ESOPs Explained: A Complete Guide for Founders and Employees

ESOPs come up in almost every early stage startup conversation, and they are still one of the least understood parts of building a company. We asked our network what they wanted to know, and the questions kept coming, from founders and employees alike. So we made an episode on it.

In this episode of Fundamentals, our series breaking down the basic but critical functional topics every startup runs into, Praseedha from Stellaris answers the most common questions on ESOPs. What they actually are, who gets them, how founders should size a pool, how to communicate the value to employees, and what happens to a grant when someone leaves.

Founders often design ESOP pools without a clear framework. Employees often accept offers without knowing what the grant is worth or how it vests. The gap is rarely about intent. It is the lack of clarity. This episode is an attempt to close some of it.