Thrillist has had a somewhat unusual policy regarding the way it distributes stock options to employees. According to CEO Ben Lerer, the company doesn’t automatically hand out stock options to employees when they join the company.
The philosophy behind this is that Lerer has watched other startups give out options to new employees as a way to lure them to join the company. But, as he shared with the audience at the PandoMonthly NY, that method is backward.
“You have to earn something,” says Lerer. “Something that is less valuable that is earned feels far more valuable than something that is given.”
As a result, Lerer gives out options sparingly, and after strong performance. As he shared on stage, the goal isn’t to convince people to work for Thrillist by topping other startups’ offers. The goal instead is to reward people who work hard and earn the equity. That being said, it isn’t guaranteed that they will receive options, but that instead that Lerer can “delight them” with an unexpected reward.
The reward comes in part because the employees work hard, but more importantly according to Lerer, they are given out when he recognizes employee treating the company as their own.
There are exceptions to the rule for more senior people, he said. It’s already difficult to convince quality people to join a startup, which is amplified when the person has years of experience behind them.
The strategy may seem counterintuitive for startups that are trying to attract top talent in an incredibly competitive recruiting market. But that’s missing the underlying philosophical point of giving people what they have earned — nothing more, nothing less, and with no guarantees.