The most powerful choice startups don’t realize they’re making: entitlement or gratitude (and an exercise to help you shift)

Hi Entrepreneurs.

As we get ready for Thanksgiving tomorrow in the States, in my work with entrepreneurs I’ve been thinking a lot about the dichotomy between entitlement and gratitude. I think it’s one of the most powerful, and impactful, decisions an entrepreneur can make. I wrote a thing about it, and included a practical exercise you can use to make this powerful shift, below:

You’re acting entitled

If you’re like most people, you hear that and you immediately get defensive. Maybe even just reading it, right now. “Am not,” you say. And you think you’re telling the truth.

But put aside what you know about what it means to act entitled, the image of a spoiled three-year old perhaps, and really think about it. Think about something you’ve recently complained about, and consider what’s behind that complaint.

If you’re honest, when you look under the sheets of your complaint you’ll find that you feel entitled to the thing you’re complaining about being different than what it is. (You might resist this, but it’s what’s there if you’re honest with yourself.)

Realizing this — that you’re acting the way you might teach your kids not to act — can have the remarkable effect of moving areas of your life that haven’t moved in a long time. Seeing yourself in a new way can change you, if you let it.

Next time you catch yourself complaining about something, lift up the covers and see the entitlement underneath. Give yourself the gift of catching yourself in the act, owning your entitlement even if it’s uncomfortable.

Entitlement or gratitude. Each moment is a choice.

If gratitude doesn’t feel like a choice, try this exercise

Here’s a quick, two part exercise to illustrate the power of attention, paraphrased from The 15 Commitments of Conscious Leadership:

Look around the room, identifying everything in a 360-degree radius that is white. Be specific in your inventory, and make sure you find everything. Go ahead, do this now and I’ll wait.

Great.

Now, without looking around the room again, recite all the green things you saw. …

You find what you look for.

This holiday season, at home, at work, or over Zoom, I invite you to choose to look for things to appreciate. You’ll find them.

Quote that sums up my thoughts on entitlements vs gratitude

Am I better off making up an alternate reality in my mind and then fighting with reality to make it be my way, or am I better off letting go of what I want and serving the same forces of reality that managed to create the entire perfection of the universe around me?

— Michael Singer

What I’m grateful for

This Thanksgiving, a vastly incomplete sampling of things that I’m grateful for:

The many people sacrificing to save lives, both COVID related and not, and the many people sacrificing to get us a vaccine.
The way the sunlight hits the elm leaves outside my home office window, long after all the other leaves have fallen.
The generosity of so many people sharing their love and compassion online (this is my experience of the internet, it may not be yours, in which case see the exercise above).
The worldwide recognition of the importance of community.
The right poem at the right time.
The forest, walking distance from my house.
The amazingly deep relationships I’ve formed since COVID, many over Zoom.
The teachers at my oldest son’s school and the teacher at my youngest son’s home-school-pod.
My youngest son’s dimples.
My oldest son’s boundless energy.
My wife’s unquestioning support, for our family and for everyone in her life.
My wife’s bravery amidst uncertainty.
My wake up call, now over a year old.
Receiving a not-so-gentle nudge to make a change.
Rediscovering my love for writing, and an audience of leaders I’m so lucky to share my journey with.
The many generous people who continue to believe in me and support me.
How remarkably serendipitous my life has become, in such a short time.
The remarkable men and women I get to work with every day, and their inspiring visions that I get to help bring into the world.
The courage to live my one wild, precious life fully, even (especially) if I don’t understand where it’s all headed.
Christmas lights before Thanksgiving.
———

May you be happy, may you be healthy, may you live with ease.

Happy Thanksgiving,

Ryan

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Should I do cash-out refi to exercise my shares in my startup?

I have been grated shares 4 times over the past 3.5 years. One of those grants was as an early employee and I paid for them, so they are fully exercised. The rest have various dates but can be exercised early. I have no plan on leaving. I will stay until we are acquired, go public, whatever. (Any future grants, I can pay for as I get them. I just got 'behind' because I didn't understand the value of doing so.)

-I can exercise the shares for $ 22k. They are worth about $ 1million based on our current valuation and business is booming. It's in a space that is a little tough right now. It will bounce back, but some of the companies that would acquire us have lost billions in valuation this year, which might impact the deal size.

-Our mortgage rate is currently 4.25%. We have about $ 120k equity in our home and have lived in it for 8 years. Our payment is beyond comfortable for us (something like 12% of our take home pay after we contribute to retirement savings, etc.)

-We plan on moving soon. Maybe within the year? We'd like to build and are looking for land, which just takes time. We don't need all of our equity to buy the new home, so the $ 22k wouldn't really impact this in any way. The 22k would either sit tied up in equity in our current home or go towards our next home (but would make little difference in our monthly payment and wouldn't affect the value of the home we could/would buy.)

-I need to exercise the shares more than a year before we're acquired. I can basically backdate the transaction to April if i do it soon (some complicated changes, plus some willingness of the ceo to just take the pile of checks that's been sitting at our now-empty HQ for months now and enter them all in the same date) meaning i'd already be 7 months into the 12 months. This would save me over $ 100k in taxes once we're acquired.

-The business going under is not on my radar right now- we've got about 2 years of runway in the bank, are slightly above break-even right now and are about to have our best month ever and are picking up tons of steam. But our founder told me that IF this happens, he'd pay out what people had paid to exercise basically as a final bonus. I generally trust him, but I also don't 100% bank on this because it's not in writing and you never know what will happen.

-We raised a Series A a few years ago. Have no plans for a Series B anytime soon because it's just not needed.

-I don't have 22k in cash. I have it in a 401k, HSA, 529…but I'm not interested in taking from any of those, for obvious reasons.

Perhaps this is more of a /personalfinance type question, but I wanted to talk to people who had a good understanding of startups and exercising options, so here I am 🙂 How should I be thinking about this?

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Female execs at 2 Triangle startups bring new ideas to virtual exercise, recycled clothing – WRAL Tech Wire

Female execs at 2 Triangle startups bring new ideas to virtual exercise, recycled clothing  WRAL Tech Wire
“startups when:1d” – Google News

ScriptDrop scores $27M; Chinese exercise startup Fiture lands $65M; and other digital health fundings – MobiHealthNews

ScriptDrop scores $ 27M; Chinese exercise startup Fiture lands $ 65M; and other digital health fundings  MobiHealthNews
“startups when:1d” – Google News

If you are granted stock options as part of your compensation package, put money away each month for when you need to exercise them.

I say this because I did NOT do this and now I need to shell out over $ 7k that I didn’t really plan on spending.

Even if you stay for a while and you’re at a company when they have a successful exit, in order to take advantage of long-term capital gains tax, you NEED to exercise (ie purchase) them at least one year ahead of time. If you don’t, you’ll likely end up exercising and selling in one transaction which gets taxed at the higher short-term capital gains rate. If your stock has real value, this will make a significant difference in how much money you take home when all is said and done.

And if you don’t end up exercising at all then you have a nice surprise savings account 🙂

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Difference between Restricted Stock Awards (RSA) and ISO+Early Exercise?

I'm talking to a startup company that is making a big deal of the fact that they provide equity slightly differently. I'm familiar with ISOs and the benefits of an early exercise with an 83b election. However, the equity structure for "Restricted Stock Awards" sounds a lot like an ISO + Early exercise. RSAs are distinct from RSUs, and involve a purchase at par value for tax benefits because taxes will be applied to the RSA purchase price minus value (ie. 0), as opposed to the vesting value. This sounds identical to an ISO + Early exercise + 83b election.

What am I missing here? are there additional benefits to these RSAs over ISO+Early Exercise? Is there any reading you can recommend that can explain the difference?

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Chattanooga startup Onsight Fitness expands its approach to exercise for life – Chattanooga Times Free Press

Chattanooga startup Onsight Fitness expands its approach to exercise for life  Chattanooga Times Free Press
“startups when:1d” – Google News

Should I exercise my vested stock options?

I have been working at a startup for a little over a year now and which to date raised a total of 180M valued at 650M back in 2016. Since then the company revenues grew by at least 40% YoY. And most recently raised a Series C with a private valuation of approx. 2B. With 2021 being a likely profitable year and are planning to prepare for a potential IPO in 2022.

I have recently passed the 25% vestment cliff and feel highly confident about a potential exit in the next 12- 24 months.

I read somewhere that exercising stock options as they vest and selling them after at least a year's time of holding means any gains will be considered long term capital gains and thereby eligible for lower taxes?

my question is when should I exercise the vested stock options? Any suggestions or pointing to any online resources would be very very helpful.

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Startups – Rapid Growth and Innovation is in Our Very Nature!