Equity and Stock Options

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Transcript

When it comes to shareholders and investors and employees, everybody gets either equity or stock options. equity is a percentage of your company's common stock. So 100% of your company is what what you have when you first start out, if you give a CTO 50% of the company, he now or she now owns 50% of the entire company right away immediately, because you give them a stock certificate. And if you give a marketing director or an intern or a junior programmer stock options, that means that they have the right to purchase those options later in the future, so they don't actually own equity in the company. They have the option to buy stock at a later date, but at a set price. So if one day you get acquired for 100 million dollars, and they have a million dollars worth of stock, but they're only going to have to pay like $100 for it, because the set price was like a penny apiece.

So they were able to basically bank out and cash out. And a lot of people say, Well, why do I need all these co founders and employees? Well, it's just like a pit crew, a racecar driver can race around the track, but if he needs to change a tire, or if he's gasoline, or if he needs to change the brakes, his pit crew is there to help out and support him. If not, he's not going to be able to win the race. So you know, you really need to find a diverse set of skills, talents and value for your team. They have to have the time commitment, so they have to be able to at least give you you know, 1020 hours a week, if not more, they should be a part of the ideation process.

If not, then you're just a solo founder. They should have some sort of domain expertise. I mean, if you're building an app for furniture, like a furniture, you know rental app, well, then the people that you work with should one of them should have been Like the VP of Marketing for IKEA, you know, or one of them should have worked for, you know, some other furniture store so that they have some sort of expertise in furniture. connections to funding is always a plus if they have investors in the family or friends that they know who are wealthy and don't mind investing, that's a good reason to bring someone on the team because you'll it's really hard to get funding. So that's just one less thing you got to worry about anybody who's already had a success in the startup world, or they sold their furniture business for your furniture app.

So you know, something that, you know, says to you, that you that this person is going to be worth your while because they've already succeeded in some way. It's worth adding them to your team. I mean, let's take a look online. And I pulled up Elon Musk earlier. So if I search for Elon Musk, you know, this guy has done so many things like SpaceX, Tesla Solar City, pay pal was his big one, you know, and he made a lot of money off that And because he made a lot of money off PayPal as his success, his previous success, investors started investing in him. For more and more things, he's been able to succeed repeatedly because of his previous success.

Okay. And financial contributions is close to this too. If you hire us, say, say you're the CTO, you're a technical person, and you know how to code but you're not going to business. And you meet a friend from you know, you knew from college, and you ask her, Hey, Lisa, would you like to be a part of my company and become the CEO? And I'll build the platform, and you, you know, are the face of it? And she says, Sure, and she says, and actually, I just sold, you know, my last business and I have $2 million in the bank and I wouldn't mind putting in $50,000 Well, if she's willing to contribute financially, I mean, again, that's a win.

So she may not be the best CEO you'll find that out. But if she has skills and talents and if she has some domain expertise, and some financial contributions. I mean, that's good enough. You know, you have to be able to kind of navigate this and choose and pick the things that really matter the most to you.

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