We have new joiners at MarketInvoice every week. Whilst it’s a changing process, right now they’re all welcomed with a Kindle, Amazon credit, a training programme, a beer or two and, most importantly, options in the business. We rolled out a full options scheme for the whole team last year and we think it’s a massive step forward for the business and its culture. I’ll explain why below. But first, the basics.
Employee stock options are the standard way to offer employees an equity stake in the business they work for. Employees are granted the option to buy a certain amount number of shares at a fixed price, which is based on the value of the business at the time options are granted. As the value of the business grows over time, the value of the shares you have the option to buy grows with it. But the price you’ll have to pay for that stock doesn’t change, so as an employee, you benefit directly from the growth of the business. If the business doesn’t grow, then you’re protected because you don’t have to exercise your options if you don’t want to. Typically, you can only exercise your option to buy stock when a liquidity event happens. This is usually when a business lists on a public market or is bought out.
We’ve found our options scheme has two distinct benefits. The first is that it helps with hiring. Our main competitors on the sales side are the banks but when it comes to recruitment, we face even stiffer competition from the likes of Google, Facebook and Amazon – not to mention the other cool fintech companies that are all chasing after the same pool of talent. Some of the bigger companies in that list can offer astronomical salaries to the top talent but they can’t offer the same potential for growth that we can. By making sure new hires can share in that growth potential, we make joining MarketInvoice more enticing than joining a massive bank or tech company. It also helps us screen for the right people in our hiring process. We’re looking for people that want to help us grow, be a big part of our journey and make a commitment to our mission. Candidates that fit these criteria are usually more interested in options than salary.
The second benefit of an options programme is culture-building. Our team is already motivated by the challenge we’ve put in front of them – to change the way businesses fund their growth. Having that goal is motivating in and of itself but when the whole team knows that achieving that goal will also play a role in their personal lives, the motivation multiplies. Having a passionate team pulling in the same direction is half the battle of growing a great business.
An options programme can mitigate the risk of short-termism creeping in. We saw the results of short-term thinking in the financial crisis when bankers’ annual bonuses became the focus of their thinking rather than where their bank was going to be in five or ten years’ time. The best organisations – from tech companies, to government departments, to sports teams – look beyond the horizon when making decisions. An options programme is a central part of cementing long-term thinking into the culture of your business. Plus, if your business is growing, your team deserves to share in that.