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How Stock Options Work Chapter 3: The "Options Discount" 515 Views


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00:00

Thank you We sneak in the options discount Well if

00:11

he had normally makes a yeah eighty grand a year

00:13

doing a key function at ibm at your startup you

00:17

might only make fifty grand a year that is fifty

00:20

grand in cash Why only fifty grand especially since at

00:23

a start up you'll work sixty five hours a week

00:26

instead of the required union Forty would ibm Well because

00:30

your founder just doesn't have the money to pay you

00:32

more you're not the only employee there and if he

00:35

can save thirty grand in cash over twenty employees well

00:38

that's six hundred thousand bucks a year less cash that

00:41

he needs to raise from outside investors whose ownership positions

00:44

would then dilute that founders and your ownership In reality

00:50

the founder would rather give his employees a slice of

00:53

his pie then give that slice to investors and obviously

00:57

having a meaningful ownership stake in the company usually makes

01:00

employee behavior better Employees act like owners and use their

01:05

pencils until they're down to the nub They turned the

01:08

lights off to save electric bills when they leave and

01:10

they work weekends when they have to do so without

01:13

any whining It's just how owners of a company work

01:17

and if you're not up for that kind of ownership

01:20

vibe or you want the opposite well u s postal

01:23

service is still hiring So are america's best and brightest

01:27

the amazingly talented people who run the psa but okay

01:33

you're in this for more than love There's the money

01:35

part and along with your below market fifty k salary

01:39

also might have gotten say one hundred thousand stock options

01:42

is part of your employment package And yet it's a

01:45

package worth noting because you'll likely have less good health

01:49

care benefits vacation time masseuse is and free lunches as

01:54

well at your startup So you better believe the company

01:56

is going somewhere or you'd better really love the work

02:01

All right well your package at a startup is likely

02:04

not much more than the low salary and the stock

02:06

option you got granted Oh and coffee startups usually get

02:10

the notion that a caffeinated workplaces a productive workplace yeah 00:02:14.353 --> [endTime] like that

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