I proposed giving stock options to every employee, which was a groundbreaking idea at the time, and we announced that we would give 14% of everyone's base pay in stock options, which changed the culture of Starbucks and made everyone partners.

The standard vesting period for stock in Silicon Valley is four years with a one-year cliff, meaning founders earn 25% of their shares after one year.

Companies should evaluate their stock option policies regularly to ensure they are fair and beneficial for both departing and remaining employees. To make stock options meaningful, employees must stay until an exit, have their stock vest, and the company must be worth something; otherwise, owning 10% of nothing is still nothing.

Early employees should receive more equity than those who join later because they take on greater risks and work harder in a chaotic startup environment.

In a non-priced round, investors often have a valuation cap that sets an upper limit on the company's valuation for future share conversions, rewarding early investors with more shares if the company grows significantly.

FF stock allows founders to sell shares in later rounds without affecting common stock valuation. It's advisable to set this up after initial success rather than too early.

Startups typically allocate between 10% and 20% of their equity for employee incentives, and venture capitalists often require this equity pool to be established before investing.

Founders should be generous with equity for early employees, as they are the ones who build the company over time.

Before distributing equity, consider how many people you need to hire and how much equity you plan to allocate for their compensation. The first employee at a traditional Silicon Valley startup typically receives between one and two percent equity.