The CEO, who is 65 years old, made at least 88% of his employees millionaires after selling his company for $70 million.

Jay Chaudhry, after selling his first company for $70 million, prioritized his employees' financial well-being, aiming to make them millionaires.

Today, Chaudhry, 65, is the billionaire founder and CEO of Zscaler, a cloud cybersecurity firm valued at roughly $28 billion, as of Wednesday afternoon. In 1998, he was a first-time entrepreneur who sold his startup, SecureIT, to VeriSign in an all-stock deal for a huge windfall.

More than 70 of SecureIT's 80 employees became millionaires two years after the deal closed, as VeriSign's stock price surged, according to Chaudhry in an interview with CNBC Make It.

"The company was going wild with excitement because they had never experienced such a large amount of money," he says. "Many of them were purchasing new homes and vehicles. I know someone who took six months off work, rented a mobile home, and traveled the country. They had the freedom to do as they pleased."

From the time of acquisition to February 2000, VeriSign's stock experienced a more than 2,300% increase, reaching a high of $253 per share. This growth was aided by two stock splits and a temporary bubble in tech stocks. However, the bubble eventually burst, causing VeriSign's stock to lose approximately 75% of its value at the end of 2000, dropping to a low of nearly $4 in 2002.

Chaudhry recalls advice from VeriSign's then-chairman, Jim Bidzos, to sell some of his shares "on a regular basis." This strategy helped Chaudhry reap some benefits of VeriSign's soaring stock before the market crashed, he says.

Employees of SecureIT who held onto their VeriSign stock were likely rewarded by their patience, as the stock closed at $254 per share in January 2021, but is currently trading at approximately $175 per share.

Chaudhry admits that he was unaware if or when his former employees sold their shares of SecureIT after he left VeriSign in 1999. Despite the party thrown in his honor, he only came to understand the full impact of the SecureIT sale on his employees later on.

"Chaudhry says, "I realized that the math was about 70 or 80 millionaires, with stock options, when I multiplied the spreadsheet of all the stock options by the stock price of VeriSign.""

'Those employees make the difference'

He and his wife had a "nice, typical middle-class house at that time, and we didn't have any fancy cars or fancy payments," he told Make It last week.

Chaudhry attributes his ability to give employees a significant amount of stock to his bootstrapping approach, which involved him and his wife investing their own savings of approximately $500,000 to fund SecureIT instead of seeking outside investors.

He says that the release of more equity in the company was "good, because those employees make the difference — they were working day and night."

The act of handing out employee bonuses after selling Broadcast.com to Yahoo for $5.7 billion in 1999 turned hundreds of employees into instant millionaires, similar to what fellow billionaire Mark Cuban did.

Cuban has consistently given bonuses to employees at every company he has sold, starting with CompuServe's acquisition of MicroSolutions in 1990, as he stated in a recent interview with Make It. This includes the sale of his majority stake in HDNet, now known as AXS TV, in 2019 and the NBA's Dallas Mavericks last year, as he shared on his social media platform X.

Cuban stated that only HDNet experienced layoffs following the sale.

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