A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

“Associate yourself with men of good quality if you esteem your own reputation; for ’tis better to be alone than in bad company.” –George Washington

For early stage companies (and for all well-run private, Pre-IPO or Pre-Acquisition firms), the stock awarded to employees and the executive team is a form of “social contract” that promises them unusually high “return” for their risk, hard work, “sweat investment” and belief in the company.

The unstated social contract goes something like this:

I will initially forego a higher salary and cash compensation, in lieu of stock options that will increase in value at a faster rate than possible elsewhere, and will “return” more than the forfeited cash compensation might have, over time.

This is both an investment risk approach (“Do I believe the company’s product or service can win in the marketplace?”) and a simple ROI calculation (“Is the salary/cash compensation I forfeit going to be made-up (and then some) in a reasonable amount of time?”)

Because I am now an “owner” (“investor”) in this company (seeking to boost stock value. i.e. company value), I presumably have strong incentive to help the company thrive.

This includes being diligent and helping avoid risk, helping to find and fix problems everywhere, as well as going above and beyond my “job description” to help the company thrive and grow. I am super-diligent and respect and protect the company’s assets, reputation and product/service quality.  I treat this as “my” company.

In short, as an owner-employee (at any level), I understand that I have to “have the company’s back” and that others in the company “have my back.” We all watch-out for one another.  Our stock positions fairly and accurately reflect our contributions and risk “investments” we’ve made in this venture.

If the workers and/or the exec team come to disrespect, disbelieve or ignore this social contract, the company is lost.

Option Sanity ratifies the social contract

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process.  It’s so easy a CEO can do it.

Warning

Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.” Use only as directed.

Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Flickr image credit: Kevin Spencer

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Whether you are a startup entrepreneur, work in a startup, invest in startups or just find the whole topic interesting this series is intended to shed some light on the dark mysteries surrounding stock and options and they way they’re handled (or abused).

In general, the way startups choose to give out incentive stock options (ISO) reflects the founders’ attitudes towards fairness and merit; and it sends some signals about whether these values are authentic or just platitudes.

I’m also delighted to introduce Matt Weeks who, in addition to being on the RampUp Solutions board, is President of Actio and deeply involved in the startup world, as well as having held marketing positions in corporate America. Matt will be contributing his knowledge and experience detailing the ins and outs of startup MAP, even though he may not think of it like that.

Here’s a sneak peak of some of the ideas we’ll be discussing.

• Risk mitigation
• Why managers who don’t have a plan are condemned to becoming part of someone else’s—such as the candidate’s
• Good vs. Great
  1. Leading by bullying (lack of transparency and authenticity) can (possibly) make a company “good”
  2. Leading by authenticity can dependably make a company great (because the team is driven by common goals, outlook and honesty)
  3. Why when push comes to shove #1 falls apart (sounds obvious, but there is more subtly here than you might think), while #2 holds together and fights through.

There’s lots more, so plan on joining us every Friday as we explore these and other topics.

One last note. This series offers value even if you have no intention of being and entrepreneur or getting within a hundred feet of a startup. When all is said and done, entrepreneurs are people; people have MAP and the more you learn to recognize MAP characteristics the better off you will be, because MAP drives culture in every organization, large or small.

Option Sanity™ reflects and supports your company’s values and culture

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process.  It’s so easy a CEO can do it.

Warning.
Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.” Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Flickr image credit: Kevin Spencer