“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.”
Close your eyes.
Imagine, if you will, a startup that meets the following criteria:
- Their recruiting process is fundamentally flawed
- Their operations are a mess
- They make engineers pretty much do everything, which leaves almost no time for coding
- They don’t (care) about charity or…
A fantastic post by my friend Avand Amiri from Sqoot, an API for daily deals
“How to Measure the Metrics that Determine Real Progress” By Trevor Owens on Oct 3, 2011
