Company
Carta
Project Type
New product
Duration
1 month to launch
My role
As the lead UX designer and PM driving the product to completion, it was my responsibility to understand the industry and competitors, and analyze the opportunities to create a better experience.
Skills applied
Industry and user research, user flows, sketches, wireframes, high fidelity prototypes, feedback, testing, collaboration with business, engineering, and marketing.
Problem
Background
Public companies use Employee Stock Purchase Plans to offer their employees the chance to purchase the company's stock at a discounted price. By participating, employees not only get a good deal, but it also gives them a vested interest in their company's success and growth. An ESPP is mutually beneficial to both the company and employees, which is why over half of public companies offer it.
Opportunity
Companies often have difficulty getting participation rates up due to lack funding for employee education and access to learning material. Companies also need to hire ESPP administrators specifically to manage a plan. Everything has always been done by hand, and there has never been an automated self service experience. In an industry that is slow to change, Carta has the opportunity to create a best in class and first in class self serviceable ESPP experience for both companies and employees.
Research
A NASPP survey from 2016 revealed that more than half of public companies offering stock plans also offered ESPP, and the popularity is still rising. Unfortunately, many eligible employees do not understand the benefits of participating in an ESPP, and most of these companies underestimate the time and resources necessary to educate employees. There are plenty of education pieces and opportunities to guide administrators and participants through the many benefits of an ESPP.
Structure
The stages of an ESPP include plan setup, enrollment, contribution, and purchase. Once the ESPP offering is setup, an administrator will invite eligible employees to enroll. If an employee wants to enroll, they must fill and sign a form that shows what percentage of each paycheck will be withheld and contributed towards the purchase. After enrollment, an ESPP participant would be allowed to change their contribution rate or withdraw from the offering period. Once the contribution period ends, the money that participants contributed is used to purchase shares. After the shares are delivered, the participants would be able to sell them like normal shares. Similar to Incentive Stock Options, stocks derived from an ESPP purchase get special tax treatment, and the disposition of such shares can be determined as qualifying or disqualifying. In order to qualify, the shares must have been sold at least 2 years after the offering start date and 1 year after the purchase date.
Old User Journey
Companies hire ESPP administrators who make sure enrollment, contributions, and purchases are executed smoothly. This is usually done manually by paper, and the system used to keep track of things is often excel. Only the administrator has immediate access to the progress and status of every participant. Keeping in mind that purchase periods are 6 months long, it can be unsettling when an employee doesn't have on-demand visibility into how much money they have contributed, which can be thousands of dollars.
Carta User Journey
We automated plan administration to start and end in Carta. Everything from plan creation, invitation, enrollment, and purchases would all be visible on the system for both the company and employees. By allowing employees to see their enrollment status and progress, they could easily make a decision about whether to stay in the plan, change their contribution rate, or withdraw from the plan.
Administrator
The company administrator creates an offering period and invite eligible employees. Here is where plan options are chosen, including discount rate, lookback provisions, and limits to contribution changes.
Employee
Employees receive email invites once the enrollment period starts. Any employee who wishes to enroll elects their paycheck contribution rate. Once the enrollment period ends, the contribution period starts. Participants can see a history and total of their contributions. During the contribution period, employees can withdraw from the offering period and take their money with them. Participants who have not withdrawn by the end of the contribution period will have their contributions used towards the purchase of company shares.
System
Carta calculates how many shares each participant purchased and distribute them proportionally to each participant's total contribution.
User Flow
Result
We launched a beta product with 2 customers using it. Most ESPPs only see participation rates of 30% or lower, while our customers saw participation rates of over 50%.
We were given a tight 1 month to hook a large customer. The plan setup and enrollment was finished within that timeframe. Since the enrollment period is 30 days, it gave us more time to build out the later stages.
The beta product is already best in class compared to other platforms, and there is still much work to be done in the way of education. During enrollment, administrators can gauge the interest in real time and proactively reach out to employees to help them understand the benefits of participating in an ESPP.