to actually exercise one's options or not.

Well - great stuff but it is not like there are only two types of businesses - lifestyle or vc backed :) it is more like regular business vs vc funded tech startup style business. In fact about 90% of businesses are in the first category. Also tons of big huge companies started out as regular businesses and just grew really big - they are not “lifestyle” (a favorite vc term to put down any business that does not want to go their route) or vc funded. Like Walmart, Mailchimp, and many many many others (there is a whole great book about it called Building on Bedrock that has a lot more examples).

Honestly, the best video overall on TH-cam describing stock options. We’ll done!

This was the exact informative video I was looking for after endless searching through Google and Reddit. So, thankful! You have further strengthened my stance on bootstrapping my business. As a recent college grad, VC money is so ingrained in my mind due to the college environment where finance students are always talking about funding, funding, funding, valuations, term sheets, etc. Can't wait to look back at this in a few years!

This was so easy to understand! Thank you. Can you explain RSUs?

Seems like a gap between sound and picture?

Fantastic video! Thank you!

Amazing! Thanks a lot for the detailed explanations. Helped me a lot 🙂

This is exactly the info I needed. Awesome content.

Brutal honesty RULES!!!! Delivered timely😎🖖

Great video! Learned a ton!

After series C, is the company pretty much forced to IPO at some point? Or is there any kind of later stage fundraising that can happen?

Where is the 3rd vídeo? 👀

Great contents. Keep them coming. :)

you can't sell the options instead of excerising them?

Loving season 2 Chris! Thanks for keeping it real. Great education for Aussie startup employees, where the value of ESOP is misunderstood. We just haven’t had the same volume of wealth creation events in Australia to demonstrate personal impact. I’ll be sending @StartupVic community to this video (and part 1 of course)!

Awesome content and I love the dry humor! I'm validating 2 ideas at the moment through customer interviews. If the ideas are validated-customers are willing to throw money at me to build it-then the next step is to evaluate whether or not to go the VC funding route. Looking forward to seeing more content!

Keep them coming Chris!

Thanks so much for this great explanation Chris! Is it true when we talk about getting shares from a company where investors are anticipating a 10x return over 5yrs, the 409a will reduce your spread (due to the strike price increasing) if you aren’t able to exercise your options, and you will never realize the 10x spread if it does happen?

Chris, if you do part 3 like you mentioned in this episode, you may want to mention lockouts for those that IPO. Many don't realize this a typical stipulation. I worked for a Silicon Valley startup in the late 90s and early 2000s. We went public and had a great IPO. Unfortunately, the dotcom bubble burst prior to our 6-month lockout ending. We watched the share price climb to over $75 then nosedive until we were all under water before the end of the lockout. Obviously an extreme example, but it is a reality.

Chris, great episode. What's your feeling on giving stock options to every team member vs. limiting it to a more select group?

Thanks for this! I had no idea how strike price was calculated. Also- I love the upgrades to lighting, music, and graphics in your new season. Nicely done!

This may relate to the last episode (I watched them back to back) but I was surprised that you said not to really think about the % of equity, just the # of shares/options. That may be true once you get hired, but while negotiating an offer, shouldn't the % really be the decider, since 100,000 options maybe really generous if the company has 2m shares outstanding, but not so much if its 10 or 20million shares. Obviously, once you have your options, then % is less relevant and just the quantity matters since that's a measure of your potential reward

Thanks a lot. Finally I can see these topics applied to startups. It's like a financial engineering class, except for the fact I'm not falling asleep. Even though that blue light in the background is so relaxing ahaha

For the next episode, please can we provide some guideline for the number of options granted (or in percentage), including the initial offer and follow-on (e.g. evergreen)? Thanks!

Shared. Solid education video here! (getting some mad editing skillz BTW)

Great, now I'm ready to take on wall street with my life savings, WSB here I come! JK, great video. Thanks for taking the time to share some knowledge with us.

New camera looks great! Welcome back

Hey, what are your thoughts on some new loan startups giving loans to give cash to exercise options? great video btw

Great video, thanks Chris! I'd love to hear your thoughts on typical percentages of options to expect as an early stage employee (foundation and engineer #1 of a bootstrapped SAAS company in my case). I know it'll have a lot to do with specifics of skills, wages and company size, but it's so hard to find this information so a general discussion would be much appreciated if possible 🙂

I'm curious what portion of stock options ever become valuable; I'm guessing it's roughly the same as how many companies either reach an IPO or are purchased by another company (minus a little for too-high strike prices or shenanigans by the purchasing company), which seems like slightly better odds than buying a lottery ticket. That's probably the best way, as an employee, to think about them. They're worthless until they aren't, just like a lottery ticket, except that your efforts *may contribute to the chances of winning. And that's a huge asterisk, as many (or most) of the factors that go into the chances of winning are beyond the control of a typical employee, or even a c-level exec.

Welcome back! Great summary of how stock options work and the various types of grants and tax implications. Thank you!

Please ask questions or leave comments! Also, I know I spelled "simultaneously" wrong. I was too lazy to re-upload the video once I noticed.

I'll bring it back to the marriage comparison you use in another video. Marriage isn't based on the vibes or the feeling of love, but rather the commitment to the underlying terms of the marriage, fidelity, contribution, and support. It seems to be the same with business, the feelings can sway but the commitment to company's underlying principles have to remain steadfast.

My mom used to say, "make a great day," and it didn't occur to me until adulthood that she meant sometimes you just have to get over that wrong-side-of-the-bed mentality and seize your day. Great Vlog, thanks for facilitating this conversation, Moody.

It's great to see VCs who are also educators. And on that same note, please don't edit out your digressions, it's nice to be able to follow your train of thought. The way you went over the Dentist example step by step was illustrative.

Great line.... "be very careful of who you pretend to be"

Boulder neighbor here! Wonderful content and personality, you are much braver than I am. Film geek note: If you are noticing on your metrics that viewers are not making it through your episodes, try some soft-cuts instead of the hard jump-cuts. A little easier with respect to viewer fatigue factor. In any event, keep 'em coming and well done!

As a small startup, we really appreciate the perspectives and information you are providing (along with humor... this should be fun right?). What are your perspectives on what a food/beverage business startup can learn from the tech startup world and where do you see food businesses typically failing? Another topic we'd like to see you cover is what are your perspectives on best of class techniques for Networking/Mentorship. Thanks!

Great content. I’d love to hear about vetting good ideas.

I'm sharing with my VC class at CU

Really enjoying these videos. It would be great to hear about any strategies for landing that first enterprise client - you know, the one that loves your product and is happy to tell others. That B2B client validation is particularly critical for us (Analytics, InsurTech). Thanks.

Authenticity is such a great power law in business/life. Thanks for bringing up that trait as well as honesty.

Please have an episode on how to properly utilize lawyers (not using trebuchets) in startup and early funding rounds. Thanks for taking the time on these vids!