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0 9800 Let us design a stock option strategy from scratch for a hypothetical education startup.
9800 14280 They are just getting started and plan to develop high-quality digital education content
14280 15280 for schools.
15280 20360 They have two co-founders, Margal and Catherine.
20360 25480 Both of them have been passionate about education for a very long time and wish to contribute
25480 28920 to the education conversation worldwide.
28920 33680 They incorporate a company with 10,000 equity shares to begin with.
33680 38120 Since they both are software engineers, they start to build their education application
38120 42120 together without hiring anyone else just yet.
42120 47520 A few months down the line, with the product built to a reasonable extent, they feel they
47520 52960 need to hire a couple of junior engineers to help them speed up the development, and
52960 58000 very importantly, also someone for sales and marketing.
58000 63480 They plan to sell their product to educational institutions so they need someone experienced
63480 65640 in B2B sales.
65640 70880 They know the digital education domain is quite crowded, but they wish to build a product
70880 76520 that though digital has a unique manner in which the content is delivered.
76520 81920 They also have a separate section for teachers to help them upskill so they can use the content
81920 82920 effectively.
83080 88400 They are not trying to replace the teachers but to train and empower them.
88400 94680 After a lot of deliberation, they agree that the vision of empowering teachers resonates
94680 96440 very strongly with them.
96440 102440 This is their non-financial vision that energizes them to come to work every morning, and they
102440 109240 would like to have such people on the team who are also energized by such a vision.
109240 115160 They also agree that apart from integrity and professionalism, a core value they would
115160 120960 want to have in their team members is warmth and compassion.
120960 126880 The definition of their values and a non-financial vision provides them with clarity in terms
126880 130520 of the kind of people they would like to have on the team.
130520 135800 For instance, they are now clear that someone who is very well connected in the education
135800 143600 ecosystem is experienced in B2B sales, but bears a loud and a slightly domineering attitude
143600 148680 may not be the right fit for the culture they would like to create.
148680 154440 Now they are also not looking for people who merely have their relevant experience or are
154440 160000 passionate about education in general, but those who would be excited about empowering
160000 163080 teachers in particular.
163080 167760 As they begin their search, they are also aware that they cannot afford to pay market
167760 169560 salaries.
169560 174760 Once they find the right people who are inspired by their values, vision and culture, they
174760 179360 would also need to incentivize them financially using stock options.
179360 181720 So they need to note two things.
181720 188800 One, they intended benefit for each such role over four years, and two, their financial
188800 195680 projections to determine how much profit one equity share would provide in four years.
195680 196680 Let us do that next.
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