“HR Heretics” | How CPOs, CHROs, Founders, and Boards Build High Performing Companies The $8M DoorDash Mistake: Equity Offers
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May 6, 2025 Nolan and Kelli unveil the hidden risks of equity compensation, sharing tales like Nolan’s missed $8 million opportunity with DoorDash. They emphasize that understanding share counts and strike prices is crucial for maximizing startup wealth. With practical advice, they equip listeners to navigate the complexities of equity offers and negotiate job terms effectively. The conversation also introduces innovative tools enhancing workforce management, underlining the need for self-education in the intricate world of equity grants.
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Nolan's $8M DoorDash Story
- Nolan missed out on $8 million from his DoorDash options due to a high exercise price and inability to afford exercising them.
- He had to use $75,000, their entire savings, as a down payment on a home, forfeiting large potential gains.
Ask About Share Count
- Always ask for the total fully diluted shares outstanding to understand your equity ownership percentage.
- Knowing the percent ownership is more important than the raw number of options granted.
Understand Strike Price
- Always ask about the 409A valuation or strike price, as you have to pay this amount to exercise each option.
- Equity has value only above the strike price, so higher strike prices reduce potential gains.