Founder: 1% Post-Exit - Pluralsight

Alicia_Schmidt — Sat, 02 Mar 2024 23:47:42 GMT

Aaron Skonnard, Co-Founder & CEO

Founders committed personal equity equal to 1% of company; Ownership transferred post exit.

“We believe technology has the power to create freedom, equality and opportunity around the globe… that’s why we created Pluralsight One and joined the Pledge 1% movement”

• Pledge 1% member: since August 2017 (Builder)

• Pledge Types: Equity, Product, Profit, and Time

• Stage: Public (IPO 2018)

Timing of commitment:

Late Stage. <1 year pre IPO

Vehicle:

Equity source:

Co-founders: 1% Post-Exit Model

Funding schedule:

Co-founders transfer 0.1% a year post IPO for 10 years

Investor dilution:

None

% Upfront:

N/A

“Top off”:

N/A

Donor-advised fund:

Yes - Silicon Valley Community Foundation

Background

Aaron Skonnard (CEO) and Fritz Onion cofounded Pluralsight in 2004. They founded the company with the mission to democratize technology skills, believing in the power of technology to address the world’s greatest challenges. They launched Pluralsight One in 2017, demonstrating the company’s commitment to drive significant, lasting social impact by improving equal access to technology skills and investing in catalytic solutions.

Strategy

Pluralsight had been mission-driven since inception, but Aaron took things to the next level about 10 months prior to Pluralsight’s IPO. Pluralsight hired a Chief Impact Officer, built and launched its social enterprise, Pluralsight One, and joined the Pledge 1% movement, while publicly announcing their commitment of 1% of equity, product, time, and profit.

Aaron and Fritz both committed to donating shares out of their personal holdings, which equaled 1% of the company’s outstanding shares.

Execution

The co-founders committed to donate 0.1% a year for 10 years (first grant in 2018), which enables Pluralsight One to benefit from any rise in the stock price. They formalized their personal pledge via a legally binding agreement with SVCF, their corporate donor-advised fund provider.

Pluralsight’s S-1 disclosed the founders’ personal equity commitment along with the company’s commitment to 1% of profits, time, and product for Pluralsight One initiatives. In addition to equity and profits, Pluralsight One is also funded from profits generated from sales to nonprofits.

Pros/Cons of This Approach

✓ Founders in control. No board approval needed.

✓ Social impact legacy protected; legally binding.

✓ Demonstrates company commitment (beyond founders) via profit, product, and time pledge.

✓ 10-year spread: Pluralsight One benefits from stock upside and Founders likely have tax benefits.

⌧ Risk of stock downturn (equity is not diversified).

article Founder: 1% Post-Exit - Pluralsight in Equity Case Studies