Stock / Option Management Service; Update 5/28/11

by Wayne Willis on May 28, 2011

Update (5/30/11)

In early April we completed a market analysis of creating and running a web-based service that would help "Companies" manage their stock option programs.  I've noticed that many businesses waste a lot of time and money dealing with options' management.  Rather than repeat the advice and help I give early stage CFOs (and sometimes CEOs) with these issues, I found a partner willing to build a web-based service that could administer the cap table and manage the paperwork involved.  The Company's lawyer would still manage the core documents (the Stock Option Plan, the standard option agreements or "Notice of Grant" forms and all other securities documents).  But a web-based service where each option holder would be listed and vesting would be tracked seemed like a cool new service worthy of being built.

Applying the Customer Development process I've recently written about, I made some startling discoveries, which persuaded us not to proceed. First, the "problem statement" was simply not compelling.  Keeping track of options on an Excel spreadsheet was not optimal, but it worked.  And people already knew how to use Excel.  Writing a very short, compelling offer to solve a painful problem for a specific profile of customer proved to be very difficult.  Secondly, we knew that the pricing would have to be modest for the private companies most likely to need this.  That coupled with a relatively small market of private companies having active option plans doomed the project.

I still think there's a need for some tool to help private company CFOs and CEOs with this -- and not the $5k+ software offered for larger companies.  Perhaps an internet-based training program or "information product" (e-book?) would suffice.  I'll put that idea in the oven for a while and see what happens.


Update (2/7/11):

It turns out that "general" feedback of the sort we sought (and got) in December is not disciplined enough for the framework outlined in  Steve Blank's The Four Steps To The Epiphany.    I re-read his Chapter 3 -- Customer Discovery -- and was mortified with all the biases and rationalizations I had included in the first set of discussions on this product/market.  With humility, and with a commitment to avoid making the mistaken assumptions that I've often made in startups I've backed or led (with deep gulps of the Kool Aid first!), I decided to go back to the beginning and do it right.

Anyway, I'd now like to set up interviews to get a deeper understanding of the issues and problems facing US corporations which have a stock option plan (including RSU, SAR or phantom stock plans) and which will issue more than a handful of options in a year.  I’d love to talk with the officer responsible for managing everything involved, probably the CFO (or maybe the CEO or an in-house lawyer).  If you are in the Bay Area, I’d like meet face to face.  If you are further afield, I’d like to connect via Skype.

We are considering building a web-based service to address issues we think are painful, but the purpose of the interview is to understand the reality you face.  Please contact us at or leave a comment below



(from December, 2010)

We're  posting this for any “law” or "finance and admin"  folks who would be willing to give us  some insight into a project we are considering.

We may back in an internet-based, paralegal service that is addressing the documentation and management of stock and stock options in privately held companies.    Wayne would like to conduct a brief phone interview with people who manage the actual paperwork associated with issuing stock options, either at a law firm or at the company’s offices.

We're interested in every step of the process -- from the corporate resolution approving the grants, to the preparation of the grants, to the signing/filing of same, to posting entries to stock/option ledgers, to calculating the accounting charges associated with issuing options, to exercise or termination. We'd like to talk to the people (lawyer and/or paralegal or company officers doing it by themselves) who actually do this work.

It’s a 10 minute phone interview (promise!) addressing:

  • how do you handle the processes now?
  • what tools do you use?
  • what are common sources of error? frustration? cost?
  • what would make it better?

If you do any of this work, we'd like to talk with you. If not, please feel free to forward this to any professional or paraprofessional who may be closer to the action.  People referring or completing the interview (you decide!) will be put into a drawing for the new iPad.  The drawing will be on December 31st.

If you (or someone you know) could participate, please email Wayne the name, email address and any convenient quarter-hour window from 8a to 3p Pacific Time next week or the week between Christmas and New Years.

If you (or folks you know) can’t do a phone interview, but would be interested in a short questionnaire, please let Wayne know that, too. If we go forward with this project, we will need advisors who can help with feedback during the development process.


Previous post:

Next post: