Špela Prijon, Co-founder EquityPeople.co, on the financial challenges around incentivisation

Speaker A: Mhm.

Speaker B: Welcome to CFO Insights, the leading podcast for finance professionals in disruptive tech, brought to you by the startup CFO community. I'm Guy Hutchinson and I'm the host of the podcast as well as being a tech cfo. In this episode we're going to talk to Shpe Leprion. She's one of the co founders of Equity People, a business focused on team incentives and recently acquired by Optio. In our discussion we look at a range of challenges in the incentivisation space from salary benchmarking to share option schemes. Shares her views and what it takes to make incentives drive the right behaviors. And I think many of our CFO listeners will enjoy a refreshing perspective on the role of secondary share sales Speller. Welcome onto the podcast. It's really good to have you on. I know you've got a, ah, really deep heritage in understanding share schemes and employee incentivization. Fantastic experience and some strong views on how to uh, circumnavigate the challenges of the time in terms of these incentive programs. So thank you very much for agreeing to be on the podcast.

Speaker A: Hey, it's so good to be here.

Speaker B: It's uh, really good to have you here because not that many people have your kind of background. Right. You've got this really interesting career journey where you focus a good deal on things like share scheme, incentive plans, things of this nature. Um, and obviously founded your own business, Equity People, about three or four years ago. And so you're kind of in this unique position where you can talk about this subject that's so important for CFOs, but from the perspective of somebody who's really sort of living and breathing it. So thank you very much for being on. It'd be great to talk through some of the hot issues in the space right now.

Speaker A: Yes. And it's always so interesting to talk about. At least I find it interesting to talk about, uh, what we encounter. And because it touches compensation, typically people are interested to dive a little bit deeper. It touches all of us.

Speaker B: Um, yeah, yeah, because if you compare the world of tech with the world of more conventional businesses, the majority of conventional businesses wouldn't have a long term incentive scheme that was linked to driving up the valuation of the business. It's really the nuance of tech where nearly all of those companies have something normally a company wide scheme, but it can vary. Uh, and so it is one of those things that if you hadn't worked in a tech business before, you might be surprised by the amount of effort that goes into looking at compensation plans and share schemes and share option schemes and how those things work and how you capture the tax breaks. Uh, and I think you're, your kind of history in this space is super interesting. I mean it'd be great just to hear a little bit about your career journey and the kind of things that you've done and how you ended up founding your business equity people in 2022.

Speaker A: I think it's a good point to start probably back in my still academia years. So academically I'm a pharmacist so that has nothing to do with the work that I do today. But the interesting part of my, the studies happened in parallel because my wife and I actually joined an accelerator with our own idea for a startup. And one of the most exciting and at the same time frustrating events happened back then because we were in conversations with potential advisors and potential investors and I think I have never been, I, I'm sure I have been but I have been extremely humbled in those conversations not knowing anything about dilution or how much should a VC receive in exchange for an investment. And I felt powerless enough to give me the energy to try to figure it out. Um, and then luckily one of the, one of those challenging times, I was looking at the angel list which was still used as a recruitment tool back then and found the cap table software that uh, was hiring. And their proposition resonated with me so heavily because I just went through this powerless um stage as a startup that I applied, joined and then learned everything I could about equity and how to um, stakeholder manage and how to then manage employee equity plans. Um, and I think through there saw, I think the need of the market that someone should share what other companies are doing when it comes to equity plans. Um, so you have a 50 person company asking a question about well what should we do with our new hires and at the same time I'm speaking with a uh, 2000 person company that has figured that out. So why not share the knowledge and adjust it to the stage appropriate um, architecture. And I think that's where the, maybe the idea for an equity consulting was born. But then it wouldn't have been possible without the co founder Tamash, um, because we took that as a self standing niche equity consulting agency, therefore the name equity people. Um, since then we've become more of a specialist total rewards, um, not just equity compensation consultancy and somewhere along the way we've become lucky enough that uh, not just companies but also VCs um, have been coming to us for you know, insights and helping with the portfolio companies. So now we typically help VC backed companies. So series A to pre ipo, even though we've gone through an IPO with quite a few. Um, we design and run compensation programs, salary compensation, leveling, bonus equity. Um, and actually we were recently acquired by a company called Option Incentives. Um, that's an equity management company. So well in my opinion it's the best one. That's why we chose to be acquired by them. But um, I think my word has some weight there. We ran a lot of RFPs for our clients. Um, so now that's a platform that can take you from series B through pre and um, post IPO all over the world. So, so I think we're well positioned to do full cycle consulting with equity management attached. Um, and a lot of our work sits at ah, the intersection of finance and people strategy. So we help CFOs and founders make these decisions that need to be competitive and internally consistent and scalable. Um, um, and it's interesting because we work both with companies directly and then also with VCs and platforms. So we have retainers with Sequoia and General Catalyst, Albion Balderton and so on. Um, but then we also work with companies like Personio and Vinted and Granola. So the big companies and the big VCs and I think the learnings in the intersection of um, the two have been incredible.

Speaker B: Yeah, yeah, there's a lot of stakeholders in that space and I think until you describe it in that manner where you realize that you've got venture funds, you've got founders and companies, you've got platforms and some platforms that are suitable for early stage, some platforms that are more suitable if you're going to do an ipo, for example. Um, there's a lot of stakeholders really in the mix here and I can imagine that uh, you probably often need a consultant really to cut through all of the difficulties and the challenges and getting a scheme right and there's so many people that are wanting the incentivization to work. Um, it's not just as simple as um, looking at what's in the best interest of the company. Um, it's a great topic. I know we've got two particular angles that we want to explore that we think are really sort of hot things to talk about in 2026. But I think before we dive in there, I am curious. So as uh, an equity consultant, what type of person is really well suited to that kind of role? What does it take to be a great equity consultant and to be able to Collaborate with all these different parties.

Speaker A: That's an interesting question. I think there's many, many different types of consultants, um, that can do really well in equity, um, but it depends on what the company or the person on the other side needs. So for example, you can have a company that is mature in thinking, um, and has access to all kinds of benchmarks and it has access to all of kinds, all kinds of, uh, legal counsel and they still come to an equity consultant. And then you ask yourself why, if they have all of the resources that they could possibly get. And I think my answer here is it's because of the, um, two sides. One is if the consultant can give a sense of maybe de risking or an independent view. So independent versus internal view are very similar in the goal that they're trying to achieve, but can sometimes have a very different way of getting there. And so when you have a big stable company, this independent view can bridge the gap between the stakeholder affected, so the company and the employees, and the external kind of internal VC or pen or stakeholder that's trying to um, live on the other side of it. So in this case it's an independent bridge. And the other side of the same person that does really well is almost like a mediator, creative, um, mediator. So that's one side of the, what would make a good equity comp consultant. On the other hand, you have maybe some of the chaotic clients and then a different, uh, Persona would help quite a lot. Uh, and that one is if you have seen the process and the project done before and still manage to keep the flexibility of the conversations, to tailor what we call best practices to the actual culture of the company. And so in that one there's still the uh, creativity, but it's less about mediation, it's more about pointed execution. So this relentless forward motion to execute on what was agreed on, um, while still retaining the flexibility because each startup is unique and they all want to have their own, um, flavor. And then I think the underlying, the undercurrent to all of this is probably to be good at spreadsheets.

Speaker B: Ah, yeah, I can completely see that. Right. I can see that piece where this person's got to have the qualities of a mediator, uh, um, but they've also got to have seen how great process is run from an internal standpoint before. But also be mindful that you might have different objectives, different, different aspects of company culture and things like this. And it's certainly not something that a lawyer is going to do. You know, your legal team will never Be inside the business in that manner where they really understand what's happening culturally.

Speaker A: That's actually a very good point that I should have said. It's the, I think the business mindedness sometimes. Yeah, sometimes, sometimes it's lacking. Um, which means that you can maybe produce a pitch deck that will result in a drawer somewhere. Um, so the goal should be to have enough business mindedness to actually affect um, the business that you're working with. So I think that's, that's always what we're looking for.

Speaker B: Yeah, yeah, yeah, yeah. I can completely see that. Very good. It's all super interesting. So why don't we uh, dive into the first of our two topics that uh, you uh, see as being really important one for the time we're in, we're in this era where a lot of these AI businesses are uh, taking off. And really it's quite rare to see a business raising a serious amount of capital which is not at some level an AI business. Uh, and that means that certain skills, certain qualities, certain types of engineers in fact are seeing some really interesting times in terms of salaries. And there's a lot of competition to get super talented people and to get people to move from existing businesses to your business perhaps. Uh, and so we picked on that point around uh, what the CFO might be seeking to do in this dynamic where there's almost a bit of an arms race in terms of salaries.

Speaker A: There is, there is. I mean the number one thing that we see right now is that we start a project. So uh, let me paint the picture. Two years ago we would start a project. We would say, okay, we have a two year plan. We have these, this approximate headcount plan. If we're slightly wrong, it's okay because you know, either it's an internal or external, um, facing role, maybe it's a 5, uh, 10% difference in the total comp for each of those. But we're pretty confident in how we're doing our budgeting and planning. And now fast forward to now. We get called in, I think maybe 30% into the project already. So 30% into. Someone tried to do something already. Um, they're trying to make a, ah, headcount plan. They're trying to make uh, a budget and they're trying to do dilution modeling maybe. And they give us all of this and we 90% of the cases have to almost um, deliver the shock of, oh, you have only accounted for software engineers. But we also see that you're actually hiring a machine learning uh, engineer or you're hiring let's say the most common AI role, maybe forward deployed engineers or, or you are just hiring AI researchers. And the gap between those roles and the roles in the headcount plan is sometimes 50 to 100% when it comes to equity. So now what we're seeing is that the kind of this generalized let's look at what we were hiring in the past, let's grow by the same amount, let's um, and let's project it into the future kind of modeling doesn't satisfy the financial responsibility of modeling because we see such big discrepancy between the departments. And now you have to model either on the most expensive department basis and project that into the future or at least introduce them as a variable even though perhaps you don't have already them, um, don't already have them hired. So it's not enough to say engineering org, it's engineering, part of it maybe is product. But then we need to separate out those AI roles because those are the ones with the premium and we need to account for them because that premium is so much larger that our model doesn't work anymore with the margin of error that we were hoping for.

Speaker B: And why is that occurring? Is that because the market is changing so quickly that organizations just don't know which of their roles are subject uh, to massive competitive demand. They just might not be aware.

Speaker A: I think so. I think it's an important distinction uh for me to make to say we have companies that do not touch AI and then we have companies that are either native in AI. You know, you have, you start as an AI company and then you have this big group of companies that are a SaaS company that now needs to enter the AI race and if you are in the non AI company your modeling still works for because you're not affected by the big differences in the compensation. Uh, if you're an AI native or a foundational company, you started out and you know that the candidates what they're asking for and you have adjusted your compensation plan. But this middle of trying to be more AI is entering a market and they get the direct feedback that software engineering, the offer that we put out is not being accepted and we have a certain role out for long and long and long. And now those are the ones that had the old headcount planning on the old departments and now we're switching to former deployed engineers and AI researcher and ML M engineering and so on. Um, and they have not done the benchmarking yet and they run under the same assumption as before that There's a small variability in compensation, but in reality it's a big one. And I'm not gonna like comment on whether the big difference is, you know, deserved or if people should be paid that much. It's just currently, if we look at the numbers, some departments are just getting a lot higher compensated, um, and they need to be accounted for in the headcount plan. Otherwise you will have roles outstanding for 912 months. Um, so I think that's probably the main cause is you have this transition between a SaaS to an AI company. You're introducing AI, ah, departments, but you have to introduce them and account for them in all the downstream effects of your modeling because they're so, um, differently compensated.

Speaker B: Interesting. And does that mean that CFOs should be asking for more data on the market or is it more that there's bigger organizational things that have to happen internally so you don't have those mistakes where you're looking for these highly sought after people for months and months and months before you realize that you're some way off the market.

Speaker A: Yeah, it's a good question. If, uh, planning even still works, does planning still have the same function as it did before? Um, yeah, I think that's another question. I think it's important to acknowledge that we used to plan for three years in advance. Is that still relevant? Um, but the other thing is when you say should they ask for more benchmarks? I think they should ask for the creation of internal benchmarks. So what I'm saying here is if I said before, we have the huge variability between ML engineer versus, uh, I don't know, QA engineer, very, very big difference. So we introduced two departments. We said AI is separate from, um, software engineering. Now if we have that, we also have to go back to the segmentation that I said before. If we're talking about an AI engineer, fortunately or unfortunately, there's different companies that compensate very differently for the same title of a role. So if you're going for top end of the market, you're looking at half a million dollars. And if you're looking for a company that is maybe just now introducing AI, they would still be paid 180,000. So not only do you have to understand the departments that you're adding, but you also have to understand exactly which part of the AI world are you competing with. And it is very difficult to get benchmarks to be as dynamic and as accurate as you're trying to make them. So what we see, what we're seeing happen now is earlier stage companies have to behave more like later stage companies. What I mean by that, if you go to, I don't know, 50 billion dollar company, they have an internal department called compensation Data, uh, and analytics and they have their own internal benchmarks. They build them up based on recruitment, based on who's leaving, based on how much. And so they are very, very in tune with exactly how much they have to pay for the type of talent that they're looking to hire. It's very accurate. When you are a $50 million uh, company, you don't have that department. But what I'm saying here is that that's, that's the holy grail of a solution. Have fine tuned data for exactly the talent that you're going after. So instead of just going broad and saying we need a AI engineer, you have to know AI engineer within which of the segments, maybe you have to know which seniority and then pay as much as it takes for you to get into that talent market and account for that in the model.

Speaker B: Mhm. So it's really substantial data exercise where the data that you need is multidimensional. It's not as simple as what you think your departments are. They there's this additional granularity about the specifics of those roles.

Speaker A: Yeah, there is. Of course you can always raise $100 million at size of 20 people and just say I'm just going to pay everyone $400,000 and you can go that way, which I have seen. And it works, it's fast. Um, but not everyone raises $100 million. Um, that's 20 people. So for the CFOs like thinking hat on accuracy of the model is achieved by having internal benchmarks fine tuned to the exact talent market. And of course it's not going to be perfect in the beginning, but at least to have it as a, somewhere to go towards.

Speaker B: Yeah, no, I can see that. I can see that. Those are wise words.

Speaker A: Fantastic.

Speaker B: Uh, Shbrela, now um, we should move on to the second of the hot topics in your space right now. Uh, we were keen to ask uh, ourselves a few questions about businesses that we see doing secondary transactions. Uh, what's driving that and what the impacts are for uh, founders, employees, et cetera. Um, it might be worth actually just defining what a secondary transaction is before we dive into this topic.

Speaker A: Yeah, that's a good point. It's a big topic of conversation right now. And secondary transactions typically mean, uh, and just in layman's terms that people cash out before an exit. But in the actual sense of the Definition, it means that if you have fundraising happening, that's something that goes, I received the money as a company and in return I give the shares back to the investor and that's a primary transaction. So the shares and the money were exchanged between the company and the, um, individual and the first time issuance of the share and so on, but on the secondary, it's in the name. So it's not that we are now exchanging money for the shares of the company, um, outright. We're actually saying there are shares out there and I want to be in that um, company invested. So instead of buying from the company new shares, I'm going to buy shares from an existing person that's holding them. And that typically means that early investors, early employees, founders, sell some of their holdings to a third party, sometimes even employees between themselves and so on. But that's the main, that's the main way of uh, liquidating some of the vested equity for people that have been holding it for uh, quite a while.

Speaker B: And what's a typical example where it would just make sense or say founders, some of the tenured employees or senior, maybe some of the early senior investors, at what stage is it typically making sense, those types of profiles be invited to be part of a standard transaction?

Speaker A: That's the number one question that companies have. Um, and used to be a straightforward answer because it used to be around series B, maybe the founders take some, something off the table. Um, around Series C. They used to invite more people into that conversation. Uh, it was maybe all employees or maybe it was employees plus the people that have left. Um, if we talk about angels, maybe they've already taken some off the table then as well. Um, and an understanding when I say Series B and series C was that you were of revenue making approximately half a billion dollar company. And yeah, that's what maybe Series B, series C meant. Um, now we have this new type of companies which are AI companies which it, you know, sometimes at seed, um, stage get a billion dollar valuation. Um, and so we still get the question, hey, is now the time to do it? Because we're so valuable and we have to start introducing sub parameters like, okay, have you made any revenue? Are you on your way to, um, live up to the valuation that you got? Um, have you achieved any milestones? And now instead of saying it's Series B, it's Series C, we're saying, okay, how much work have you put in? How much work is still ahead? Um, and is the money that you're getting, um, well spent on secondaries as Um, a mean of remuneration because you're competing with public companies.

Speaker B: Um, yeah, yeah, because that, that is interesting because if you joined a mature tech business that was listed that was public, quite often you've got a share scheme in place where you have opportunities to sell some of your stock. And so this is almost mirroring that concept. But the opportunity will come up sporadically, most likely connected to other share transactions. People will always ask about, uh, but what about the tax implications? And clearly we can't give any tax advice on the podcast. And besides, our listenership is global. They're in the US and the UK and Europe, various other markets. So it wouldn't even be possible to uh. But as a kind of rule of thumb, what type of thing would be a typical tax consequence?

Speaker A: There are two answers I think at least, but there's a tax consequence. Not really a tax consequence, but a consequence for the company and a consequence for the employee. I think on the employee side there's a lot of hope that it would be treated as capital gains. I think it's fair for the employees to prepare for uh, income taxation because maybe the timeline hasn't reached the capital gains, um stage yet, or maybe the UM share sale will not be structured in a way that allows for capital gains taxation. Um, but from the company perspective, there's always the question mark of if we're utilizing fair market value that's calculated in a different way than the fundraise share price. And we use that for tax optimizing the strike price. Optimizing the strike price for the tax optimized UM share plan. One of the downstream effects of a secondary shale is that there's another proof point that common shares which are typically held by employees, have now been sold at a certain price. So that price can now influence the strike price for all future grants. And that strike price is probably a lot higher than the strike price used before when you were granting it as a tax, um, optimized scheme.

Speaker B: So it could actually lower the incentive effect for everybody, really all of the employees in a longer time period.

Speaker A: I don't think that it's lowering, ah, the incentivizing effect, um, especially if the growth story continues to um, be on the same trajectory and it's for a segment of grants that have a strike price. If you don't have grants with a strike price, if you automatically go for, you know, unapproved tax options, anything like that, then it doesn't really influence it. But it does come into a conversation of if we're doing secondaries and we know that the downstream effect of that is that our strike price is going to go up. Do we continue granting tax optimized vehicles or are we lowering the in the money for the employees enough that the risk of having to continue the growth versus the cost of the income taxation versus the capital gains taxation, it's just a different mechanic of conversation and it's just another parameter that pushes maybe in the direction of, away from tax optimized, um, schemes. But again, ah, I'm not a lawyer. This is just something that we've seen and it could be, I'm sure there is a different way.

Speaker B: Yeah, I can see that. And one of the things here that's probably front of mind for CFOs is that let's say you're the CFO of a business, it's doing well, it's doing its series C. In this series, you're inviting people to buy new shares, uh, to make up some numbers. Say let's say it's 500 million valuation. Uh, but if at the same time you're advocating for some of the leadership team, if not all of your leadership team and your founders to be able to sell some shares, you've got this dichotomy where you're both, you're both a buyer and a seller at the same time. Right? Because when you're inviting people to buy the 500 million, you're trying to tell them, hey, look, give us another two or three years, it'll be worth twice that. But the fact that you're also trying to sell stock might well indicate that you think it's towards the top of the valuation range. And so you have this dichotomy where those signals are opposing somehow.

Speaker A: Yeah, I think that's certainly um, a way to see it. There's, I think there is a lot in it as a signal. If there's the want from someone to completely exit out of the business via the secondary, then that, that's a big signal. On the other hand, what I've seen in the majority of the cases is that the founders are seeking to be leveled up to what they should have been compensated for working, you know, 80 hour weeks for the past five years for 100K. And so sometimes the calculation is as simple as I should have been paid 350 per year. So that's 250 of a difference maybe over the four years that I vested. So maybe I will just give myself a million dollar, uh, secondary share payout.

Speaker B: And yeah, so it's benchmarking to having uh, worked for an extended period, probably submarket salary, and filling that, that, that gap which, which essentially caps to some degree how much you would rationally seek, uh, to capture as part of a secondary. Um, the other thing that I've had a couple of people mention to me is that, uh, if you look at who's involved in these businesses, it's mainly founders plus venture investors who make it happen. And the venture investors would never place one bet on your business like they're placing 20 bets a year. And some will do really well and some won't do well at all. Uh, and therefore they've got this natural hedge from the sheer number of bets they placed. But the founder, and actually the founder, the C suite, the employees, they've got all their eggs in one basket, so they're not hedged. And so at some level, if they've done a sufficient number of years, it's an opportunity for them just to put, uh, some of the accrued value into a different asset class. And that's hedging, right?

Speaker A: Yeah. I think there are many, many ways of seeing why someone should get more money. And I think we will always find a way to rationalize why we should get more money. And in this case, Yeah, I can see myself agreeing with what you said, but I can also see myself saying, you know, what, are you actually in a disadvantaged position being a founder of a company? Or do you have actually more power because you can influence your own future, um, wealth? So I think the most important part of the secondaries is that it should achieve an incentivizing effect. And what we just discussed is the human psychology kicks in. And so all of the advice that we can give to even our clients is tailored to the people that we're talking to. Because for someone getting a 5 million payout is actually disincentivizing because they wanted to keep the equity in the company because they think those 5 million are going to turn into 50 in the next five years, vice versa. If for the past five years I couldn't buy a house and my wife and my kid need to go to a better school, it's going to be disincentivizing if I can't cash out a little bit. So it's, it's fascinating. Um, but it's also interesting that now it's not just the founders that are participating. It's being used on the broader employee, um, population, which from our external perspective, has had a very, very good educational effect on the market.

Speaker B: So it's a. Yeah, yeah, very interesting. I can completely see the kind of human side to it. And I think of that that's the way that people are describing the motivation to be doing a secondary transaction at all. And actually in the uk, where people probably revolut as our post du Bois of tech at scale, or at least in recent years of this, I think in the publicity that they had around a secondary transaction quite recently, um, they were doing that transaction at a discount, I think reported at 30%. And so to what degree is a sort of discount generally or even discounts like Quantum, to what degree is that a norm in order to make sure that, that these things happen at all?

Speaker A: I think it's um, just to kind of tie back to the strike price effect. If you discount the share price then you're probably closer to some of the making your future strike price still be low. So just kind of tying all of both of those together. But um, the main reason why people give a discount to a strike to the um, share price is because you're selling different shares. It's not preferred shares, it's common shares that have less um, rights. That's the, that's the main reason. But we've also seen, um, companies allow people to share at the same share price, then they buy back the common shares and they go back and issue preferred shares. So it's a very um, very different ways of going about it. But as you mentioned revolut, it is fantastic that they included employees, alumni in their secondary share sale. And even the discount price was very, very, very high. And I think the smart thing that they did and the smart thing that we see as a positive ROI on equity that appears in our clients. If you have secondaries, you can show the value of equity even to people that don't believe in equity. And you can use it as a retention mechanism for some of your highest performers. What I mean by that is you have a secondary event and if you know that you just raised a, uh, Series E and you want to do a secondary event as part of that, if you're allowed to, sometimes you're not because of the jurisdictional governance and so on, um, announcing that you're looking into secondaries, you have just increased your retention. If you also said we're looking into secondaries and we will allow only existing or current employees to participate. And if you institute that as part of almost like a normal cycle, like you say every fundraise, we will aim to get to the secondaries. Of course, you can't promise anything. Um, you added another layer of retention, not just another new grant not just a performance grant, not just a bonus, but also secondaries. Um, and we see the first signs of that working when you have a secondary event and then after that people come and say, how do I get more equity? People that have never been interested before and that's a fantastic sign that now they believe that the, whatever lottery ticket can actually produce some results. Um, but I think the main conversation, uh, here, maybe that's interesting for the CFOs, is how do you set up the parameters of how much do we allow people to participate in? Do we guardrail it? Do we say alumni? Do we say existing employees? Do we cap it maybe on a dollar value? Um, and there are, there are different answers for it, but there are answers. I think the most common is to say we want all of the existing people to participate and maybe we want the alumni to participate. But to a much lesser extent, the one rationale for allowing ah, alumni to participate is um, to clean up the cap table. Sometimes some companies really want to do that, um, and there is value in that. Um, but even if you're doing that, I think my recommendation would be to at least make a, um, different UM proposal for that. So cap alumni at 5% of the holdings versus 10% for current employees. And then we also see the eligibility thresholds. You can have a tenure threshold, so you have to be at the company for at least two years. Or sometimes they even say if your performance fell below meet expectations. Um, and sometimes there's almost an inverse. The higher you are in seniority, the less of the percentage of the vested you can, um, cash out. But there's always a cap on total dollar amount. Um, especially if you have early employees that sit on $5 million, you don't typically see them cashing that out and then, uh, potentially quitting the next day.

Speaker B: I can completely see that. And I think the piece that I would emphasize there is the part where you might be the CFO and one of your worries is that you've got an incentive scheme and that maybe you don't hear the employees talking about it in a manner where they're genuinely motivated m by it. But the minute that they, they know that periodically they can turn some of that paper money into real money, something that they can enjoy immediately, something that they can use to pay off part of their mortgage or whatever it would be, um, CFOs do, do like the sense that all of this work that's going into having a powerful share scheme, uh, is, is really reflected in people's behaviors and you're Seeing people really driven by it, uh, wanting to talk, to talk about it, feeling it's having a real impact on their motivation and their work.

Speaker A: Yes, I think it's. If I had one concluding thought about secondaries, it would be if we have a billion dollar company and they are not even trying to be the most advanced in employee pool sizes, but they stay at 10%. 10% of $1 billion if everything works out, 100 million. So a company has invested $100 million into an incentive plan that we are unsure on their roi, we're unsure if we're going to get a positive ROI on it. And secondaries are one of the best ways to turn that into a positive roi. The minute after it closes, all of a sudden everyone actually believes that that 10% is $100 million. Before it was 100 pieces of papers. Much better than any rigorous education that you can do through learning and development or webinars now.

Speaker B: Yes, that's a fantastic final message. I can see uh, that being something that really cuts through all the noise, uh, and really helps people to feel the motivational impact and uh, making it real. I mean that really needs to be the ice test for these things. Uh, Shabela, I really enjoyed our conversation. I can see why this was a sufficiently exciting topic that uh, you and your co founder built a business around it. So um, really, really good to, to talk through share schemes, salary structures dealing with these interesting challenges in a world of AI. Uh, and thank you very much for being on the podcast.

Speaker A: Thank you. It's a pleasure. It's always nice to talk about uh, in a critical uh, space, I would say critical thinking space. It's always, always fun. Fun.

Speaker B: Yeah, absolutely. A really important topic. Thank you again. I hope you enjoyed our discussion today. We're really proud of the podcast following we've built up as we run our podcast in conjunction with the startup CFO community. We're able to access many of the experts who are changing the face of the modern finance function, allowing us to hold these discussions, playing our role in shaping the modern finance leader and informing career journeys. In the age of AI. We're seeing the most dramatic changes in how CFOs apply themselves to supporting high growth businesses. It's a time where peer support will add more value than ever before. And lastly, if you're not in our group already and want to join, just go to StartupCFO Tech and click to apply to be part of our exclusive community offering

Speaker A: MHM SA.