“The first thing you do is you figure out how valuable your company is (we call this “best value”). This is NOT your 409a valuation (we call that “fair value”)…
The second thing you do is break up your org chart into brackets. There is no bracket for the CEO and COO…
When you have the brackets set up, you put a multiplier next to them. There are no hard and fast rules on multipliers. You can also have many more brackets than four. I am sticking with four brackets to make this post simple. Here are our default brackets:
Senior Team: 0.5x
Director Level: 0.25x
Key Functions: 0.1x
All Others: 0.05x…
Then you multiply the employee’s base salary by the multiplier to get to a dollar value of equity. Let’s say your VP Product is making $175k per year. Then the dollar value of equity you offer them is 0.5 x $175k, which is equal to $87.5k….
Then you divide the dollar value of equity by the “best value” of your business and multiply the result by the number of fully diluted shares outstanding to get the grant amount. We said that the business was worth $25mm and there are 10mm shares outstanding. So the VP Product gets an equity grant of ((87.5k/25mm) * 10mm) which is 35k shares.”
“Here’s a rundown on the weekly calendar Dorsey keeps as CEO of payments platform Square and chairman of Twitter.
Monday: Management meetings and “running the company” work
Tuesday: Product development
Wednesday: Marketing, communications and growth
Thursday: Developers and partnerships
Friday: The company and its culture
Weekends are a bit slower: Saturdays are for hiking and Sundays are for “reflection, feedback and strategy,” Dorsey said.”
“And it’s not the easy problems that make it your way. Those already got solved. Rather, they’re the hardest problems that people bring to your attention. Day after day. That, my friends, can be tiring.”
“…it led to two pretty interesting discoveries: a) people often don’t realize they’re facing a problem. Rather, they just feel frustration. b) problem solving, and particularly the ability to shepherd a problem through the four stages listed above, is highly correlated with seniority.”
“How to Measure the Metrics that Determine Real Progress” By Trevor Owens on Oct 3, 2011
Leaders are people who go their own way without caring, or even looking to see whether anyone is following them. “Leadership qualities” are not the qualities that enable people to attract followers, but those that enable them to do without them. The include, at the very least, courage, endurance, patience, humor, flexibility, resourcefulness, determination, a keen sense of reality…
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John Holt as quoted on the blog of Caterina Fake
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Some choice quotes:
“It’s like the fight club of management: The first rule of the CEO psychological meltdown is don’t talk about the psychological meltdown.”
“Which interpretation was closer to the truth? In the absence of someone to talk to, that’s a question that I asked myself about 3,000 times. As an aside, asking oneself anything 3,000 times turns out to be a bad idea.”
“Tip to aspiring entrepreneurs: if you don’t like choosing between horrible and cataclysmic, don’t become CEO.”
“At times like the above, it’s important to understand that nearly every company goes through life-threatening moments. My partner Scott Weiss relayed that it’s so common that there is an acronym for it: WFIO which stands for We’re F#%ked, It’s Over (it’s pronounced whiff-ee-yo).”
“A Final Word of Advice—Don’t Punk Out and Don’t Quit. As CEO, there will be many times when you feel like quitting. I have seen CEOs try to cope with the stress by drinking heavily, checking out, and even quitting. In each case, the CEO has a marvelous rationalization why it was OK for him to punk out or quit, but none them will ever be great CEOs.”
If you think of management as a systems problem where your task is to design and maintain a system where it’s a) easy to get meaningful work done and b) is fun to work in and c) you will be recognized for your good work, then the relevant experiences for management are to a) work in a company and find out why it’s hard to get things done or b) run a company and carefully observe how you are screwing it up.
