Hi, everyone. Welcome to the A6 and Z podcast. I'm Zonal and I'm here today with our co-founder

Ben Horowitz and our managing partner, Scott Cooper. And we're here to talk about a controversial

and important discussion around stock options for compensating employees and the nuances of

timing, the vesting of them. Let me just give some more context. We recently wrote a post that talked about some of the

problems with the current 90-day system. And I think what's great about this is it's generated a lot of

healthy discussion. But let's first start off with where we agree in broad strokes.

Well, I think, look, it's important to go back when you look at a system redesign to how did the

original system come into place?

And so it started in the 80s with the kind of advent of stock options.

And the original motivation for it was actually very smart in that when you're talking

about software engineering, yes, you can build a product to do something, but how you build it matters even more

than, you know, like what the actual functionality is at the end. And to get to a level where people

are really invested in what they're building, it made sense to make the people building that

software be owners in the company. And that was like a great innovation. And as part of that,

the ownership agreements were written in a way that was compliant with the then accounting laws.

And the then accounting laws basically said that if you gave an employee more than, you know,

a very short window to exercise, you would potentially create a very

large accounting charge, which would make it impossible for the company to ever go public

or be acquired or anything like that, and that you wouldn't be able to predict earnings and all

kinds of other things from a technical accounting standpoint. That was just the way it was,

and nobody questioned it from its origin to the early 2000s. And then following the great stock option scandal of the early 2000s, in late 90s.

What was that scandal, by the way?

...