A CEO Sold His Company and Turned All His Employees Into Millionaires. He Did Something Few People Do: Share

The story of Jay Chaudhry, CEO and founder of cloud security company Zscaler, could be the script for one of those Saturday afternoon movies you watch on the couch after lunch. As a young man of humble origins who grew up in a small rural town in India, he dreamed of traveling to Silicon Valley, studying engineering, becoming a billionaire, and living the classic “American dream.” The difference is that he achieved it in 1980.

A rise that leaves no one behind. In his rise to become one of the world’s wealthiest businessmen, Chaudhry has turned everyone who has worked with him into a millionaire. According to Forbes, it hasn’t stopped the entrepreneur from accumulating a fortune worth $11.1 billion and leading a cybersecurity company valued at over $28 billion.

What sets Chaudhry apart, however, is his focus on sharing his success with his employees.

His first real hit. Chaudhry’s entrepreneurial career took off in 1998 with the sale of SecureIT, the first startup he and his wife founded after they both quit their jobs in the technology industry and invested all their savings. The pair sold SecureIT to VeriSign for $70 million.

Rather than keep all the sales profits, Chaudhry distributed a significant portion of the company as stock options to his employees. These options allowed them to buy VeriSign stock at a fixed price and proved a winning bet. “Almost two years later, due to the rise in VeriSign’s share price, more than 70 of the 80 employees were millionaires on paper,” the billionaire told the French media outlet JVTech, according to an English translation provided by Google. This allowed many employees to obtain nicer homes, change cars, and even take long family vacations.

Growth and reward are the keys for Chaudhry. With the advice of Jim Bidzos, the president of VeriSign president at that time, Chaudhry implemented a strategy where he sold a portion of his VeriSign shares at opportune times. This decision allowed him to capitalize on his stock’s rise and let his employees participate in VeriSign’s long-term growth by selling them his stock options.

Chaudhry remembers being surprised when he realized the impact of his decision: “I went home that night and looked at the graph of all the stock options held by my employees. When I multiplied the number of options by the price of VeriSign stock, I realized that I had created 70 to 80 millionaires. It was impressive,” the billionaire recalls. For Chaudhry, this success wasn’t just his own but that of the people who worked alongside him at SecureIT: “It’s the people who make the difference. They worked day and night for the success of the company.”

Silicon Valley’s “other” Chaudhry. While Chaudhry’s story is worthy of a Netflix series, it’s not the only case in Silicon Valley. Another notable example is billionaire Mark Cuban, who sold Broadcast.com to Yahoo for $5.7 billion in 1999, making hundreds of his employees millionaires, according to CNBC.

More recently, Nvidia CEO Jensen Huang has earned the absolute loyalty of his employees by making them millionaires through the company’s Employee Stock Purchase Plan (ESPP), which Nvidia has offered for 18 years.

Priceless loyalty. Chaudhry, Cuban, and Huang have created an unprecedented sense of ownership and loyalty by offering employees a significant portion of their company.

This approach has proven to be an essential incentive for their employees to commit to the company’s success. It demonstrates that sharing a portion of their value can be a powerful tool for driving motivation and performance.

This article was written by Rubén Andrés and originally published in Spanish on Xataka.

Image | Wikimedia Commons (BluBayou), Unsplash (Arif Riyanto)

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