The SAFE of option pools

One area where we’ve seen shockingly little innovation over the few last few years is in standardizing and protecting employee options. Sure – the standard egregious stuff has been corrected (10 year exercise period, sharing total share count along with your share count, etc).

But given how much this matters, and how much great employees are worth and fought over – I think more can and will need to be done to attract great teammates.

One reason little has been done is that “employees aren’t in the room” when it happens. Employee stock agreements are made between *investor* and *founder* before the first employee shows up. This creates a bit of an agency problem – who is going to fight for the employee before they’re even there?

I think one option is for a third party (like YC did with the SAFE) to create a new standard. Here are some ideas for what might appear:

  1. Employee board seat (at some trigger of total employee shares vested)

  2. Information rights on financings (including liquidation preferences)

  3. Proportional secondary if a founder ever chooses to sell part of their stake

  4. Consistency of double-triggers across employees

  5. Readable one-pager on the rights distributed with employee agreement, rather than months later with board approval