Use case: Growth Company

Scenario

A growth-stage company with 5 employees has revenues and is starting to hire talent.

Deployment

• 25% of EBITDA allocated towards bonus compensation
• Everyone starts with a base that is at 70% of their market rate
• Goal of 10MM in revenues per year within 5 years
• Vesting: 2 years
• Divesting: 3 years

Impact

• Improved Cash Flow Leads to Faster Growth: because everyone comes in below their market rate, cash flow is improved thus allowing hiring of additional talent, which results in faster growth.
• New Employees are Partners: New employees feel more like partners because they’ve invested themselves, thus affecting the culture
• No Slackers: because everyone is directly affected by the growth of the company, people manage and assist each other and do not tolerate poor performance.
• Transient Talent: growth requires technical expertise that is temporary.  The company is able to hire a database administrator (DBA) for 6 months to build a system and leave to profit from sales that happen over the next 3 years.