The Origins of FairSetup – Nikita’s Personal Account.

The following is a personal account by our founder, Nikita Bernstein, of how the idea of FairSetup came about:

I co-founded JoVE (www.jove.com) in late 2006.  After three years, we figured out how to run the business and did about $3 million a year in revenues (no profits).  As time went on, I saw my employees’ performance starting to decline. When confronted, they asked:

“Why is the company making money, but we are still at startup wages?”  

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Value Proposition and Pain Points

Update: (6/4/2012) this article has been re-written and published as a page:

It seems that FairSetup really addresses three primary pain points: capital, culture, and management.  We also have segmented our market into startups, growth, and established companies.

This is an improvement on our original value-proposition that we are making after presenting FairSetup to a pretty large number of people.  While we started with Nikita’s original pain point of stretching capital in a growth-stage company, we have learned that FairSetup has much broader applications.

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The Mystery of Startup Compensation (via GigaOm)

Recently came across the article on GigaOM (hat tip Aaron) – this is actually the exact problem that we are looking to solve.  The conversations when nobody is making any money and after you can hire your employees are fundamentally different.  When everyone is crazy about the idea and is working on equity, divisions become relatively straightforward: it’s a mini-family.  But as soon as you pay someone,everything changes – all of a sudden you are providing immediate compensation separating people into two categories: those who profit today and those who will profit eventually.

This has been the traditional model and FairSetup builds on this specific issue.  Traditionally, ownership meant two things: strategic control and ownership of profits.  Nowadays, front-line talent most often doesn’t have interest in strategic control.  But  they do care about ownership of profits.

To this end, FairSetup allows ownership of profits (and thus ownership of the company) without strategic control.

It is good to see on GigaOm reaffirmation the problem we are solving does indeed exist.  We have secured some clients recently and will be posting cases shortly – one question that comes up constantly is “How do you define profits?”

Why FairSetup?

During a recent meeting, I was asked by a potential client: why FairSetup?  In the process of writing the email, I realized that this is actually a very good question and so deserves to be on the site.  So, indeed, why FairSetup?

Because FairSetup is the first truly impact-based model that helps businesses be more profitable by creating a system in which both employees and employers are treating each other fairly while working towards the same goal.

Specifically…

  • Next Step in Evolution: FairSetup is the next evolutionary step in compensation that aligns employees’ and company’s goals by giving employees a sense of ownership over the business.

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