Jay Chaudhry left his work send-off unknowingly partying with millionaires. It was the late 90’s and he’d just sold his startup SecureIT, which he co-founded with his wife Jyoti, to Verisign. Perhaps his employees threw an extra nice celebration or splurged on the decor, because when Chaudhry left, he did some math on the net worth of his attendees.
“I went home that night and looked at the spreadsheet of all the [stock] options they had, and I multiplied by the stock price of VeriSign. That’s when I realized that the math was about 70 or 80 millionaires, with stock options,” Chaudhry told CNBC’s Make It. “It was impressive,” he adds, explaining he didn’t really understand the financial windfall that selling his startup would have on his co-workers.
Now the CEO of cloud-security company Zscaler, Chaudhry, age 65, is a billionaire. But he had emptied out all of his joint savings with his wife when they started SecureIT, Chaudhry told CNBC. He said this move and independence from external investors allowed them to give more equity to those within the company.
When he sold his company in 1998, Chaudhry wasn’t the only one walking away with a padded wallet. Verisign’s stock price surged in the coming years, making more than 70 of his 80 employees into “on, paper millionaires.”
In the same vein, entrepreneur Mark Cuban recently tweeted that most of his sales resulted in bonuses for his employees. His sale of Broadcast.com to Yahoo meant Cuban became a billionaire and “300 out of 330 employees became millionaires.”
“It’s the right thing to do. No company is built alone,” Cuban told Fortune.
Chaudhry is of a similar mentality. He told CNBC the equity distribution was “good, because those employees make the difference — they [were] working day and night.”
But long-term financial success was not a given. VeriSign shares plunged during the dotcom burst before eventually recovering, leaving employees with more or less worth depending on if they cashed out at an inopportune time.
During the surge though, there was a palpable feeling of excitement throughout the office. “People were going crazy in the company, because they had never thought of so much money,” he told CNBC, speaking of many employees buying new houses, cars, or taking time off of work. “They could do what they wanted to do.”
This story was originally featured on Fortune.com
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