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Why we picked it This is the canonical piece that named the option pool shuffle, and it shows the exact trick with numbers: an $8M pre-money quietly becomes a $6M effective valuation once a 20 percent pool is carved out pre-money, because that dilution lands only on your common stock, not the investor's preferred. It hands you the counter-move too: build a real 12-month hiring plan, then argue the pool down to what you will actually grant (10 to 15 percent), turning the investor's own logic against them at the negotiating table.
The Option Pool Shuffle
From Venture Hacks by Nivi and Naval Ravikant 20 min read
- A pre-money option pool lowers your effective valuation without changing the headline number, so an $8M pre-money can really be $6M once a 20 percent pool is carved out first.
- The pool dilutes founders and existing common holders, not the incoming investor, and any unused options revert to everyone (including the investor) at the next round or exit.
- Beat it by sizing the pool to a concrete 12-month hiring plan and negotiating it down to what you will genuinely grant before the next round, not a padded default.