The most common ways to own stock in a startup is to be an investor or an early employee, but Jet.com has another idea: It wants to give stock options to some of its earliest and most dedicated customers.
The company, which was founded by Marc Lore, the co-founder of Diapers.com, says one lucky customer will get up to a 100,000 stock options, the equivalent amount that some of its highest-ranking employees may own.
The idea was presented yesterday as part of the company’s Jet Insider program.
People who sign-up for the program will receive a six-month membership for free, and customers who promote the company to friends have a chance to receive more benefits, including stock options. For instance, each person who you get to sign-up, will improve your ranking. The top 10 insiders will be receive 10,000 stock options, and the No. 1 insider will receive 100,000.
So far, the company has 10,942 Jet Insiders based on my ranking today.
In return for being so dedicated, the insiders will also get early access to Jet.com before it launches in 2015, and will be able to provide valuable feedback to the company’s marketing team.
The interesting part about this program is that customers will be basically be participating blind, meaning that they really don’t know what they are signing up for because it’s not exactly known what Jet will be selling, or how it plans to disrupt the e-commerce industry. Presumably, it will offer an alternative to Amazon, which coincidentally bought Quidsi, the parent company of Diapers.com for more than $500 million, three years ago.
In September, Lore made a short appearance at an industry event, where he provided a high-level summary of what the company is all about. He said Jet is trying to put more power in the consumers’ hands. In prior communications, he’s compared it to how Zipcar and Airbnb have pulled back the curtain on price and reducing friction for consumers.
Much of the friction in e-commerce has to do with logistics, and getting orders to customers quickly. When shopping online, customers often look for the lowest prices irrespective of where the product is based. Products that are closer to the customer should cost less and arrive much faster.
Of course, Jet.com is not a publicly held company, so there’s no guarantee that the options will ever be worth anything, or that a customer will be able to sell them. Having said that, Lore does have shockingly big plans for the Hoboken, New Jersey-based company. He has already raised $80 million in venture capital and he anticipates raising up to $600 million in total over the next five years.
A vast majority of it, or $550 million, will be spent on marketing, he said, although maybe that won’t be necessary if this referral program really takes off.