Naval's idea of wealth creation is, owning a piece of equity or business. For
employees, that's ESOPs. Though there is a catch.

Most of the folks while entering startup ecosystem-fresh out of college or mid
level corporate jobs do not understand how ESOPs work. So, they ask for cash
component more than ESOPs.

Add to it, a casual joke comparing ESOPs to toilet paper for early stage
startups in India, led to an overall dilution in perceived value of these ESOPs.

Partly startups are responsible for same-not many allowed encashment/buybacks
during growth rounds (Series-C/D onwards), at least till 2016-17 period.

Seems like things are changing now.

There have been so many cases- MPL, Razorpay, Urbanclap where ESOP buyback(small
or large) has been done in very early stage.

Now such companies are in a position to pick talent of their choice, employees
think of staying for longer periods and competitors find it difficult to match
their offering even with higher cash components.

I believe, soon startups that do not offer buyback in early stages, will miss
out on talent and will be tagged "Old Age".

#startups #ESOPs

Originally posted by Abhinay Jain on LinkedIn