Swipe! New Compensation Model – Tiger Trade For Agencies | What Is A “Tiger Trade” & Why Does It Matter?
Menu Home Insights Featured Image Composed with Adobe Express AI Text-to-Image Generator Swipe! New Compensation Model–Tiger Trade For Agencies What Is A “Tiger Trade” & Why Does It Matter? Written by Mattske // September 10, 2024 (Read Time: 10 Minutes) Follow on LinkedIn for Daily Insights > SUMMARY We’ve started using a compensation model we call the “Tiger Trade,” where we get paid in publicly traded stock through platforms like CashApp instead of cash. This idea came from our frustrating experiences with equity-based compensation in startups. The Tiger Trade ties our work directly to market performance, potentially creating long-term value for both us and our clients. It also helps smaller agencies like ours build investment portfolios while aligning our interests with those of our clients. We believe this could offer a more stable and innovative alternative to traditional compensation models. Whelp…Experiencing Growing Pains With Agency Compensation Models When we started our company in 2014, we had been inspired by Marcus Lemonis and his show “The Profit” on CNBC. As an investor, he would do deals based solely on a handshake (at least in the context of the show) and then be “100% in charge,” which challenged the ownership of struggling companies in a big way. We also learned quickly how the startup community would often position newly founded companies as equity investing opportunities for strategic partners, including marketing companies who are perceived at having the ability to increase the valuation of the company using branding & advertising campaigns. This spoke to us, and we gave it a shot. Needless to say, it did not go very well, for a variety of reasons. Trust & Decency Are Hard To Commoditize New companies are incredibly volatile. They win a big project, and things look really good. They lose a big project, and things are terrible. It takes several years for any company to get off the ground, and most fail before they are even fully formed. In the half-dozen options we negotiated with respect to gaining equity in startups, none of them came to fruition. We were cheated out of some, and others simply fizzled out without fully forming. That was incredibly frustrating, because we always delivered on our promises, but couldn’t trust other people to do the same. Just last month, Ad Age reporter Lindsay Rittenhouse published the article, “Inside Independent Agencies Driving Change In Industry Compensation Models,” where other agency owners report the exact same experience. Reading this article made me feel a lot less alone, and it also came on the heels of a new experiment I had been running which I call the “Tiger Trade.” How A Tiger Trade Works The premise of a Tiger Trade comes from a variety of factors, most notably the prevalence of different businesses to accept payment in the form of cryptocurrencies like Bitcoin, Ethereum, and others. While I am not a proponent of this, what I noticed is a trend in delivering an asset at a retail level, or low-cost purchase point of sale, which in my opinion is more novel than the newly minted digital & decentralized class of assets known as cryptocurrencies. After learning that CashApp is the only (as of this writing) peer-to-peer payment processor which enables people to easily “gift” stock, I had an epiphany, that I could be compensated in the form of the publicly traded stock of any company that is available on the CashApp brokerage account. I instantly started sharing about this phenomenon and received steller agreement from people in the private banking world. Within about (10) days, I convinced one of my startup clients to pay me for a consultation in the form of Warner Music Group ($WMG) stock, because the company this gentleman was building is in the music/tech space. The theory I had was that it would tie our conversation to something significant in the market, in an asset which could potentially increase in value compared to USD in a checking account. Another benefit of this approach is that it establishes the basis of an investment portfolio which my agency is cultivating for the retirement plan of the (2) of us who own this company regardless of whether or not we ever have other employees. Investing In An Agency’s Future For Partners & Staff Small agencies owned by a person or two, or only several partners, may not have access to the same kinds of investment vehicles that the majors do. That is a disadvantage, too, because in hard times when projects are lagging or payments from clients are lagging, it can be incredibly scary to figure out how to pay people or ourselves. Having stock assets in an easily liquidated portfolio like CashApp enables is a new kind of investment thesis that has a lot of people I’ve shared this with very excited. Moreover, selecting the stock to receive as compensation gives me and my clients in the startup space something to aim for or pay attention to. For example, when a startup begins, they often don’t think about their competition or strategic partners. They can be defensive about what their idea is and how well it will work. Once a client agrees to pay me in another company’s stock (which, to my knowledge, is completely novel) – they naturally appreciate the value of that company – whether it’s as a potential competitor or partner. That is very valuable in my work as a consultant, because some founders believe they exist in some kind of competitive vacuum. The Big Boys & Girls Club Can’t Play This Way Quite Yet When it comes to being compensated by publicly traded companies, in the form of their own stock, it has so far proven more difficult due to internal regulatory & legal concerns about issuing stock. The strange thing is, from the perspective of the payment processor, it’s the same exact process as sending cash. Oddly enough, some of the new pitches I’ve been giving to bigger companies involve different methods of issuing
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