| 1 | |
| 00:00:00,000 --> 00:00:05,760 | |
| The third dimension is how many. | |
| 2 | |
| 00:00:05,760 --> 00:00:09,120 | |
| The how many dimension has two parts to it. | |
| 3 | |
| 00:00:09,120 --> 00:00:15,280 | |
| How many options per employee and how many options in total as in the total stock options | |
| 4 | |
| 00:00:15,280 --> 00:00:17,600 | |
| pool. | |
| 5 | |
| 00:00:17,600 --> 00:00:20,760 | |
| How many options should you grant per employee? | |
| 6 | |
| 00:00:20,760 --> 00:00:24,240 | |
| What number is the right number and how do you decide that? | |
| 7 | |
| 00:00:24,240 --> 00:00:28,880 | |
| Well, here we use the principle of attractiveness. | |
| 8 | |
| 00:00:28,880 --> 00:00:34,920 | |
| In a certain growth rate, what amount would be an attractive amount for an employee at | |
| 9 | |
| 00:00:34,920 --> 00:00:38,400 | |
| a particular role criticality? | |
| 10 | |
| 00:00:38,400 --> 00:00:43,600 | |
| We will discuss this in detail when we do the numbers, but broadly what you need to ensure | |
| 11 | |
| 00:00:43,600 --> 00:00:51,040 | |
| is that the number of options must be such that they are attractive to the recipient. | |
| 12 | |
| 00:00:51,040 --> 00:00:57,440 | |
| The second part is how many overall meaning what must be the total stock options pool | |
| 13 | |
| 00:00:57,440 --> 00:01:02,840 | |
| of the company and out of that how many do you give out today and how many do you reserve | |
| 14 | |
| 00:01:02,840 --> 00:01:04,960 | |
| for the future. | |
| 15 | |
| 00:01:04,960 --> 00:01:12,040 | |
| Here you might have your own restrictions or those placed by your investors in some cases. | |
| 16 | |
| 00:01:12,040 --> 00:01:16,720 | |
| Now look at the interplay between this dimension and the last one. | |
| 17 | |
| 00:01:16,720 --> 00:01:21,440 | |
| You have a certain overall limit that you cannot exceed. | |
| 18 | |
| 00:01:21,440 --> 00:01:26,840 | |
| Within that limit, you need to ensure that whoever gets stock options should get a number | |
| 19 | |
| 00:01:26,840 --> 00:01:30,400 | |
| that is attractive enough for that role. | |
| 20 | |
| 00:01:30,400 --> 00:01:35,400 | |
| If you are ever in a situation where the stock options pool is too small and you cannot cover | |
| 21 | |
| 00:01:35,400 --> 00:01:41,200 | |
| all your people adequately, then consider reducing your coverage. | |
| 22 | |
| 00:01:41,200 --> 00:01:46,080 | |
| You can try reducing the individual number of stock options so you try and cover as many | |
| 23 | |
| 00:01:46,080 --> 00:01:51,280 | |
| people but beyond a point it does not make sense to give them out to a large number of | |
| 24 | |
| 00:01:51,280 --> 00:01:52,760 | |
| people. | |
| 25 | |
| 00:01:52,760 --> 00:01:58,360 | |
| Because that might mean giving out peanuts to everyone and it may not motivate anyone | |
| 26 | |
| 00:01:58,360 --> 00:02:00,720 | |
| at all. | |
| 27 | |
| 00:02:00,720 --> 00:02:05,960 | |
| Attractiveness also depends significantly on your growth rate over the next few years | |
| 28 | |
| 00:02:05,960 --> 00:02:09,440 | |
| and we will see how when we do the numbers. | |
| 29 | |
| 00:02:09,440 --> 00:02:15,520 | |
| As a founder, you need to balance these forces and customize your scheme so that it is right | |
| 30 | |
| 00:02:15,520 --> 00:02:16,080 | |
| for you. | |