Launch House empowers its globally distributed employees with equity

In this episode, we're interviewing Michael Houck, co-founder of Launch House. He began as a software engineer for TherapyNotes, LLC. He eventually worked as a product analyst for Uber Eats and eventually moved to Airbnb Plus as a product manager and data scientist. There he built the incentive structure of Airbnb Plus and worked on growth and infrastructure.

Key takeaways

• Learn from other founders! Share knowledge, experiences, and wins. Hold each other accountable and find the balance between professional and personal growth.
• Provide options and incentives equally to your team. Make sure everyone’s in on the future of the company by giving them skin in the game. It’s more than just the paycheck!
• Investors also look at data and trends. As a founder, seek out investors who can apply their information and insight to your business.

What can startup founders gain from Launch House?

Apart from the access to information, support, and mentorship one can get in Launch House, one of their most talked about programs is their co-living experience. An incubation-like setup where founders build deep local connections with the startup scene with investors who are now increasingly based in Los Angeles.

Houck says,

“They put down roots to grow their startup. Some people do it for the industry specifically, like creator economy, entertainment, gaming, things like that. But others do it just because the LA ecosystem is growing really fast and Launch House is an outpost within it where a lot of people just naturally gravitate towards. And we throw a lot of events that help keep that going.”

A wide variety of founders have joined the Launch House community, skewing towards pre-seed and seed. They’ve even been able to raise a Series A from their house during a cohort! What happens is, “The whole community…gathers around and helps [a startup] refine their pitch and their billion dollar vision… Really it's for connecting with like-minded founders and who you can learn from. And so what we do is try to intentionally group founders with others at the same stage as them. So we do these sessions called squads. Squads are basically your innermost circle of the community for you individually. They're a hand-picked group of other members who you meet with once a month to hold each other accountable, to share wins, to brainstorm… So you can learn from each other.”

Launch House offers an annual membership that gives you access to their various programs. They have their co-living residencies, digital courses taught by industry experts, and intimate circle squad-type programs. Houck says, “We try to strike the balance between professional growth and personal growth.”

Launch House also has its growing flagship newsletter, Home Screen, where you can learn more about the trends, news, and VC funds available within the industry.

How do you handle equity?

Employee equity is something we’re passionate about at Cake. The same could be said for Launch House! Houck says,

“Employee equity is super important. You want to make sure that employees, especially early employees, who are making a huge commitment and taking a huge risk to bet on your startup versus one of the many other things they could do with all their skills, are compensated for…and have the upside for that in the long run.”

A part of Launch House’s equity structure is an employee option pool that sits at 10%. With a growing community globally, Houck explains how they keep everything uniform and everyone happy,

“We do have IRL employees in New York and LA, but a good portion of our team is remote and international. We have employees in Mexico today. We've also had Canada... We've also had employees in Ireland... You want to make sure that your incentives are aligned. You want to make sure that everyone's bought into the future vision of the company. And as a founder, you want to make sure that people are going to be in it for the long haul and..are in it for something more than just the paycheck.”

Their structure is at a four-year vesting period with a one-year cliff. Houck says, “After one year, you get a quarter of your equity and then it's monthly vesting after that… We find this to be pretty standard…at least in the US.”

What makes Launch House stand out as well is their exercise options wherein instead of the common 30-90 day pay period, people are given seven years, “Give the team member a bit of time to understand what the outcome is going to be. And I think you ideally want the exercise outcome to be as close to the exit as possible, because when you've got the exit you've got the cash to be able to make the payment for the exercise, and then everybody's kind of winning at the same moment.”

At the end of the day, it’s all about keeping your team engaged and cared for.

“You want missionaries not mercenaries, right?” says Houck.

Some (extra) sweet advice for founders

Pitching isn’t all about convincing investors you’re on to something. In fact, investors are doing their own research and constantly studying the market. Houck goes on, “They're looking at data, they're looking at qualitative signals, they're looking at trends. They have very connected friends who give them information as well. And so they kind of have a pulse on things. And really the founder's job is to find the investors who already believe in the thesis that can be applied to their business.”

“These days you’ll find investors on Twitter, podcasts, or writing newsletters to advertise trends that they’re excited about so that the right startups approach them. As a founder, it's your job to research and identify who those people are."

‍