Converse is the simplest and fastest app built on XMTP. The Converse team has been building with XMTP since day one, and with the ability to reach over 2m+ identities on XMTP, we are excited to put more resources into building a better future together.

We need to make using crypto as easy as sending a message. We have already started implementing secure groups into Converse, and we have so much more work to do so that everyone has a secure messaging application native to crypto.

Everything starts with trust.

The world needs an open, secure, and decentralized communication platform. One that everyone can trust to build on and use.

That’s why we are open-sourcing the application layer, which is also built on the open & secure XMTP network.

Let’s talk about why we believe in open-sourcing everything. Converse and XMTP.

We are building the most open and secure developer platform in the world—one that all developers can trust to build on, unlike the centralized platforms of the past, such as Facebook, WhatsApp, Telegram, Zynga, etc.

I spent the past 15 years of my career building on top of the Big Tech platforms. This actually means I spent the last 15 years of my career getting the rules changed, promises broken, and ultimately getting my businesses killed or forced to sell because I built on top of these centralized platforms.

To protect global communication, we must create a more open and secure communication layer for the internet. We cannot risk building on top of platforms owned by a single company or, in some cases, a single person.

We deserve a messaging network that is more aligned with the entire crypto community and our core values of openness, security, and decentralization.

This isn’t a move about acquiring Converse; it’s about building trust with the best developers in the world and aligning XMTP with the values of the entire crypto community.

The move makes the application layer as open as the protocol layer. The truth is that developers don’t just build on protocols; they build on apps, too. Building on closed-source apps is like playing a game without knowing the rules. But it doesn’t have to be this way.

Here’s our not-so-secret plan for the next decade, which has been the same since day one:

1. Build the most open, secure, and decentralized messaging protocol in the world that can last forever (v3 upgrade to XMTP brought world-class privacy and security to our protocol)

2. Build amazing and secure messaging applications that are native to crypto - Converse will push the limits to show what’s possible and be open so all developers can benefit from it

3. Open source everything to create the most trusted developer ecosystem in the world

Join us, and let’s build:

1. We are working hard on an #AllNewConverse and we will be letting people in on an invite-only basis starting today! This will include secure group messaging and onchain native functionality. If you want to try it, shoot me a DM on XMTP @ shanemac.converse.xyz

2. Collect this post to jump ahead in the invite line

3. To build with us, check out the Converse or XMTP open-sourced repos below:

   1. https://github.com/ephemeraHQ/converse-app

   2. https://github.com/xmtp

The name also reinforces that Ephemera's core role in nurturing XMTP is not meant to be permanent. In fact, the true marker of Ephemera's success is a future in which it can step away and have XMTP endure as a decentralized, secure, private, and resilient protocol, maintained by a committed and diverse community of contributors and participants.

Currently, as the main contributor to XMTP, Ephemera works alongside grassroots developers, partners, and the community to build features, strengthen security, and promote the protocol's growth. The company’s efforts center on fostering a vibrant community and expanding the developer surface area to drive innovation in decentralized messaging.

The messaging space is dominated by centralized powers—corporations and individuals who dictate the rules, control the networks and protocols. Developers can’t trust to build on these platforms without a constant threat of being rugged or shut down. This must change. XMTP is leading this change, bringing trust and confidence to its community of developers and users with a secure and open messaging network not owned by any single person or company. Together, we can build the most secure and private messaging network in the world, owned by the people who build it and use it. - Shane Mac, CEO of Ephemera

Since June 2024, XMTP has supported secure group chat built with Messaging Layer Security (MLS), ratified last year by the IETF as the new internet standard for secure, private messaging. MLS delivers robust security guarantees such as message confidentiality, forward secrecy, and post-compromise security. These features, combined with advanced cryptographic techniques and secure key management practices, make XMTP’s group chat uniquely secure.

Decentralization remains a core focus as Ephemera helps expand the number of node operators, protocol contributors, and client apps, ensuring users have reliable, transparent, and fair access to truly secure and private communications. We are eager to connect with node operators who share our vision for a secure, private, and decentralized messaging future. If this resonates with you, reach out to us at nodes@ephemerahq.com.

We champion privacy, security, and user ownership. We're building XMTP, an open and secure messaging network built to last forever. Our mission is to change the world through technology, tackling the hardest problems because they matter deeply.

To achieve this, we're assembling a small but mighty team of staff-level engineers, world-class designers, and passionate leaders who believe in our vision. We operate like owners, and believe that our passion combined with grit, talent, and drive can change the world. If you are inspired by solving hard problems alongside the best in the space, come join us.

XMTP Labs isn't for those exploring, curious about Web3, or needing daily direction. It’s for the committed—those devoted to decentralized technology and an onchain future, with a championship mindset, ready to win alongside the best.

Competitive base salaries, meaningful equity and benefits designed to give you autonomy. We are a fully remote team headquartered on the internet. Do great work from anywhere.

Open positions

Engineering

• Head of Security

• Staff Software Engineer (Messaging Protocol)

• VP of Engineering

Executive

• Chief Marketing Officer

Or, join our bench!

With this new capital, we have an open road to building the base layer communication protocol for the next web. We’re excited for this to unlock an opportunity to find more people who want to join us in that mission…

The primary factor in raising this capital is supporting our recruiting efforts. We wanted to share some additional insight into our future, our motivations, and the scale of our ambitions:

XMTP is a fundamental new building block of the next iteration of the web—a permissionless, crypto-native communication protocol that connects communities, creators, protocols, applications, and users. Today’s messaging platforms are walled off and centrally controlled, email is rampant with spam, and chat apps are rife with ever-accumulating scams. We’re here to build a better way for the world to communicate, established on a decentralized network that’s owned by its users, and that aligns incentives among participants in that network.

The problems we’re addressing with XMTP are pervasive. With $100’s of billions at stake in the emerging decentralized economy, solutions are needed ASAP. Here is a small sampling of those use cases that helped us know why XMTP is needed right now:

Cole

@ColeThereum

Here are some common types of people that Discord scammers will impersonate:

- NFT Twitter Influencers
- NFT Project founders
- Celebrities
- NFT Project Mods
- Developers

They will find a Discord, impersonate the admin/mods accounts, and target the members. Watch for this!

27

9:16 AM • Aug 25, 2021

📢Attention Ethereum whales

There's currently a single Eth account that still has $131 million worth of ETH locked in the old ENS deposit sys they could reclaim anytime but haven't.🤯

Who is this? Whales🐳, can you ask around w/ your whale friends?https://t.co/snM9Eaft5H pic.twitter.com/ogey0PdCzz

— brantly.eth (@BrantlyMillegan) May 4, 2021

Austen Allred

@Austen

Email is crazy.

You can just drop messages into basically anyone’s inbox with zero permission whatsoever.

2,233

1:17 PM • Jul 19, 2021

seb ⚡️

@sebaudet26

Alpha Leak from @zapper_fi HQ

245

12:04 PM • Jul 9, 2021

Peter / ‘pet3rpan’

@pet3rpan_

Anyone interested in building a telegram bot for @SnapshotLabs vote alerts? Love to fund/support such work.

33

8:09 AM • Aug 9, 2021

Building something like this from the ground up means we have to put together the best team possible, and that takes capital. We also want to ensure we have the runway to sustain long enough to decentralize the protocol’s development, ownership, governance, and network.

As founders we’ve both been working on related problems in Web 2.0 for over a decade, crypto happens to be the unlock and web3 is the moment. We feel like our entire careers have led us to build XMTP.

• Shane Mac spent the past 15 years working on messaging, communication, and how people interact digitally. He knows first-hand how much new opportunity can be brought to the world with an open communication platform, as well as unintended consequences if not built carefully and thoughtfully from the onset.

• Matt has spent his entire career building and designing products to be delightful and simple to use, however complex they may be behind the scenes. He previously founded a company in crypto and has seen up close the usability and education challenges that come hand in hand with its advancements.

A new evolution of the internet is forming in plain sight. Old problems are getting new and novel solutions by way of innovations in blockchain technology. We have an opportunity to re-imagine an internet not beholden to corporations, but rather a place where users have a say and can share in the upside. Building a new primitive in web3 is a chance to be a part of a revolution right from the start—just as the wave begins to grow.

• There’s a chance to have a real impact and take what we’ve all learned in Web 2.0 / consumer tech and bring it to an entirely new type of web.

• XMTP will be an open source project—from the protocol to client apps to processes and research, we’re committed to building this together with our community of developers, creators, and users.

• If you’ve ever looked at crypto and thought “it’s all about the money / it’s speculative / that’s finance stuff, not my jam” we hear you. There’s a new generation of startups like XMTP that are taking the primitives from crypto and finding novel ways to apply them to solve the web’s current problems. We want to help bring people curious about crypto that haven’t yet made the leap into this new world. If you’re not in crypto but are curious, we’d LOVE to chat with you. Do not think “I don’t know crypto”—we will help you.

Check out our careers page.

It’s not just about what we build, it’s also about how we build it. At XMTP Labs we’re obsessed with culture and questioning everything it means to build a company. We focus on what serves our people and our community first. While there’s more to come, here’s a few things we’re already doing:

• No office, replaced by a headquarters on the web with deeply considered practices around remote work

• No more vesting cliffs, working towards a better alignment of incentives

• Perks and benefits that are more about personal growth than sneaky ways of getting people to stay late at the office

• Building a grown-up startup—where meaningful contribution doesn’t require a recipe for burnout

Last week as the round came to a close we posted a memo to our internal forum, and we thought we’d share that text below:

Hi team,

We are excited to share that as of this morning our Series A round is official. The wire from our lead, a16z crypto, hit this am.

We’re so very fortunate to have amazing partners like Ali at a16z (@alive_eth on Twitter) who believe in us and support our vision for how communication evolves in this next chapter of the web.

While this is a moment to be celebrated, we should also acknowledge the hard work ahead. This capital can help us attract and hire the best people in the world but it’s up to us to deliver on our vision and promise.

We’ll do this by staying focused, never compromising on hiring anyone but the best, and always listening to the people who are using and building on the protocol. Curiosity and self-awareness will take us further than anything else, especially in a world where no one has all the answers—they still need to be discovered. We need to ask better questions and seek to understand vs seek to command.

In the startup world, raising money is mostly about creating opportunities to hire great people. That’s what this moment is about. When a16z approached us about raising now, that’s why we did it. Capital from top-tier investors lends legitimacy—enabling us to have conversations with the best people in the world, and if we’re lucky we can convince them to join us on our journey.

We’re here to build a better way for the world to communicate. We can unlock infinite opportunities in the future if people can communicate on the basis of their activity, not their identity. That’s what’s changing in the next web.

In the past it was one’s identity that led to conversations. This was what we had in Web 2.0. Communication was about who you were, where you came from, who you were already connected to.

We have the opportunity to help change this. Actions are in the driver’s seat now. What you do, what you create, how you work, all leading towards more meaningful connections and communication. That’s what matters. That’s our opportunity.

We are so excited to welcome our new investors and have the opportunity to work together with a small but mighty team. Let’s go build the company, culture, and team we’ve always dreamed of. That’s what this is all about.

Now, back to building Phase 0 of the protocol and getting this in the hands of our partners and builders.

Thanks for being here,

Shane & Matt

We can't wait to share more and have been truly humbled by the support so far. If you're intrigued with our story, or with web3, and ready to leap—we're hiring, let's chat.

• Join our team here

• Follow us on Twitter

• Send a personal DM to our founders Matt & Shane

• a16z Crypto

• Atelier Ventures (Li Jin)

• Betaworks

• Distributed Global

• Form Capital (Josh Williams & Bobby Goodlatte)

• IDEO CoLab

• Hawktail (Michael Polansky & Robert Pollak)

• Leyden.vc

• Nascent

• Not Boring Capital (Packy McCormick)

• Offline Ventures

• Redpoint Ventures

• Scalar Capital (Linda Xie)

• Semantic Ventures

• SK Ventures

• Sound Ventures (Ashton Kutcher and Guy Oseary)

• Warburg Serres

• Alchemy

• Coinbase Ventures

• StarkWare

• Aaron Batalion

• Alex Taub (Upstream)

• Alexis Ohanian

• Alison Grigonis

• Anthony Pompliano

• Anthony Sassano (The Daily Gwei)

• Austin Green

• Austin Rief (Morning Brew)

• Balaji Srinivasan

• Ben Huh

• Bill Boebel

• Bored Elon

• Brian Forde

• Bryan Irace

• BT

• Chris Coyne (Keybase)

• Chris Kurdziel

• Cooper Turley (Audius, Friends with Benefits)

• Courtney Guertin

• Dan Romero

• Danny Newman

• Derek Colla

• Diogo Monica (Anchorage)

• Eamon Leonard

• Eric Arsenault (Rarible)

• Ethan Beard

• Fernando Martinelli (Balancer)

• Fiona Kelly

• Harsh Patel

• Itamar Lesuisse (Argent)

• Jamie Dubs (DeWi Alliance)

• Jamis Johnson (PleasrDAO)

• Jason Warner

• Jess Sloss (Seed Club)

• Jesse Grushack (Friends with Benefits)

• Jesse Pollack (Coinbase)

• Jing Wang (Optimism)

• Joe Lallouz (Bison Trails)

• Joe Lau (Alchemy)

• Joe Stump

• Jon Choi

• Jordan Messina

• Josh Fraser (Origin Protocol)

• Josh March

• Julia Lipton

• Justin Boreta (The Glitch Mob)

• Kain Warwick (Synthetix)

• Kayvon Beykpour (Twitter)

• Maaria Bajwa

• Martin Green (Cambian Asset Management)

• Matt Condon

• Matthew Liu (Origin Protocol)

• Maxwell Krohn (Keybase)

• Meltem Demirors (CoinShares)

• Michael Dunworth (Wyre)

• Michael Mignano (Spotify)

• Morgan Beller

• Narendra Rocherolle

• Nat Eliason

• Naval Ravikant

• Nikil Viswanathan (Alchemy)

• Nir Kabessa (Yup)

• Pablo Rodriguez-Fraile

• Packy McCormick (Not Boring)

• Patricio Worthalter (POAP)

• Paul Stamatiou

• Paul Veradittakit

• Rahul Vohra (Superhuman)

• Raihan Anwar (Friends with Benefits)

• Reggie James (Eternal)

• Ric Burton

• Ricky Engelberg

• Robert Leshner (Compound Labs)

• Roham Gharegozlou (Dapper Labs)

• Ryan Sean Adams (Bankless)

• Ryan Selkis (Messari)

• Santiago R Santos

• Scott Belsky (Adobe)

• Scott Lewis (Defi Pulse)

• Seb Audet (Zapper)

• Shishir Mehrotra (Coda)

• Sriram Krishnan

• Stani Kulechov (Aave)

• T.A. McCann

• Tegan Kline (Edge & Node)

• Todd Goldberg

• Trevor McFedries (Friends with Benefits, Brud)

• Tyler Willis

This is a continuation in our series on how we view compensation here at XMTP. You can read our previous post detailing how we’re getting rid of the standard vesting cliff as part of our stock options for employees. Now…onto our thoughts on extended exercising of options…

The vast majority of startups tend to issue stock options to its employees as part of their compensation package. Its purpose is to give employees skin in the game, and a way to share in the upside of the company should it reach an IPO, exit, or similar event. However, many employees that depart never get to reap the rewards of those options because for various reasons they were unable to exercise and purchase their stock.

We think it’s incredibly unfair when some former employees don’t get to win when the company wins, especially when the reasons are either technicalities or stale, outdated standards. Let’s have a look at what the current situation is like for most people:

According to an analysis done by Carta showed some shocking statistics on the rate of exercise. They found that when the stock had reached an 8x fair market value to the exercise price rate, 40% of people still didn’t exercise the options. If the cost to exercise increased over $125,000 they found that over 70% of people didn’t exercise.

While the specifics as to why they didn’t exercise could be wide-ranging, one very common reason is not enough capital to exercise. I’ve personally been in that situation before and it feels really crappy to leave potential money on the table. This happens most often when the expiration date of the options occurs before an opportunity to sell the stock that’s acquired, therefore leaving folks without enough money to do it.

Most exercise windows are all of 30-90 days, meaning that when an employee leaves the company they have less than 3 months to gather up the cash needed to buy the stock. Worse yet, they can be on the hook for some immediate tax consequences depending on the type of stock. Why in the world would companies only give 90 days to exercise you ask? It’s all part of the way that the IRS handles options, specifically incentive stock options (ISOs).

This is getting in the weeds a bit, but stock options come in one of two forms: an ISO or an NSO. ISOs carry special tax treatment, which can be beneficial for the exiting employee, but sets a hard limit of 90 days to exercise. Following termination, NSOs can have a longer exercise window as determined by the company, but they carry an immediate tax consequence for the employee. Should the employee exercise an NSO they are taxed on the difference between their strike price (what price the option was when it was granted) and the current fair market value.

The tax burden someone may experience after exercising an NSO can be crippling. Even though there may not have been a sale of the stock yet (a liquidity event), the employee still has to pay taxes for the delta on the increase in value as income for that tax year. It’s crazy, but that’s how it is.

So given all of the above, we wanted to find a better way to help ensure that our team members are able to share in any future upside we might be able to achieve together as a company.

When someone joins our team, we’ll initially issue the stock as an incentive stock option. This gives the employee the most tax advantageous setup possible for the moment. Then, should the employee be leaving on reasonable terms (more on that below), we’ll be happy to convert their ISOs to NSOs and extend their exercise window, matching the length of time they’ve been at the company.

To dig in a bit further into the specifics, here’s the excerpt about extended exercise directly from our handbook:

The standard operating practice in startups is to offer a 90-day window to exercise stock once a person has departed a company. We recognize that this could create an untimely or untenable burden, which may lead people to be unable to exercise their options and miss out on any future upside in the company. For those that are leaving the company on reasonable terms we believe there's a better way to do this.

For those that qualify, XMTP, Inc. offers an exercise period equal to the number of months that their stock had vested at the company. So in this example if you've stayed for two years, you'd have two years from the date of departure to exercise your options.

To be clear on what constitutes leaving on "reasonable terms," it's largely based on our "How to Quit" guidelines, with a couple additions:

1) Have early conversations with whomever you report to, letting them know about how you're feeling about things, and if you're inclined to consider leaving. If you're uncomfortable in having that discussion with them, you can communicate that to People Ops.

2) If you do intend to leave, communicate that in a live discussion with whomever you report to, or someone in People Ops. This should take place no less than 3 weeks prior to your intended departure.

3) Ensure that you're leaving with a clear transition plan in place so that process can meaningfully continue for the things you have been working on.

Above all else it comes down to communication. If you're communicating sufficiently with the necessary individuals and teams, and you're not leaving for a competitor, you'd qualify for extended exercise.

Note: Anyone terminated for-cause would not be eligible for extended exercise.

At XMTP, Inc. we’re committed to building a company that’s deeply aligned with its employees. If you have some feedback or just want to chat, hit us up on Twitter… or say hi to us personally on Twitter: Matt & Shane Mac

Be sure to check out our career opportunities.

Photo by Vladislav Babienko on Unsplash

I thought it was the coolest thing in the world… I was 22 and this was my first job.

The thing is, every company was doing it back then. VCs would say things like “how are you going to hire the best talent if Twitter and Facebook have all these cool perks next door?”

Startup perks have to change, we ain’t in SF anymore and we can’t just be a bunch of young dudes blinded by our own biases. First, let’s start by never calling them perks, we will only use benefits from here forward.

It wasn’t until shit got really hard that I realized none of this stuff mattered. When things get hard and when your cool new idea isn’t really working yet, no one gives a f*** about free lunch. These days, I respect the leader who reminds people to shut their computer and spend time with their family. One who acknowledges that more time does not equal more deep work.

I’ve learned what people actually want is self awareness from leadership, flexibility in their life, and benefits that help them become the best version of themselves, however they see fit.

We want to go above and beyond for our team. We’d rather invest in our people, through things that meaningfully improve their lives, vs. lavish office perks that impress visitors.

Robert Stephens, my former co-founder, and founder of Geek Squad, once told me something that I’ll never forget:

“You can’t make everyone happy, but you can help them be more productive and in control. That’s the best way I’ve found to help others be happy.”

While benefits like gym memberships and such may work for some, they won’t work for everyone. And they don’t necessarily unlock what people may need most in their lives beyond a salary. To give people flexibility is to give people choice.

We’ve decided to re-think every benefit for XMTP through the lens of this question:

What can we offer our team to help them feel more productive, become the best version of themselves at both work and home, and ensure the offerings are equitable for everyone?

In a remote world, we have a chance to rethink this and make everyone’s lives better. Here’s how we are thinking about a remote-first benefits stack that feels equitable and gives people their time back:

It wasn’t obvious at first, but we eventually realized it’s not about what we give people, but about what we give back: time and an opportunity to focus on well-being.

Executives always get an assistant to help with stuff, why doesn’t the team get one too? So we’ve partnered with Squared Away to offer assistants to all of our full-time team members. This goes for both professional AND personal tasks. So whether it’s booking a trip for work, or coordinating a doctor’s visit for a family member, we’ll be here to help.

Startup jobs, and especially those in the crypto world, carry some unique qualities that make financial matters more difficult to understand and plan for. This can include how to deal with equity, how to take best advantage of benefits, and more. It can often be overwhelming to deal with much of this, so we’re partnering with Northstar to bring a financial advisor to each and every team member.

The best athletes in the world all have great coaches. In professional sports, everyone on the team gets a coach. Which got us to ask ourselves a question:

Why can’t everyone at XMTP have access to a great coach?

The short answer is: they can. Everyone at XMTP will have the opportunity to work with a coach for their own professional and leadership development.

It was this Tweet that helped inspire this idea. We just took it a step further and thought “If this happened because exec got coaches, imagine what could happen if everyone got a coach?”

nihal

@nihalmehta

got to hang IRL with one of our best CEOs this week, hitting an inflection point, tripling revenue 50% above plan after the series B.

i asked him HOW??!, he said two things:

1- hired a great VP of people to level up the team
2- got every exec at the company a coach

165

5:25 AM • May 14, 2021

Every XMTP team member gets set up with a standard set of equipment, as well as a budget for their home office.

Upon starting team members will receive an allowance of $1,000 to purchase things for their home office. This can be flexible but could include things like an adjustable height desk, chairs, speakers, plants, etc.

Each work anniversary team members will receive an additional $250 which can be “banked” to spend at a later date. This entire budget can also be used for a co-working membership.

Standard Equipment

• Mac of choice

• Large screen monitor

• Elgato Wave:3 Microphone, Bose QuietComfort 35 II Gaming Headset, or Jabra Evolve2 65 (for high quality audio chat)

• Elgato Key Light Air (for video calls)

While others reimburse for “health and fitness” we’re broadening that to be all about your general well-being. We’ll be offering a stipend of $150/mo intended to support whatever you feel could make your life better. This goes for therapy, fitness memberships, coffee subscriptions, child-care, or anything else that you feel like contributes to your well-being.

We believe that the company is better when each and every one of us has everything we need to be a better individual. That starts with taking care of our mental health, physical health, families and having someone help us out whenever we need it.

In the U.S. we think it’s dumb that people have to pay for their health care, and particuarly confusing to have to choose between different plans. We’d like to eliminate all stress around that so we’re covering 100% of coverage for excellent plans here in the U.S.

That’s what we are here to do, we hope you’ll join us.

Becoming a parent, especially for the first time, is as amazing and fun as it is overwhelming and stressful. We at XMTP want to do what we can to provide the support needed to help our working parents have the time they deserve to bond with their new child, as well as transition back to work.

We offer a competitive supplemental parental leave for all parents and flexible schedules for new parents transitioning back to work.

Here’s what is most important to hear from us about parental leave: Flexibility. Here’s some guidelines about how we see parental leave at XMTP: (these are just guidelines, everything is flexible)

• Our flexible parental leave is 3 months, which can be taken at any time within the first year of birth.

• Equal bonding time for all new parents (birth parents, spouses & partners, adoptive & foster parents)

• We provide additional disability leave for birth parents with flexible return to work plans that are agreed to by all stakeholders.

New parents don't know what to expect or how to plan for life with a new human. We want to provide just enough structure while ensuring flexibility.

We know we don’t know everything and we are still questioning what it means to offer a world class remote benefits program. We are open to feedback and would love to hear from you if you’re interested in working with us. Check out our careers page or say hi on Twitter to myself or my co-founder Matt.

Photo by Aron Visuals on Unsplash

The DNA of a startup is not magically born out of thin air, crafted perfectly from the onset in whatever the trendy new document tool happens to be. It’s created over time with every single decision, however big or small, adding to it. Each opportunity for a decision creates a fork in the road, and whichever path is chosen forever alters that DNA.

With that in mind, one of the many things that has come up already is the question of employee compensation and more specifically equity comp.

For as long as I’ve been working in startups (and for a long time before that), the standard way of providing employees with equity in the company always came along with vesting, and a cliff. However, we’re not sure that’s what’s best for all parties anymore and we’re changing it.

The vesting of stock is intended to incentivize the employee to stick around and to earn their stock over time. Often that means that a new employee’s stock vests over 48 months. With each month that they’re working at the company, they’ll earn 1/48th of their stock, usually in the form of an option to purchase shares at a very low price (based on when they joined). Note: we still like this part, so it’s sticking around.

The “cliff” part of vesting is also par for the course: a period of time where stock continues to vest, but if the employee leaves prior to a specific date they receive none of it. That time period is usually a year. So given all of the above, what does that mean in practice?

• Employee stays for 11 months: they get nothing

• Employee stays for 12 months: 25% of their stock vests all at once

Imagine as a new team member, you’re 9 months into a startup where you’re miserable. Maybe the company is doing so well, or you’re having a really hard time jibing with the culture, and you feel like the best thing would be to try something else. Now you’re stuck with a really challenging question: leave early and give up the 20% of stock you’ve vested, or grin and bear it for another 3. Neither choice is a good one.

This is often what people call “golden handcuffs”—when you really want to leave something but doing so would be giving up just enough upside to make it a very difficult decision. What’s worse is that should the employee decide they want to ride it out and get to the 12 month mark, they’re not going to indicate their situation to the employer for likely fear that they’d be terminated early.

In the first example where the employee leaves early, that’s ultimately only good for the company. While both the employee and the company took on a risk by joining up, only the employee bears the risk here—and that sucks.

In the second example, it’s bad for both parties. The employee is miserable, and will likely underperform for that period of time, simply because of a lack of interest. The company will share the burden of their underperformance, but also lose an additional portion of equity equal to the extra 3 months they’re sticking around.

When we asked around to various other founders and attorneys the answer was pretty simple: if an employee leaves early, you don’t want to have them on the cap table. Typically this is associated with situations where “it just doesn’t work out” or perhaps they’re “not the right fit.”

But almost every example (save for termination-for-cause) felt like it was actually the business, not the employee, who is responsible for something “not working out.”

It’s the company’s job to interview, thoroughly evaluate, and vet new people joining the team. When someone seems to be a poor fit a number of months in, likely that meant that something didn’t come up in the interview process. At that point the company can choose to terminate, or perhaps help guide the team member through an opportunity for correcting the perceived issue.

So what happens if the company changes the roadmap six months into a new employee’s tenure, and their position no longer fits with the direction? How about if due to unforeseen circumstances, an employee needs to leave at the 10th month? Sure, companies could make one-off exceptions in each case, but that is not an equitable nor transparent process for the rest of the team. It’s unfair.

We wanted to come up with a different solution.

While we still believe that vesting is a good thing for all parties, we think that the cliff is ultimately an unfavorable thing for employees and it needs to go. Given the above example, in the event that we have a team member that’s 9 months into their time at XMTP and is unhappy, we want to know about it. Maybe it was actually an avoidable departure and we now have an opportunity to rectify the situation, which is advantageous for both parties.

Otherwise, they should just be free to go without the pain of sticking around, and take their 9 months worth of vested stock with them!

Eliminating vesting cliffs will force us to make our hiring process a bit more stringent than perhaps peers that still have vesting, as there’s a bit more downside to letting someone go. But that’s our responsibility to bear.

In the long run, we definitely think this will be what’s best for our future team members as well as a positive thing for the company.

So that we can be 100% clear on what’s different and what’s not:

• Only the industry-standard one year cliff is going away

• We still like the traditional 4 year vesting schedule for equity

• Nothing is changing about strike price, etc.

We’re building a different kind of startup here at XMTP: one that puts deep thought, curiosity and intentionality into every decision we make. If that’s something that resonates with you, then we’d encourage you to hit us up on Twitter and check out our career opportunities.