Yesterday A.C. and I worked out the number of shares to reserve for stock options for each employee planned to be hired over the next twelve months. This work will strengthen his ability to negotiate a good deal for the company, meaning have enough shares (and percent of the company) to attract top talent to the new enterprise.
Too often this is not done or is done with haste and thus poorly. The result is a pool of shares inadequate to attract the best people.
Your job must include the tedious calculation of number of shares and percent of the company (before and after the rounds of financing). Then memorize the numbers. That is how you become "fluent" with your figures. It also helps to "know the market" for what people expect in a startup stock option. Ask friends and professionals who are familiar with startups.
This is a big deal. When you see the first offer of a term sheet from a venture capital firm, you must know how adequate the stock option pool is. That is not the time to start thinking about the pool. It is time to calmly produce your plan and negotiate an adequate number of shares for the pool.
BOTTOM LINE: When you have planned the details of number of shares for your first twenty employees you will have gained the upper hand in negotiations and will boost your chances of success as a recruiter and manager. I wish you the best!