Agree. In Germany, some Mittelstand companies do offer employee stock options which allow you to buy a certain quota of stocks per month at a pre-negotiated price which is typically much lower than market value. The idea is that over time, employees can choose to reinvest their salary into the company, thereby becoming partial owners.

Personally I do not think employees should pay money to invest in the company where they work.

Because if they do, then if the company goes bust they lose their job and their savings on the same day. See Enron as an example where employees were heavily invested in Enron.

And the company doesn't even need to go bust - a downturn in the stock price leads to some cutbacks and redundancies, and you're the unlucky one...

The first rule of investment is diversification, and keeping your salary separate to your savings seems like a good start.

By all means buy options, and sell for a quick bonus, then take the money elsewhere. If you can't sell the stock (company not yet IPO) then treat money spent on options as "lost"... In 99% of cases it will be.

I believe you're seeing things through a US lens there. Many of these small Mittelstand companies are incredibly durable because they don't have high loans and they don't have investors.

Also, the idea here is not that it's a great investment (although it usually is), but that it transfers power to experienced employees. Imagine if you and your coworkers owned enough company shares so that you could veto the CEO together.

Sure, if employees owned more than 50% of the company then they'd have more "seats at the table". In my experience the employee poll is negligible though from a "power" point of view.

My point I guess is that there's no materially different upside to owning shares where you work, or just shares outside. And shares outside diversify your income stream.

If there is a material difference in terms of power, well then I guess that's different.

Employee stocks are a suboptimal investment strategy. It is putting all one's eggs in one basket. If the company runs into difficulties, one's job is at risk and at the same time one's investments.

Sincere question: What benefit is there to owning equity in such a company in employee sized quantities?

Employee sized quantities should be much bigger at a Mittelstand company vs. VC-funded. You don't need thousands of people when you're going after 7-8 figure outcomes, which means each employee should be able to get better profit-sharing. You also are not diluted big-time by investors that can bully the cap table

Presumably dividends if the owner doesn’t just capture profits via inflated salary.

Maybe dividends, maybe cash-out if there is a change in ownership

Dividends?

Yes, I think this is one of the most important pieces to solve! There have been some approaches (profit sharing, etc) but I think there's room for a lot of improvement & innovation here.

> In fact, Mittelstands will probably perform even better if they can figure out how to attract the kinds of talent well-funded startups do. And from there, it'll be a virtuous cycle.

Perform better towards what end?