Why These Founders Pay Their Employees…to Quit

All good things must come to an end. That’s how the co-founders of Lattice, Jack Altman and Eric Koslow, view employee retention.

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The San Francisco-based maker of people management software lets its new employees know that Lattice will not be their forever-job. “I always tell all the new hires on literally day two of their onboarding, ‘There will come a day that you will want an opportunity that Lattice can no longer provide, and that is okay,'” says Koslow. Indeed, a little more than a month after telling me this, the 31-year-old stepped down from his role as Lattice’s CTO to launch VStream, a new company for video creators.

Altman, 32, who is currently CEO, notes that the typical tech company keeps employees for about two years. But that doesn’t mean he’s not invested in getting Lattice’s 500+ employees to stick around. With benefits like coaching programs, weekly stipends for things like groceries, and a one-month sabbatical for employees with four years under their belt, it’s easy to see why the company’s voluntary attrition rate-even through the Great Resignation-has held steady in the single digits, and is currently at 3 percent. Those perks are one of the reasons Lattice earned a spot on Inc.’s Best Workplaces list this year.

But even with a high retention rate, people still have to be replaced–and then some, as Lattice scales. The company is currently trying to onboard about 150 new people each quarter, and to meet its ambitious hiring goals, has begun offering one perk that stands out to Inc., and to potential talent: Seed money.

How to Really Invest in Your People

If you’re trying to attract talent, paying a current employee $100,000 to quit and start their own business might seem counterproductive. But that’s exactly the objective of the Invest in Your People Fund, which Koslow and Altman launched in February 2021: It offers a $100,000 investment to any employee who leaves Lattice and starts a company within one year. The terms? Lattice retains a 2 percent equity stake in these businesses–or less if the startup attracts a valuation of more than $5 million.

Future returns on these investments aside, the co-founders say the fund has already started to serve a legitimate business purpose. “We’ve had a lot of people join us because they heard about this program,” says Koslow. “They’re like, ‘I want to work for a business that treats employees this way.'”

So far, two former employees have tapped into the fund. Ming Lu, 31, co-founded data firm Sensible six months after Lattice in January 2020, and leaving Alex Kracov, 31 co-founded the marketing startup Dock in August 2021.

Lu credits Lattice with her ability to create a strong culture at Sensible. “One thing that I internalized from seeing so many organizations try and change their culture by using Lattice is that you need to be very deliberate about building culture,” says Lu. “It’s not enough to state your intention or buy some software — you have to take action. For example, at Sensible, we want to build a culture of high transparency and trust. This means that every week we’re sharing our top- line product and business metrics at all-hands, even if the numbers aren’t always up and to the right.” Lu declined to share Sensible’s revenue.

Kracov also learned a lot at Lattice. He says he joined as the company’s third employee back in 2016 to avoid business school, and because he wanted to learn how to build a startup from Altman. “It was obvious from our first meeting that Jack had this whole set of things that I could learn from,” he says. “I was like, ‘Oh, I could get that information from his brain into my brain.'”

During his tenure at Lattice, Kracov says Altman became his friend and mentor–always willing to grab a beer and talk through startup ideas and business issues. Kracov credits Altman and Koslov with being great teachers, and creating an environment where learning was encouraged and supported.

In fact, he got the idea for Dock–which helps sales teams better with customers–from a Webflow collaboration tool he built at Lattice. When Lattice’s sales team started using his tool, Kracov figured he’d stumbled on a legitimate business opportunity. So after five years the company, during which he accomplished at everything he wanted, Kracov decided to take advantage of the Invest in Your People fund and fulfill his dream of being a CEO. “When I first started I just wanted to get to a million in revenue, maybe get a little bit of management experience,” he says. “Five years later, I had learned how to manage managers.”

How to Scale Without Breaking Your Culuture

Kracov says Dock has about 20 paying customers, and revenue in the $50k to $100k range. He’s working to verify product-market fit and investing in SEO before he scales his workforce–since he’s seen how complicated a startup can get when you start adding people.

That’s something else Kracov learned from Altman, who started Lattice with Koslow after witnessing the perils of fast growth firsthand at a startup they both worked for called Teespring (now Spring).

Altman says that Teespring grew “ridiculously fast,” jumping from about 20 to 400 employees in two years or so. “My learning there,” Altman says, “was that there’s a certain size that’s no longer natural for a collection of humans to operate in. Neglect leads to a bad experience. You have to proactively work on this stuff or things fall apart.”

Altman advises companies that have hit the 100-200 employee mark to invest in communication tools, and to create programmatic ways of listening to employee feedback to how employees are feeling.

If you choose Lattice’s platform to facilitate that structure (like Kracov has decided to do with his 3 employees at Dock), then, well, perhaps Altman and Koslow are onto something when they talk about the importance of spending money on policies that align with their values. Lattice has declined to share revenue, but is valued at more than $3 billion.

“Lattice is this whole product suite that’s all about giving companies a way to do employee-centric management,” says Altman. “Obviously, we’ve got to practice what we preach.”

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