In the late 90s, Jay Chaudhry, the co-founder of SecureIT, found himself unknowingly partying with millionaires at his work send-off. Little did he know that his startup had been sold to Verisign, leaving his employees with a windfall of stock options.

Reflecting on that fateful night, Chaudhry recounted how he went home and calculated the net worth of his attendees by multiplying the stock price of Verisign with the options they held. To his surprise, the math revealed that around 70 or 80 of his coworkers had become millionaires overnight. "It was impressive," Chaudhry told CNBC's Make It, admitting that he hadn't initially grasped the financial impact his startup's sale would have on his team.

Currently the CEO of Zscaler, a cloud-security company, the 65-year-old Chaudhry is now a billionaire. However, when he and his wife, Jyoti, started SecureIT, they had emptied out their joint savings, which allowed them to give more equity to their employees and remain independent from external investors.

Chaudhry's story mirrors that of entrepreneur Mark Cuban, who recently shared on Twitter that when he sold his company Broadcast.com to Yahoo, "300 out of 330 employees became millionaires." Both Chaudhry and Cuban believe in distributing equity to employees as a way to acknowledge their contributions and to foster a collaborative environment.

For Chaudhry, the equity distribution was particularly meaningful because he recognized that his dedicated employees were the ones making a difference, working tirelessly day and night. He told CNBC that giving them a share of the financial success felt like the right thing to do, acknowledging that no company is built alone.

While the sale of their startups brought immediate financial success, it was not without some risks. Verisign's stock price experienced a plunge during the dotcom burst, which affected the worth of the paper millionaires. Those who chose to cash out at an inopportune time may have ended up with less than they had anticipated.

However, during the surge, there was an undeniable sense of excitement in the office. Chaudhry recalled how his employees went wild with the newfound wealth, buying new homes, cars, and taking time off work. The sale allowed them to do what they had always wanted to do.

The stories of Chaudhry and Cuban serve as a reminder of the significant impact that equity distribution can have on employees when a startup is sold. It not only rewards their hard work but also fosters loyalty and motivation. While financial success is not guaranteed in the long term, the immediate benefits can be life-changing for those fortunate enough to be a part of a successful startup.