The Case of the Millionaire Mirage

I have always so admired Heidi Roizen at Threshold Ventures. Throughout my career she has so kindly offered advice and support. In this podcast, she outlines one of the greatest disappointments option holders experience.

I have heard this story so many times in my career. The expectations are never set correctly to begin with and employees believe they are working for millions that may or may not be there.

I have found it to be very effective to create an anonymized cap table that can be provided to team members. It has allowed me to explain the entire process of fundraising and valuation. When the team can see the actual numbers and how the process works, they can see how the decisions are made and have the correct expectation. They can play with the model and at any given time can have a much better idea of what to expect. Not to mentioned that they appreciated the education in fundraising, cap tables, valuation and value.

I realized it was a bit of a risk, but I found that this activity was incredibly appreciated. I have never had anyone that quit or worked any less diligently after they fully understood the potential value of the options they had been granted.

If you are interested, just contact me. I will share my model with you and talk you through it.