☕️ Mid Summer Tech Breakfast Clubs

NYC, SF, El Segundo Tech Breakfast Clubs coming up

Author

Morgan Barrett
June 26, 2025

👋 Hi, Breakfast Club Members!

Thank you Tom @ Citrin Cooperman for sponsoring today’s edition. Tom works with the fastest growing tech companies on tax/advisory

It was a close call. A month in Italy (I had to go for a couple of weddings) nearly destroyed my will to work. But as soon as I returned and felt the cold embrace of true American air conditioning, my desire to grind came rushing back.

The plan for July is to fly around the country and host the best founders and VC’s for breakfast in NYC, El Segundo, and SF.

Really excited about my cohosts for this month. Truly an epic lineup. Danielle Strachman from 1517 in SF. Grant Gregory from Cantos in El Segundo. And Nicole Ripka from Beta Works in NYC. Stay tuned for interviews with all three.

Also, scroll down for some thoughts on option pools and how to own more of your startup. Critics are saying this could be the most interesting thing you read on option pools this year.

Resources:
-Clerky offers a $100 discount for TBC Members on their formation packet. Reply to the newsletter and I’ll send you an invite
-Fixing the YC SAFE: Reply to the newsletter and I’ll send you a redline for the YC Postmoney SAFE that can save founders millions in dilution
-Ramp is offering a $500 bonus to TBC members when they start using Ramp.
- Free Zendesk for 6 months. Time to scale your customer service? Talk to Zendesk

Tech Breakfast Club Events

NYC Tech Breakfast Club July 16th
Cohosting with Nicole Ripka, investor at betaworks and all around great human to know

For Founders & VC’s

El Segundo Tech Breakfast Club July 29th
Come hang with Grant Gregory, partner at Cantos, and one of the pioneers of American Dynamism

For Founders & VC’s

SF Tech Breakfast Club July 30th
Cohosting with Danielle Strachman, one of the most legendary evaluators of talent and Partner at 1517

For Founders & VC’s

NYC ML Leaders Tech Breakfast Club August 6th
Brought to you by the first name in Inference, Baseten! We’re showing the engineers and CTO’s some love with their very own Tech Breakfast Club.

Tech Breakfast Club 🤝 Citrin Cooperman

Meet Tom Porricelli, Partner and co-leader of the Technology practice at Citrin Cooperman

#Sponsoredpost

Tom - I’m seeing a lot of startups use Citrin from the start. How does Citrin work with early stage startups?
We offer a fixed-fee program for early-stage companies that includes business tax return preparation, outsourced bookkeeping, and access to advisory services like the R&D credit and QSBS. The goal of the program is to provide guidance on issues that many early-stage companies may not have the answers to or know how to handle. In other words, we’re here to help them get their “house” in order. We've found that there are often key missteps at this stage that can lead to costly and time-consuming clean-up if not addressed properly from the start.

We’ve designed it to be as simple as possible, bring us in at the beginning so you can focus on running your business or - “focus on what makes your beer taste better”

Hah, I like the Jeff Bezos AWS reference and there’s definitely some similarities. Basically, it’s like infrastructure for running your company. 
You’re trying to build an incredible company. Any part of your brain that’s worried about tax compliance or how to maximize tax credits in multiple jurisdictions or company structure, or should we be recording this as a debit or a credit, that’s taking away from your core mission.

If people want to chat with you or learn more about Citrin Cooperman, what should they do?
Feel free to connect on LinkedIn or email me at [email protected]


Own More of Your Startup: Shrink your Option Pool before converting SAFEs

You only get 100% of your cap table to give away (or keep), and the sad fact is founders make all sorts of tactical errors that needlessly give up points to investors and other parties. Sometimes those errors are driven by bad advice offered by misaligned participants in the ecosystem.

Founders needlessly reserve too large of an option pool at formation. They’ll just pick a number, like 20% or 10%, and reserve that amount, regardless of what they actually intend to use. They think this costs them nothing, but it’s just not true.

First, most employee new hire equity grants are made based on a % of the fully-diluted capitalization. When you offer them 2% or 3%, the denominator of that percentage includes the reserved but unused pool. It’s simple math that if you reserved too large of a pool, you are needlessly giving them more of the cap table than you otherwise would have. If you had reserved a smaller pool up-front, the 2% or 3% would be of a smaller pie, and then in expanding the pool later (which you can always do), the employee dilutes alongside everyone else.

Second, reserving too large of a pool makes it easier for VCs to argue for a needlessly large pool in your first equity round. The pool you reserve before your first VC financing will set the baseline for negotiating how much of an option pool “top up” VCs make founders absorb.

If your pool is at 5% going into a funding round and your VCs are negotiating for a 10% or 15% pool post-closing, it’s going to show up as a very large increase. The optics of that increase will help you in negotiation. But if you start with a 10% or 15% pool that you didn’t even need, the increase will look much smaller, which means you basically made the VC’s job easier for zero benefit to yourself.

Stop reserving too large of a pool at formation, because it ends up giving too much equity to employee/consultant/advisor hires via equity grant calculations, and to VCs via equity round negotiations.

A somewhat newer issue that I want to emphasize here: Post-Money SAFEs make it even more costly to have an artificially large pool, given how their conversion math works. Shrink your pool to as small as possible before your SAFEs convert.

The definition of “Company Capitalization” in the Post-Money SAFE (which is the denominator for purposes of SAFE conversion) includes the pool existing before the equity round, but excludes the pool increase negotiating with your new lead VC(s).

Thus by having a pointlessly large pool at the time of SAFE conversion, you are just handing money to the SAFE holders. Shrink the pool before SAFE conversion to only exactly what you need, and the full pool increase of the equity round will NOT drop the SAFEs conversion price.

I’m not going to show specific examples of the math here. You can use the Open Startup Model (free) if you don’t have your own excel model. Suffice to say based on a few examples I’ve modeled out, you can reduce the amount of dilution your SAFE holders take, in most scenarios, by about 10% or more. Free money.

So the costs of having a pointlessly large equity pool before an equity round continue to mount:

  1. It means you’re giving too much equity to new hires.

  2. It means you’re making the job of your VCs in your equity round easier by front-loading an option pool increase they would otherwise need to argue for themselves.

  3. It means your SAFE holders are getting more shares from their SAFE conversion than is actually necessary.

Stop. Reserving. Stupidly. Large. Option. Pools. The emergence of AI probably means hiring needs, and associated equity pool needs, are going to shrink anyway.

At formation, reserve only what you think you will need for the next 6 months or so. And before you start negotiating an equity round, shrink your pool to cover only what has actually been used. This will save you multiple percentage points on your cap table that could be worth millions in the long-run. Again, free money. Take it.

About Morgan Barrett:
Morgan is the creator of Tech Breakfast Club. He hosts breakfast meetups in NYC, LA, SF, (and occasionally Austin, Miami, Boston) that bring together the best founders and investors.

Morgan is also a Startup Lawyer at Optimal, an elite lean boutique startup law firm repping clients funded by a16z, Sequoia, Kleiner, Accel, and countless other VCs. He works with clients from formation to exit, in collaboration with Optimal’s partners.