I found this article a bit disturbing. My concern with this article is not so much for any mathematical inaccuracies, but rather the tone in which I interpreted the message. The nine points presented were basically correct in their mathematical considerations, but the final statement of “Play hardball. Know what you are getting yourself into” is a poor and disingenuous approach.

I am all for having the most knowledgeable and educated employees working for both my firm, as well as any other firm. Typically that bodes well for the employer and peer employees. What does not bode well is the “play hardball”. There is a huge difference between having knowledge that can be used to one’s advantage in determining that any offer of employment is personally beneficial vs. playing hardball.

I am also equally concerned about the following statement contained in this posting: “The problem is that in a lot of start-ups, the senior management teams are not very honest and upfront about stock options.” I do not believe this statement at all. Developing an adversarial relationship between an employer and employee at the onset of employment is grooming that career to fail. Venture Capital Firms, Angel Investors, Private Equity firms, private businesses, etc. are typically run by smart and honest individuals. Clearly there can be exceptions, but they do not represent the majority of investment or venture capital firms (and no I am not an owner of a VC firm, private equity firm, bank, etc.). This statement about the lack of honesty really reflects an issue of integrity and business ethics and should be completely disassociated with any stock option plan that might be offered. Who cares what amount of options or warrants you receive if you have to be concerned with the integrity and / or business ethics of the firm you are considering going to work for?

Individuals and financial backers who start companies successfully as well as unsuccessfully, take on far more risk than most employees recognize. Stock options are just one way of potentially rewarding individuals who decide to join a firm that may not be as established as other competitors. If the motivation for changing jobs or accepting a position is driven primarily or exclusively by the desire of being able to secure greater stock options than your peers, then I would suggest a reevaluation of motivations.

I found this article a bit disturbing. My concern with this article is not so much for any mathematical inaccuracies, but rather the tone in which I interpreted the message. The nine points presented were basically correct in their mathematical considerations, but the final statement of “Play hardball. Know what you are getting yourself into” is a poor and disingenuous approach.

I am all for having the most knowledgeable and educated employees working for both my firm, as well as any other firm. Typically that bodes well for the employer and peer employees. What does not bode well is the “play hardball”. There is a huge difference between having knowledge that can be used to one’s advantage in determining that any offer of employment is personally beneficial vs. playing hardball.

I am also equally concerned about the following statement contained in this posting: “The problem is that in a lot of start-ups, the senior management teams are not very honest and upfront about stock options.” I do not believe this statement at all. Developing an adversarial relationship between an employer and employee at the onset of employment is grooming that career to fail. Venture Capital Firms, Angel Investors, Private Equity firms, private businesses, etc. are typically run by smart and honest individuals. Clearly there can be exceptions, but they do not represent the majority of investment or venture capital firms (and no I am not an owner of a VC firm, private equity firm, bank, etc.). This statement about the lack of honesty really reflects an issue of integrity and business ethics and should be completely disassociated with any stock option plan that might be offered. Who cares what amount of options or warrants you receive if you have to be concerned with the integrity and / or business ethics of the firm you are considering going to work for?

Individuals and financial backers who start companies successfully as well as unsuccessfully, take on far more risk than most employees recognize. Stock options are just one way of potentially rewarding individuals who decide to join a firm that may not be as established as other competitors. If the motivation for changing jobs or accepting a position is driven primarily or exclusively by the desire of being able to secure greater stock options than your peers, then I would suggest a reevaluation of motivations.

I am still debating whether it is more of a perception of how you are valued, rather than substance–since either way, a lot of the “true value” of your option is the premium you give to this company: in the projection of revenue growth, the multiples for the industry and cost containment.

I think your piece helps me to look at this at a different angle: given the same projection of growth, which offer is more valuable than the other.

Keep up the good work