Case study: Mews' way to success powered by ESOP

Background

Mews is the industry-leading hospitality cloud, revolutionizing the way people travel and enjoy hotels today. Located in the Netherlands, Mews has 800+ employees spread across 20 countries.

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In the dynamic world of hospitality, Mews stands out as a visionary company with a mission to redefine travel experiences. At the heart of this transformative journey is its CEO Matthijs Welle whose belief in the power of employee ownership drives the company's core values.

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"If people have a stake in the company and its success, they will be motivated to make the right choices every day," Matt explains. This principle serves as the foundation for Mews' unique approach to empowering employees through an Employee Stock Ownership Plan (ESOP).

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ESOP implementation

The motivation

In the early days, when Mews was cash poor and fueled solely by dreams and aspirations, sharing the potential success of the company with its employees became a powerful motivator. ESOP enabled Mews to grow fast and hire top talent across multiple locations, despite having to compete with industry giants. Offering ESOP not only aligns with Mews' core values but also helps create a sense of shared purpose within the team.

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The timing

Mews implemented a formal ESOP once it closed its seed round led by a Dutch VC. This meant relocation to the Netherlands and also offered the perfect opportunity to do ESOP the right way. They had the resources to build a solid legal framework and invest in setting up the right structure that would stand the test of time.

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ESOP structure

Initially, Mews made informal ESOP commitments to its core team. As the company grew, an official ESOP structure became necessary. Leveraging its location in the Netherlands, Mews chose the Dutch STAK (stichting administratiekantoor) ESOP model.

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STAK is a trust set up by the company that allows employees to own depository receipts (DRs). The DR-holders have the financial rights of a shareholder without the decision-making power. In Mews, the trust is controlled by its founders.

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Vesting & cliff

Mews opted for a 4-years vesting schedule. After the first two years, 50 % of the granted assets vest immediately. On the third grant anniversary, another 25 % of the DRs vest. The final 25 % vest on the fourth grant anniversary. This 2-1-1 setup reflects the need for a learning phase before full commitment and is designed to promote long-term engagement.

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Eligibility

Mews' vision is to turn its employees into investors and that's why every single person is eligible for ESOP. The underlying belief is that regardless of their position if an employee contributes to Mews' success, they deserve to benefit from the company's growth.

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Secondary market

Mews understands that for ESOP to succeed, employees have to believe in its liquidity. That's why it opens a secondary market with every funding round so that employees can sell their assets to investors. Mews also implemented rules for participation in the secondaries so that it's fair to everyone.

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Pro tip

"Every quarter, we hold “shareholder” meetings for everyone with vested shares. We present the same information we present to our board, talk everyone through our financial results and ask them to question us on some of the major business decisions. And we find that this creates a culture of accountability." Matt says

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Benefits of ESOP

Mews' ESOP has helped turn the company's employees into true stakeholders. Check out some of the main benefits.

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Creating a culture of accountability

Treating employees like shareholders motivates them to make wise decisions and prioritize the company's growth. It incentivizes people to question everything they do because it has a direct impact on the business.

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Retention and recruitment

Offering ESOP to all employees, regardless of position, is a powerful recruitment and retention tool. It attracts top talent and keeps employees invested in the company's long-term success.

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Financial tool for tough times

During the Covid-19 pandemic, the hospitality business was in a tough spot and Mews was under pressure to improve its cash flow. Mews' leadership decided to offer additional equity to the team in exchange for a salary cut. This helped Mews improve its cash flow in the short term and benefited employees in the long term.

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Improving the financial position of employees

Mews opens a secondary market whenever there's a funding round. This allows employees to sell their assets for cash. Many of them have been able to pay off their mortgages or buy new cars.

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"During our Series C round, around 55 of our employees sold part of their assets and it was rewarding to see how this has benefited them – paying off mortgages, buying cars and showing the real value of our ESOP. Though the process was complex, we fought for it and made it happen. Going forward, we'll continue to advocate for secondary sales in future rounds because we see a real value in it," Matt explains.

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Support from Eldison

Mews' partnership with Eldison played a pivotal role in designing and implementing the ESOP structure. Mews uses the Eldison platform for day-to-day ESOP management and the Eldison legal team to support other areas of their business.

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Automated ESOP management

The Eldison platform automates ESOP administration, seamlessly integrating with Mews' HR system, and streamlines workflows through document templates and digital processes. This automation has freed Mews from paperwork and administrative burdens.

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Digital signing

Before Mews started using the Eldison platform, the CEO had to manually sign every award, consuming valuable time. The platform's digital signing functionality has saved Mews tons of resources and time.

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Employee dashboard

To make sure ESOP delivers on its benefits, people have to understand the value behind ESOP. Through the Eldison platform, employees can easily access their portfolios and see how the value of their assets evolves.

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Complex legal support

Having a company with 800+ employees in 20+ countries brings a lot of complexity to ESOP management. The Eldison legal team supports Mews across all locations. It saves Mews a lot of time and resources as they don’t have to have a separate legal partner in every country of operation.

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“The Eldison team has been with us literally from day one, so they deeply understand our business. They were there for us when our business started scaling to multiple locations. They fully understand the complexities that come with dealing with a global company.” Matt elaborates.

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In a nutshell

Mews' pioneering approach to ESOP has accelerated its journey to a hospitality cloud disruptor and helped create a culture of ownership and accountability. With Eldison's support, Mews has successfully launched an ESOP that aligns employees' interests with the company's success. The Eldison platform helps Mews streamline ESOP management and communicate the value behind ESOP to the team. This keeps everyone informed, engaged and motivated to do their best. As Mews continues to flourish, its commitment to empowering employees through ESOP remains at the heart of its path.

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Key takeaways

• Mews implemented ESOP right after its seed round.
• Mews launched ESOP to boost hiring and create an ownership culture.
• Due to its relocation to the Netherlands, Mews opted for the standard STAK ESOP model.
• Mews implemented a 2-1-1 vesting structure (50 % of assets vest after the first 2 years, 25 % vest on the third anniversary and the final 25 % vest on the 4th anniversary). This reflects the need for a learning phase and promotes long-term engagement.
• Mews' vision is to turn all employees into investors and that's why every single person is eligible for ESOP.
• During investment rounds, Mews opens a secondary market that allows employees to sell their assets.
• ESOP helped Mews create a culture of accountability. It also works as a strong hiring and retention tool.
• The Eldison ESOP platform helps Mews automate its workflows and communicate ESOP value to its employees.

Are you planning to launch an ESOP in your company? Learn more about our end-to-end ESOP platform here.

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