The Notion Of Notional Values — P2

How should our share options work?

CrowdEmotion lives at the intersection of people and technology. This four part blog series explores our considerations around equity based motivations to drive innovation through diversity and collaboration in the UK tax system.

Part 1: What is an options scheme?

Part 2: How should our share options work?

Part 3: Our Ideal Equity Program…for now

Part 4: Making this work within the UK

Disclaimer: I am a business owner and not an accredited legal for financial advisor. All opinions are my own and I cannot be held accountable for action taken against them.

2/How should our share options work?

Our purpose as a business is to personalise your future.

Our Q&A summary to motivate around our purpose

So, understanding the reasons behind our share options, I needed to understand practically how they would work to motivate the right people.

What company goals are we motivating?

• Creating a technology world that promotes humanity first
• IP based profitability — so specifically a £2M ARR and V1.0 of an API product as defined by core feature functionality

Who are the people we need to make those goals real?

• Highly talented STEM PhD’s
• Recent psych and STEM grads
• Exceptional talent of all ages — the quirky, curious types who simply take an alternate view

Can they be motivated by equity?

• PhD’s — yes, but only to an extent and variable on how much impact this would actually have
• Grads — Not really. They want to be treated as an equal and work on really interesting stuff
• Exceptionals — the purpose and associated challenges are the attraction

If yes, how do we provide them access to equity? (that’s a big IF)

• Purchase (at a discount? full price?)
• Salary Sacrifice
• Share Options
• Bonus

How does that equity impact company decision making?

• Equality means open forum communication on all topics with clear team leadership to make decisions.
• Team leadership is supported by peers, not by shares.
• So equity must not separate the decision makers from team members.

Do we separate current employees from future employees?

• No — equality is important at a base level, variation is earned through performance

Do we provide preferential treatment?

• No

If no, will higher salary and performance based rewards actually drive better motivation?

• Yes, as soon as we demonstrate a clear path to sustained profitability
• Pre-profitability, we need shares to attract those who will persevere through the tough times.

These answers will depend on your culture, investment strategy, your distance to profitability, your personal and corporate philosophies and your growth speed.

We need collaboration of really smart, quirky minds. That’s where our uniqueness comes from. They need to innovate and should not be roadblocked by hierarchy or inequality. Transparency and diversity are very important for our business. As is profitability. Everyone has a different reason for buying shares, so standard share options do not fit a one-size mechanism.

Next: Our Ideal Equity Program

I hope you found this useful. Every company is different and the simple exercise of answering some of these questions can unveil a lot about your employees methods for making decisions, risk propensities, and value drivers for motivation.

About Me:

The benefit of being 33 and starting a company after 10 years in corporate life is you understand the receiving end of things like share options and buying into private companies. To add to the fun, I am Canadian having worked in a North American (NA) style tech startup. I decided to start my company in the UK with a Canadian culture… under UK tax guidelines. Square peg <> round hole.

If you enjoyed this post, please recommend it by clicking the “heart” in the bottom left corner so it will be shared with more people. You can always tweet me your thoughts as well.

M