Vested initially assumed employees needed cash for life events like buying a home. They discovered the dominant, urgent need was from recently departed employees facing a 90-day window to exercise their options before they expire worthless. This single, acute problem became the company's entire focus.
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Relying solely on a time-for-money service model is precarious, as a personal crisis can halt all income. Entrepreneurs in service industries should conceptualize passive income streams from day one, even before implementation. This builds resilience and provides options when they can no longer trade time for money.
Granting stock options is only half the battle. To make equity a powerful motivator, leaders must constantly communicate a clear and believable narrative for a future liquidity event, such as an acquisition. This vision is what transforms paper ownership into a tangible and valuable incentive in the minds of employees.
The traditional IPO exit is being replaced by a perpetual secondary market for elite private companies. This new paradigm provides liquidity for investors and employees without the high costs and regulatory burdens of going public. This shift fundamentally alters the venture capital lifecycle, enabling longer private holding periods.
Vested's investment model gains an edge from proprietary data on employee sentiment and behavior. Signals like unsolicited negative comments, willingness to counter on price, or selling more shares than necessary provide unique insights into a company's health that traditional financial analysis lacks, forming a data moat.
Vested's CEO, Dave Thornton, a finance veteran, realized the massive market need for startup equity guidance only after his own mistaken advice led his employee to a huge tax bill during an acquisition. This personal failure highlighted that even financially savvy individuals struggle with the complexity of stock options.
To conserve cash, especially in a downturn, founders can pay key employees 10-30% below market rate in salary. The key is to compensate for this deficit by offering double or triple the industry standard in equity. This strategy attracts top talent aligned with long-term success while keeping the company's cash burn rate low.
While bonuses tied to revenue incentivize employees to perform specific tasks, they are purely transactional. Granting stock options makes team members think holistically about the entire business's long-term health, from strategic opportunities to small cost savings, creating true psychological ownership.
Vested works directly with employees because startups find small, one-off secondary transactions burdensome due to legal fees and cap table complexity. However, this dynamic inverts at scale. Once Vested facilitates millions in transactions for a single company's stock, the startup has a strong incentive to partner on a formal liquidity program.
After the Adobe deal collapsed, Figma launched "Detach," letting any employee leave with severance. This filtered for commitment, reset the team for a "hard-charging startup" mentality, and provided a graceful exit for those who were tired or had joined expecting to work at Adobe.
Vested neutralizes non-delivery risk, a major concern in private markets. By funding exercises, they ensure the employee retains a majority of their stock, aligning incentives. Small deal sizes ($50k-$100k) make it economically irrational for an employee to default and ruin their reputation, leading to a 100% delivery rate.