October 1, 2016

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Posted in Category: Tech,Work — Amr Awadallah @ 10:40 pm | link | | comments (1)
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Cefixime 50mg pills $139.00 I frequently find that I have to explain to candidates joining Cloudera (and existing employees) how not to be overly concerned about dilution of their percent ownership when a company is experiencing strong growth. Cefixime 50mg pills $139.00

Cefixime 50mg pills $139.00 Towards that end I created the chart below to illustrate how percent ownership is just a small part of the total equation. Cefixime 50mg pills $139.00 The core concept is that the “paper” valuation of your stock options is equal to twice the area of your sector under the pie, cefixime 50mg pills $139.00 and the area of your sector is proportional to your angle (i.e. Cefixime 50mg pills $139.00 your percent ownership) multiplied by the radius squared (where radius is the stock price). Cefixime 50mg pills $139.00 Hence if a startup raises a new round of funding at a large radius then that quickly out weighs any shrinkage in the angle of ownership due to the to the squaring of the stock price. Cefixime 50mg pills $139.00 I am not saying that you shouldn’t worry about dilution at all, cefixime 50mg pills $139.00 you should obviously try to get the best deal and keep dilution low, cefixime 50mg pills $139.00 but don’t be overly obsessed by dilution, cefixime 50mg pills $139.00 it is just one factor in the grand scheme of things.

Cefixime 50mg pills $139.00 Fortunate startups that demonstrate repeatability/efficiency of their business model raise additional funds at a large radius so that they can fuel further growth thus making the pie larger for everyone. Cefixime 50mg pills $139.00 On the other hand startups that get overly concerned by dilution and avoid raising money (depsite being in a growth market) can fall in a penny-wise pound-foolish trap where they end up being a zombie company that goes nowhere (I know many such startups, cefixime 50mg pills $139.00 and by the time they realize their mistake it is usually too late).

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Cefixime 50mg pills $139.00 — amr

Cefixime 50mg pills $139.00 PS: For stock options, cefixime 50mg pills $139.00 the “paper” value is (area of sector) minus (cost of sector), cefixime 50mg pills $139.00 where cost of sector is angle * strike-price^2.

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  1. (Reposting as the scripts messed up the previous post)

    Interesting geometry, adding some more logic to it:

    Assuming: O2 – % ownership after dilution, O1 – % ownership before dilution, r2 – new stock value, r1 – old stock value

    Stockholders would like:

    O2 * sqrd(r2) > O1 * sqrd (r1), where O2 sqrd (r1/r2)

    This means value is increased if on 50% increase in stock valuation, dilution is less than 55% (higher dilution is generally unusual unless stock valuation increased 10-fold at a very early stage)

    Comment by S Agarwal — November 16, 2011 @ 5:39 am

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