In the competitive world of Silicon Valley, where entrepreneurs are often celebrated for their drive and ambition, Jay Chaudhry’s success story stands out—not just for his achievements but for the way he chose to share his success with his employees. His approach has transformed many of them into millionaires, a rarity in a tech culture that often focuses on individual gain rather than collective reward.
Jay Chaudhry: A Classic American Success? Not Quite.
If you’ve ever heard the tale of the self-made millionaire, you’ll recognize the pattern: a humble beginning, relentless effort, and eventual triumph. Jay Chaudhry’s journey fits many of these classic elements. Born into a modest family in India, he ventured to the U.S. in the 1980s, and over time, became one of the most successful entrepreneurs in the tech world. Today, his cybersecurity company, Zscaler, is valued at over $28 billion. However, what sets Chaudhry apart from the typical “rags to riches” narrative is his decision to share the wealth he created with his employees—a move that has made many of them millionaires.
In 1998, Chaudhry made the bold move of selling his first startup, SecureIT, to VeriSign for $70 million. It was at this juncture that Chaudhry did something that many CEOs wouldn’t even consider: he gave a large portion of his company’s equity to his employees in the form of stock options. These stock options allowed his team to purchase shares in VeriSign at a fixed price, which seemed like a smart move at the time, but it turned into something much bigger when VeriSign’s stock soared.
Within two years, thanks to the skyrocketing price of VeriSign’s stock, more than 70 of Chaudhry’s 80 employees became millionaires on paper. For many, it was life-changing. Some bought new homes, others splurged on luxury cars, and one employee even took a six-month sabbatical to travel across the country in an RV.
A Thoughtful Economic Strategy
Chaudhry’s decision wasn’t just about being generous—it was a well-thought-out business strategy. He followed the advice of Jim Bidzos, the president of VeriSign at the time, to sell portions of his own shares during the dot-com boom. This move allowed him to benefit from the surge in stock prices before the inevitable collapse of the internet bubble. By the time the bubble burst in 2000, Chaudhry had cashed out, while his employees who held onto their VeriSign stock were able to ride out the volatility and eventually see major returns when the stock hit $254 per share in January 2021.
Chaudhry didn’t immediately recognize the magnitude of his decision. “I went home that night and looked at the spreadsheet of all the stock options my employees had,” he recalls. “When I multiplied the number of options by the price of VeriSign’s stock, I realized I had made around 70 to 80 millionaires.” The moment was eye-opening for Chaudhry, and it reaffirmed his belief that employees are the driving force behind any company’s success. By offering them a stake in the outcome, he was acknowledging their pivotal role in building SecureIT from the ground up.
Turning Employees into Millionaires: A Model for Silicon Valley?
Chaudhry’s story isn’t unique. Other successful entrepreneurs, like Mark Cuban, have taken similar approaches. When Cuban sold his company, Broadcast.com, to Yahoo for $5.7 billion in 1999, many of his employees woke up to the news that they were now millionaires. Cuban and Chaudhry share a belief that success should be a shared experience, especially when it’s the collective effort of a dedicated team that drives the company’s growth.
In an industry often criticized for its cutthroat competition and individualistic mentality, Chaudhry’s approach represents a refreshing shift. By sharing a significant portion of the company’s equity with his employees, he not only created a deep sense of loyalty but also a sense of ownership. Employees who felt personally invested in the company’s success were more motivated and productive.
The results speak for themselves: a highly engaged workforce can often outperform one where employees are merely working for a paycheck. Research has shown that giving employees a sense of ownership can lead to greater job satisfaction, increased productivity, and even a stronger company culture. For Chaudhry, this wasn’t just about making a quick financial gain—it was about building something sustainable, where everyone could win.
The Model’s Limits: A Realistic Approach
While Chaudhry’s strategy is compelling, it’s not without its challenges. The structural realities of today’s business landscape make it harder for many companies to replicate this model. For one, the growth of tech companies today is slower and less predictable than during the dot-com boom. To make this work, a company needs to be in a position of rapid growth, with a successful exit strategy—whether through a sale or IPO.
Moreover, even in Silicon Valley, not all companies can afford to give away significant portions of their equity, particularly if they are still in their early stages or facing financial constraints. However, Chaudhry’s approach serves as a powerful example of what’s possible when CEOs choose to prioritize shared prosperity. While it may not be feasible for every startup, it offers a valuable lesson: companies that take care of their employees, particularly when it comes to financial success, often find that those employees take care of the business in return.
In the end, Jay Chaudhry’s story is a reminder that wealth isn’t just about personal gain—it’s about creating opportunities for others to succeed alongside you. By sharing the spoils of his hard-earned success, he has left a lasting legacy—not just in terms of his company, but in the lives of the people who helped him build it.