How to Start a Startup - Lecture 15 Notes

November 11, 2014

I’m taking down notes for Sam Altman’s class, How to Start a Startup and I figured I’d start sharing them. This is for the fifteenth lecture with the following notes:

How to Manage

One Management Concept

Demotions

As a founder/CEO

As an executive

For everyone else

Raises

As a founder/CEO

Other employees

Right Answer

Evaluating a Sam Altman blog post

Most employees only have 90 days after they leave a job to exercise their options. Unfortunately, this requires money to cover the strike price and the tax bill due for the year of exercise (which is calculated on the difference between the strike and the current FMV). This is often more cash than an employee has, and so the employee often has to choose between walking away from vested options he or she can’t afford to exercise, or being locked into staying at the company. It’s a particularly bad situation when an employee gets terminated.

This doesn’t seem fair. The best solution I have heard is from Adam D’Angelo at Quora. The idea is to grant options that are exercisable for 10 years from the grant date, which should cover nearly all cases (i.e. the company will probably either go public, get acquired, or die in that time frame, and so either the employee will have the liquidity to exercise or it won’t matter.) There are some tricky issues around this-for example, the options will automatically convert from ISOs to NSOs 3 months after employment terminates (if applicable) but it’s still far better than just losing the assets. I think this is a policy all startups should adopt. -sama

Your perspective

Perspective of the employee who leaves

Perspective of the employees who stays

Situation Analysis

Two Alternative Cultural Statements

History’s greatest practitioner

Conquering the enemy

Soldier’s Perspective

Culture


What do you do with the slave owners?

Slaves

Toussaint

Slave Owners

Solution

Results:

Conclusion

Questions

Q. If you’ve got to fire/demote an exec, (i) how do you have the conversation, (ii) how do you explain it to everyone else?

Ans.


Q. How did you deal with all the stress?

Ans.


Q. How did Toussaint get the French general’s to work for them?

Ans.


Q. How do incorporate the same ideology with people who were previously against you, on to your side?

Ans.


Q. How do you build a culture at Andreessen-Horowitz that is different from all other VCs?

Ans.


Q. Putting yourself in other people’s shoes is difficult in daily life. How can you do it management?

Ans.