I think that stock options (and the eventual shares realized through option exercise) are a legitimate method for a cash constrained startup to offer deferred comp to early employees (as well as meaningful ongoing ownership in the business if done properly), but that additional government regulation is required to tip the power balance away from the employer/option grantor. I don’t disagree with social factors, but I think even today employees want upside exposure you can only obtain with options (or other equity instruments). Hustle has a cost.

If you want to issue options, no right of first refusal. You have to allow the transfer of your shares on a secondary market for accredited investors. You have to provide a cap table to all shareholders, as well as dilution and preferred share info. You have to hand over a 409A valuation annually to all shareholders.

You don’t have to go to the public markets, but you also don’t get to treat common shareholders (usually employees granted ISOs) as second class citizens. If private markets are the new public markets, we still regulate the private markets, just a bit less so.

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