Jan 4, 2023 / Last year at this time, I was in the planning stages for the first Cap Table Masterclass, and before the first course of 2023 starts, I wanted to share what I learned from teaching the course in 2022.
The first cohort leveraged what I had learned from building, using, and iterating on the Cap Table and Exit Waterfall tool for the last 5+ years. My goal was to teach people how to do the math in that model for themselves, to understand how to issue equity, convert SAFEs and notes, issue option pools, and build exit waterfalls. I took a lot of time to build slides for each session and prepare for the class. But my second session didn't go as planned; building a model live during class from scratch, plus teaching the content, was a bit more challenging than I had expected. After that session, I then sat down and rebuilt new components and examples to cover the material for that class, and re-recorded a new session for people. And then I rebuilt the slides and model components and examples for each session. Overall, it worked, and the 8.8 (out of 10) course rating indicated I was on to something.
The second session used the same course materials, and it worked ok, which the 8.5 rating indicated. But for the third cohort, I changed it up; I removed three sessions, condensing the material from two of them into other sessions, removing the session on modeling tokens (most people weren't as interested in it as I was, so I turned it into a post and free model), and created two office hours to give more space for people to ask questions, and the course felt better, which I think the 9.0 rating reflected.
That's when I changed direction. Teaching the course, building new tools, and listening to questions forced me to reconsider my fundamental assumptions about the best way to teach the material. I rebuilt the base cap table and exit waterfall tool, reworked 50% of my slides, and redid all of my example tools to alter how I taught the concepts. Here's my thing: the terms we commonly use - e.g. premoney conversion, postmoney option pool - don't match up with how the legal documents describe what happens, and I think the process of translation creates confusion and makes it harder for a less experienced practitioner (for example, a founder that goes through the fundraising process a few times) to understand what's going on. Opaque, confusing, almost exclusionary. The math behind cap tables is not the hard part; the hard part is understanding the terminology and how to use it.
I refocused the content to create more of a progression for students. Less algebra and complicated math, more focus on concepts, detailed use of the actual legal documents used in financings, and a nuanced shift in how to teach the common terminology. I can still dive into the complicated math if needed (and all the examples and explainer videos are still available), but they aren't the first thing I teach. And I also added an optional case study, a chance for people to work alongside the class to build their own model, much like I do for investors and founders all the time, and focused the office hours on the case study.
I liked the flow of the course better, and I felt people understood things easier, and the ratings reflected it: cohorts 4 and 5 rated an overall 9.8 out of 10.
So what's next?
For the next course, I've already redrafted the intro slides to the topic to cover cap table hygiene better, streamlined the case study, and edited the flow of two of the sessions. Next up, based on chatter on Twitter, is to add details on crowd safes and docs used in crowdfunding. This is why I teach: doing the work with thousands of people is how I learn, and every course is an opportunity for me to get better.
If you'd like to join me, you can register for the next course here.
Question on whether the course is a fit for you, contact me.
If the full masterclass is too long, or too expensive, check out the 1 day workshop. It is one 3 hour session covering the basics on modeling cap tables, equity, options, and convertibles, without the section on exit waterfalls, and with less time for reflection and reviewing, obviously. And if you take the workshop, you can apply the cost of the workshop towards a future masterclass if you want to dive deeper into the topic. The masterclass will likely be offered on a quarterly basis in 2023, exact schedule to be determined.