Turning Expiring Options Into Venture Exposure [Vested’s Dave Thornton] | #597
Episode
43 min
Read time
2 min
Topics
Health & Wellness, Investing, Startups
AI-Generated Summary
Key Takeaways
- ✓Stock Option Abandonment: Approximately 70% of startup employees forfeit vested stock options worth hundreds of billions because they lack cash to exercise within the 90-day post-termination window, creating systematic opportunity for third-party capital providers.
- ✓Purchase Discount Strategy: Vested acquires shares at third-party board-approved fair market value which includes a discount for lack of marketability, typically taking 25-50% of employee shares depending on strike price delta to fund the exercise.
- ✓Proprietary Selection Model: The platform uses employee behavioral signals like early exercise patterns, share counter-offers, and voluntary forfeiture decisions combined with quota-carrying sales rep data to predict company performance and select top 20% of venture-backed firms.
- ✓Dual Liquidity Paths: Portfolio exits occur through traditional corporate events like IPOs and acquisitions plus individual-level liquidity when employees access company-sponsored tenders or secondary markets, with acquisitions representing 75% of exits and individual sales 25%.
What It Covers
Vested provides capital to startup employees to exercise expiring stock options in exchange for equity exposure, creating diversified venture portfolios with 200+ positions across top-tier private companies using proprietary employee behavior data.
Key Questions Answered
- •Stock Option Abandonment: Approximately 70% of startup employees forfeit vested stock options worth hundreds of billions because they lack cash to exercise within the 90-day post-termination window, creating systematic opportunity for third-party capital providers.
- •Purchase Discount Strategy: Vested acquires shares at third-party board-approved fair market value which includes a discount for lack of marketability, typically taking 25-50% of employee shares depending on strike price delta to fund the exercise.
- •Proprietary Selection Model: The platform uses employee behavioral signals like early exercise patterns, share counter-offers, and voluntary forfeiture decisions combined with quota-carrying sales rep data to predict company performance and select top 20% of venture-backed firms.
- •Dual Liquidity Paths: Portfolio exits occur through traditional corporate events like IPOs and acquisitions plus individual-level liquidity when employees access company-sponsored tenders or secondary markets, with acquisitions representing 75% of exits and individual sales 25%.
Notable Moment
Vested discovered that startup employees who use their equity tracking tool called Vestimate abandon stock options at 55% rates compared to 70% for non-users, demonstrating how basic education dramatically reduces wealth-destroying forfeiture behavior.
Episode Transcript
Welcome to the Meb Faber show, where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here. Matt Faber is the cofounder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria's funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com. Today's episode is sponsored by Alpha Architect. Will bonds diversify like they have historically? If you're tired of explaining why this time was different, consider the Alpha Architect Tail Risk ETF, ticker symbol c a o s or chaos. Chaos is a buy and hold solution that seeks to diversify fast market crashes like 2020 and also historically has featured positive returns in normal market conditions. So prepare for tomorrow today with chaos. That's c a o s chaos. If you're exploring a bond replacement or a diversifier with low correlation, check out the link in the show notes. Disclaimer. We are not affiliated with Alpha Architect. This information does not constitute advice or a recommendation or offer to sell or a solicitation to deal in any security or financial product. Certain information contained herein has been obtained from third party sources and such information has not been independently verified by the ID. Farm. No representation, warranty, or undertaking expressed or implied is given to the accuracy or completeness of such information by the idea farm or any other person. While such sources are believed to be reliable, the idea farm does not assume any responsibility for the accuracy or completeness of such information. The idea farm does not undertake any obligation to update the information contained herein as of any future date. Welcome back, everybody. Summer's over. Get back to work. Today, we're joined by Dave Thornton, cofounder and chief customer officer of Vested, which helps start up employees unlock the value in their equity. You can go back to episode four forty seven to hear Dave's first appearance on the show almost three years ago. Dave, welcome back. Good to be back, and that's crazy that it's been three years. First, let's remind people what Vested is because you're a bit unique. There's not a lot of ideas and strategies out there like what you guys are doing. So maybe explain it first from the employee side and then the investor side, and then we'll dig in. Notice the handful of years ago when we were serving start up employees with educational content around their equity that the very long tail of rank and file start up employees tended to not have the money that they needed to exercise their expiring stock options usually after they had left a company to go wherever they're going next to …
Get the full transcript (7,634 words) + summary by email — free
One-time email with the complete transcript and AI summary of this episode. No account needed.
One email, no spam. We’ll also show you what SignalCast does.
You just read a 3-minute summary of a 40-minute episode.
Get The Meb Faber Show summarized like this every Monday — plus up to 2 more podcasts, free.
Pick Your Podcasts — FreeKeep Reading
More from The Meb Faber Show
FT’s Robin Wigglesworth: Why Bonds, Not Stocks, Rule Everything Around Us | #650
Sep 11 · 49 min
The Prof G Pod
Navigating a Mid-Career Crisis, And How to Spend Your 20s
Aug 31
More from The Meb Faber Show
Why Gold Stopped Being a Commodity (AllianceBernstein’s Inigo Fraser Jenkins) | #649
Sep 4 · 50 min
Techmeme Ride Home
Manus, The Hands Of Fate
Dec 31
Books, tools, and gear mentioned in this episode
SignalCast may earn commission on purchases via these links.
Tools
- VestimateBy guest
by Vested
“Vested discovered that startup employees who use their equity tracking tool called Vestimate abandon stock options at 55% rates compared to 70% for non-users, demonstrating how basic education dramatically reduces wealth-destroying forfeiture behavior.”
company
“The Idea Farm listed as sponsor of the episode with URL https://theideafarm.com”
- VestedBy guest
“Vested provides capital to startup employees to exercise expiring stock options in exchange for equity exposure, creating diversified venture portfolios with 200+ positions across top-tier private companies.”
“Alpha Architect listed as sponsor of the episode.”
More from The Meb Faber Show
We summarize every new episode. Want them in your inbox?
FT’s Robin Wigglesworth: Why Bonds, Not Stocks, Rule Everything Around Us | #650
Why Gold Stopped Being a Commodity (AllianceBernstein’s Inigo Fraser Jenkins) | #649
Paul Kedrosky: AI is the First Bubble With Every Ingredient at Once | #648
Jerry Parker on Big Game Hunting in the Market | #647
David Booth: 45 Years to $1 Trillion at Dimensional | #646
Similar Episodes
Related episodes from other podcasts
The Prof G Pod
Aug 31
Navigating a Mid-Career Crisis, And How to Spend Your 20s
Techmeme Ride Home
Dec 31
Manus, The Hands Of Fate
The Knowledge Project
Dec 16
Bernie Marcus: The Home Depot Story [Outliers]
This Week in Startups
Sep 9
Did OpenAI Steal the Navier-Stokes Solution? | E2335
We Study Billionaires
Sep 3
TIP843: AppLovin (APP): The 30-Bagger Down More Than Half w/ Kyle Grieve & Shawn O'Malley
Explore Related Topics
This podcast is featured in Best Investing Podcasts (2026) — ranked and reviewed with AI summaries.
Read this week's Health & Longevity Podcast Insights — cross-podcast analysis updated weekly.
You're clearly into The Meb Faber Show.
Every Monday, we deliver AI summaries of the latest episodes from The Meb Faber Show and 192+ other podcasts. Free for one show.
Start My Monday DigestNo credit card · Unsubscribe anytime