067: Building a Shareholder Mindset Steps for Tech Professionals

00:00 - 26:40 | Christopher Nelson: When I came to realize that my equity compensation opened up a whole new door of responsibility, I started asking different questions. I was no longer just an employee. I was an employee, a shareholder, and a part owner. So when I was meeting with cross departmental leaders, I wanted to understand the health of the relationship with the customer. I wanted to understand how the product was continuing to grow and evolve in a competing marketplace. I was thinking like a business owner and ultimately this change of mindset not only made me a better employee because I was thinking differently, but it ultimately has made me a better investor. Hello, and welcome to this episode of Tech Equity and Money Talk. Let's get into it. So as a technology employee, when you sit down with the HR representative or your manager, and you get to review the stock agreement, and you understand your grant, you understand the type of equity you're going to get, and you sign on the dotted line, you at that point become a shareholder and part owner in the company. Congratulations. You have now been able to get awarded equity as you're trading your time and talent there. So what does that mean? What does it mean to be a shareholder and an owner of the company? I know for myself, when I got the stock agreement for Splunk in 2011, I knew from doing the work, the due diligence and pursuing the company, it had a value. And I was excited about that, but I was not clear on what does that mean for me? I knew that I'm thinking like an investor. I'm now a shareholder in the company, but how does it change how I act? And as I consulted mentors, they let me know, you know, you do need to act like an owner. You need to act like a shareholder. If you own these shares. And so that's what I want this episode today to be about the shareholder owner mindset, because this is often overlooked among technology employees working for equity. Many times I see the value of equity diminished. People see it as, oh, maybe this is a bonus or something. But the reality is, is if everybody saw the value in being a shareholder in the company and acted like an owner, The results that you would have in the way these companies would perform in the marketplace would be exponential. It's true because I, being part of some hyper growth companies, and I can think specifically about Splunk, I think specifically about GitLab, everybody in those companies was very focused on rowing the boat in the same direction of moving the mission and the vision of that company forward. And everybody thought a lot about what it was to be a shareholder, what it was to think about the company. And so I want to break down this framework for you today of how do you think about being a shareholder in a tech company. So let's look at the leaders. So in Splunk, our leader was Godfrey Sullivan. He was not the founding CEO. He was brought in. He was given a significant amount of shares as well. So he was a shareholder owner. And a few of the things that he really embodied as that owner is he cared deeply about the company mission and vision. Arguably, he had the ability to help set that, but it was something that They got a lot of people to contribute, especially to our values as well, but our values, our mission, our vision, he held that out in front of him and you could hear when he was talking, that was always out in front. He also had an outside-in focus. What is the outside-in focus? The outside-in focus when you're thinking about business is customer, then company, then division, then department, then team, then yourself. You're thinking outside first and then in. These CEOs or c-suite executives that are large shareholders the ones that are successful have that mission vision value focus outside in focus as well and ultimately they also care. About the success. of the customers and the employees. They truly want to see customers succeed with the products and they want to see employees succeed in that particular company. I think those three things really embody CEOs and leaders of companies who are not founders, but really think as shareholders. And so how does that translate to you? Like, what are some things that you can do now that you are working for a technology company, you have an equity compensation package, I want to take these three things the way that, you know, C-suite executives who are larger shareholders in the companies, the way they think, and translate that into some actionable steps that you can take. And these were things that while I was working at these different companies, I really thought and tried to be very intentional about because what I saw is that the more people that could act like owners, the greater success the company would have. And for those of you who've been a part of it, who've seen it, I mean, this comes to mind immediately. And I think that all of us, if we all embody these types of actions, that this discipline can push out from ourselves, this attitude can become infectious. And this is where I think anybody in whatever position in the company can be a leader. And I think You know, let's walk through these right now to show you how some of these actions can teach you how to act like a shareholder owner of the company. So number one is get to know the product and how to pitch it. And I'm not saying that you have to know all of the details, but you should understand what is the problem that your product solves for the customer and be able to talk and give the high level pitch of what that is? Because ultimately, owners should be ambassadors for their company. If you are a shareholder owner, you should be out in public if you're traveling for your company on a plane and being able to have those conversations. How would you feel If you were in a conversation with Tim Cook of Apple and he was unclear on the iPhone or the value that it provided or different Apple products, be shocked. And the reality is if you and individual contributors, and I'm not saying you are, you could be a manager, you could be an executive, but if If you are really understanding and can talk about the product and pitch the product wherever you are, then that can have a larger impact on the company. I remember at Splunk, the mantra there was, everybody works for sales. And there was an encouragement to know and understand the problems that the product solved, some of the key use cases. So that if you were on a plane and you got into a conversation and people were asking you what you were doing, I could pass out a business card. I could articulate the software, the problem that it solved. And if somebody was interested, I could then pass that lead off to sales. I mean, imagine that if the whole company is doing that and sales is getting leads pouring into them and they can actually sell easier, faster, what's that going to do to the top line of the company? You start understanding how this works. So thinking like a shareholder and owner, you want to know your product and you want to know how to pitch it. You want to be an ambassador walking around for your company. The other thing that's really important. And this goes to how great leaders really care about their employees. And the attitude of the company is that you want to be able to be a cheerleader for your team and your company, especially through challenging times. Working in technology companies is hard. We work And we solve difficult problems every single day. We have to do it quickly. And there's a lot of demand from customers to make sure that we have uptime, that there's no defects as well as it should be. It's a hardworking environment. And sometimes when there's challenges, when there's headwinds, it's easy to get down. Great leaders motivate. And this is where everybody acting as a shareholder, encouraging other team members, motivating other team members is really important because As a company, as a shareholder and owner, you don't want to be inciting and creating infighting. You don't want to be creating gossip and rumors. You want to focus on the things that are going to move the company forward. This is why I think cheerleading, you think about it, somebody who's on the sideline, it may be something that you can't directly impact, but you're trying to encourage your teammates and people at the company to continue forging on, especially when there's challenges. So that's number two, is you want to be able to be a good cheerleader for the team. Number three is owners know their customers. It is so important that you understand who are some of the top customers, what is some of their financial impact to the company, because you don't know in your network, in your daily life, who you may be interacting with. I have heard stories of people on planes working for consulting companies and bad mouthing clients, mentioning their names. And there's people who work for that same company sitting in the row behind them. And that's obviously a worst case scenario. Best case scenario is, you know, your customer and anyone you understand who's interacting or participating with that customer, you're thanking them. I mean, what would you expect a CEO to do if they were out at a dinner? or out at an event and they met somebody who was a member of the organization that was one of their biggest customers. Thank you for your business. How are things going? Are we doing everything we can to meet your needs? Knowing and understanding who your customers are is important. Whether you're in HR, whether you're in IT, whether you're in facilities, I mean, it is important if you truly value these shares and want to see them appreciate doing a little extra work and understanding who your customers are and ensuring that you're treating them well is critical. I mean, it's critical to being an owner and running a profitable business. Owners want to understand customers and how the customers are perceiving them. It's so important. What else? Owners and shareholders stay focused on the metrics and understand how the business is performing and want to know how they can help. This is so important and will teach you to not just be a good shareholder of the company that you're in, but these are some traits that show you how to be a great investor as well. And that is looking at the underpinning, the metrics of your business. Talking about financial metrics, sales, how are sales going? How are you meeting sales? How's expenses, how's spending going? And there's other metrics as well. There's net promoter score. What are, you know, how are customers enjoying the product? Are they willing to promote it for you or not? Employee engagement. How are the employees feeling about the company? You know, and then, then you start going through your checklist. How can you encourage, how can you understand what's going on with other employees so that you can help them? Because the more people are leaning in to help customers, to help employees and are looking at the company and being responsible citizens. I know there were plenty of times when I was working in the Silicon Valley, the Bay Area, we were getting tremendous benefits of, you know, meals served and other things that there were times that we were asked to tighten the belt. We needed to meet different expense targets. Okay. Maybe we're not going to get the breakfast served on site. maybe it's going to be pared down a little bit. But because we're owners, I realized that getting breakfast served on Friday is less important than seeing my stock price go up, is less important than our leadership team reading out to the street that we met our expense target or exceeded it, got closer to or became profitable. That's more important than getting some candied bacon on a Friday. And these things all add up. Micro moments, micro moments with your team, micro moments contributing as an owner lead to macro movements. This is why this is so important for technology employees to understand is that when you're thinking like an owner and you're surrounded by people that are thinking this way, you're educating people that are thinking this way. your larger team is going to win. And that is going to lead to better performance as a business. And then that can translate to market upswings. It's critical. The fifth one is, you know, shareholders keep their eye on the ball, meaning that you want to be understanding how things are trending and evaluating the investment of your time and talent. because ultimately you are a shareholder. You are not the founder. You have different responsibilities and you also have different abilities, meaning that if this no longer becomes a good investment of your time and talent, you can take it and go invest somewhere else. You can hold on to the stock that you've invested so far and exercised if you needed to, if you had options, you could take that and go somewhere else. It's so important to understand as an owner, and a shareholder that you want to make sure that you're making decisions for yourself and your investment. And I want to talk a little bit about some of the red flags, some of the things that you may want to think about, because your time is your most valuable asset. And when you are somebody who's building equity by trading your time and talent, you want to be thinking like a shareholder, as I called out in these steps. At the same time, you also need to Be honest in your evaluation of this investment to understand if you want to continue to invest or not. So let's go through, you know, so you can act like a shareholder, get to know your company's product and how to pitch it. You want to be an ambassador for your company, be a cheerleader for your company, for your team members, encourage them, especially when the going gets tough. Owners and shareholders know your customer, know who they are. And then again, going to number one, if you can pitch, you can make sure that you're checking in, seeing how your customers are doing or potentially helping acquire new customers. Stay focused on the metrics and ask how you can help. And the last one, number five is just keep your eye on the ball. Keep your eye on the ball, understand how things are trending and then evaluate your investment. So as you're thinking like an owner, as you're managing your investment of your time and talent, You want to be understanding what are red flags, what are some warning signs that tell you that this may not be a good investment in your time and talent. The exit's slipping. If you are at a pre-IPO company, a pre-acquisition company, you're at a private stage and your stock's not liquid, that's a huge issue because the value in your stock, the ability to divest it, comes with liquidity. And so If you're looking at what was a planned exit and it gets pushed back six months, it gets pushed back a year, gets pushed back 18 months, at that point, you need to take stock. You need to go back to some of those metrics. You need to understand what is happening with that particular company. to see if it's still a good investment of your time and talent. I was talking with somebody, having a coaching session with somebody the other day, and they were mentioning to me that they'd been with a company for four and a half years and the IPO had been pushed three times and now there's a big question mark. At that point, if you are being conservative with your time, you would want to then identify what equity you want to take with you and you would want to then plan to take your time and talent elsewhere because it's possible that this one is not going to make the IPO. There's a lot of other factors in there, but I'm just trying to make sure that you're thinking like an owner and if you're seeing a lot of risks, don't hesitate. This is why you have the flexibility. Another reason that you would want to take your time and talent off the table is you see company metrics moving in the wrong direction. If sales are starting to be missed, if growth is slowing down, if the expense line is ballooning for some reason. This is something that, you know, public or private company, you would be concerned that this is going to impact growth. And so if your organization is setting targets and not hitting them and consistently missing them, that is also another red flag that for you as an owner of your time and talent, primarily, you would want to look and say, do I make another investment? The third one is looking out for cultural shifts. Many times as companies grow, change, and evolve, the culture can change as well. I've seen it and it's not necessarily a bad thing. Sometimes the culture, when companies go from startup mode to scaling mode, there's a significant change in culture there because some of the traits that got you through startup mode will also keep you there and won't allow you to scale. So there is a need for change. You know, in startup mode, things can be done very ad hoc and differently. You should get to scaling mode. Well, you actually need to standardize some things. You need to emphasize some more boring solutions and, and less, you know, unique solutions, if you will. You also need to start preparing for different types of audit. You need to be preparing for different security posture. So that can change the way that you operate. And as you continue to scale and grow, that's going to happen as well. So look for the culture shifts and trying to understand are those culture shifts impacting the way that you work, the way that you want to work? Is it still a fit for you or is it something that's truly going in the wrong direction with some new leadership brought in and it's really taking the culture into a toxic environment that you don't want to be a part of? All those things are important to consider. Culture shifts. Number four is turnover. Are there a lot of turnover with the C-suite executives? This can be called rotating door syndrome, but if you see a lot of C-suite going in and out and a lot of churn at that level, it is hard to get traction and build and grow the company. And so that is, again, a red flag that if you're seeing a lot of churn, thinking like an owner with your time and talent, you may be saying, I'm going to go invest this elsewhere. I need more stability because companies need stability and consistency to grow. And if there's a lot of churn at the C-suite, it's important. It could also be a little bit more intimate. There could have been some churn maybe at your division, and maybe there's a scenario where it's no longer a fit for your personality or for your skillset. There can be many different types of changes at a departmental or divisional level that then just puts pressure and risk on your particular position. I know when you get to a director or senior director position, if there's a swap of VPs, they may have their own people that they're going to want to bring in for your particular role. That can happen. It's called a regime change is one of the colloquial terms for it. And so you need to be aware that if those types of things happen, your job could be at risk and it may be time to look for other opportunities. Again, this is thinking like an owner with your time and talent. You want to be heads up, eyes on the ball, understanding what is the impact. Another one is customer service issues. Right. Understanding is the product starting to age is the product starting to move in a, again, a negative direction. That's having customer service issues, name, brand, and reputation can continue a lot in sales perspective. But if the sentiment of customers are changing, that's a huge tell for how things could trend in the future. So looking at those net promoter scores, understanding what customers are pleased with and what they're struggling with. But keeping your eye on that because you want to avoid any type of red flags. And so the last two, you know, six and seven are a little bit more related to your role. Number six is your manager leaves. Many times if you are working for a great manager and things are going very well and they decide to move on to another company, that can be incredibly disruptive. and it may put your growth in perspective, especially if you had great alignment with that person. So again, you want to examine the scenario and understand, am I going to be participating in the interviews of the new person who's coming in now that my manager's left? Do I really want to stay? That's a big indicator that you want to evaluate? Is this the best fit for your time and your talent? And the last one is you're too comfortable. You get too comfortable. I mean, that's something that we all have to ask ourselves from time to time is, am I getting too comfortable in this role that potentially my value of my career capital, my expertise is moving backwards. I'm in a maintenance mode. I'm not in a grow mode anymore. We need to ask ourselves those questions because that is us truly looking at our time and talent and saying, am I increasing the value or is it stagnating? Now, keep in mind, there are times when we rest and we vest. It's true. There's our times when we need to slow down the growth at work. And I'm saying slow, not stop. We always want to make sure that we're growing. There's some level of challenge. However, there are times when your family, if I know that when I was growing my family and we were having young kids being in a role that I understood very well, and Having the day-to-day challenges but not seeking new levels and not seeking promotions at that point in time was really important because I did not want to tip myself over. I wanted to make sure that I was great for everybody. I was doing well at the office. I was also doing well at home. That's different than you being too comfortable. And I have seen this. I have seen people who in their career did amazing things, built amazing things. And then they went from building a product, building a feature on a product to then five, six, seven years later, they're just doing the maintenance support on that particular product. And that it could be in a language technique architecture that's getting stale. And then all of a sudden it's phased out and they don't have the skills and the ability to adapt to what's coming next because that's what they were known for. They were also arguably being compensated because of the uniqueness for that particular asset. So then they get hit by a layoff. And these things can sneak up on you. So this is where I think the difference between being too comfortable and intentionally resting, investing is one, you are aware of I'm doing a downshift because I have something over here that's taking my time and attention versus being too comfortable is I could be doing more. I could be challenging myself. I could be ensuring that my skills are not deprecating over time, but are still getting are still increasing in value because that's ultimately what we want to do. So your time is your most valuable asset and you want to protect it. Yes, you are thinking like an owner when you are working for these companies and you want to make sure that you're focused on the metrics, you understand how the company is performing and you're keeping the eye on the ball for yourself. Meaning that you're looking out for these red flags. So is the exit constantly slipping? Are the company metrics moving in the wrong direction? Are there cultural shifts that you don't inherently agree with? Or there is some turnover in the C-suite that is just this churn is not creating a stable environment where the company can grow. Or there's significant customer service issues, not onesie twosie, but there's outages, there's Now some of the super fans are turning away and choosing other products. Maybe your manager leaves or you in self-reflection realize I'm getting too comfortable. I need a change of environment because this is too comfortable for me. I want to make sure that you are thinking like an owner with your time and your talent, looking for these red flags and ensuring that you're managing your career well for the people who desire to leverage equity compensation to build wealth. They're going to be focused on managing themselves as an asset and then putting themselves in a situation where they get shares of ownership in a company that they believe in, that they understand the product. They know the leaders, they have customers that are fans, they have solid financials, and they're getting really nice equity that is close to being liquid or is liquid. And if things are going the other way, if you are really being an investor with your time and talent, you are going to ask yourself for every quarter, you're going to look across your portfolio and you're going to ask yourself, am I going to invest more? Meaning in this example, trading time and talent, am I going to go for a promotion? Am I going to try and do something to acquire more equity, more effort into the job? Or am I going to hold, meaning let me observe. I need to actually get more metrics. I need to understand the true health of the business. Are any red flags being hit or is it time to sell? Is it time to take what I've earned off the table and move on to the next opportunity? That is what thinking like an investor with your time and talent is truly doing. I appreciate you joining me on this episode. I think that this is, again, a subject that isn't talked about a lot, but it's really important. And this is really wrapping up. There was a series of doing due diligence that we did with myself. I did private company due diligence. Brian Faroli did public company due diligence. And then this is thinking like an owner and a shareholder and how you want to make sure you're interacting in the company. But thank you for joining us on this journey. I hope you enjoyed it. We'll see you on the next episode.