[sanderjd]

I'm very curious about the part where prospective employees wanted options, implying you need a liquidity event anyway. Aren't there other models for that? For instance, a partnership track setup, or paying dividends on shares, or some other sort of revenue sharing? Equity in profitable privately owned bootstrapped companies must be valuable, or there would be no incentive for the founders of such companies, so why not offer a share in that value?

[sytse]

Great question, I'm sure there are multiple models possible. One complication is that our priority for next few years is to grow as fast as possible. This means that you're not making a profit but investing back in more growth.

Since we took outside investment that period is about 5 years. Without outside investment it will take longer, maybe 10 years. Many potential hires don't want to wait that long. They might wait 10 years but only if you get a substantial windfall at that point, not the first small profit share.

Partnerships are more common at consultancy and finance firms where labour generates direct profits. I think they are less suited for product firms where the labour comes years ahead of the revenue. A liquidity event is a great way to bring the 'windfall' forward.

Of course things are not black and white. We choose a 4 year vesting period https://about.gitlab.com/handbook/stock-options There are startups now doing 6, 8, and 10 years. We didn't have a good reason to deviate from the norm, so with our vesting time we stuck to what is usual in order to be an attractive employer and hire the best executives.

[sanderjd]

Thanks for the answer! This is all great food for thought.

[bisRepetita]

Can't upvote that question enough. If anyone with experience there could chime in, that would be really insightful.