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.