Profit sharing is not common in most privately held tech companies. Why? Well, it is pretty simple. For starters, most of these companies are not making any profit. (It is hard to share what you do not have.) And many are backed by venture capitalists who are expecting a big return on their investment within a few years. Generously giving back to employees is not exactly a priority. However, there is a way to grow quickly and put people first.
Celebrating the team at the end of the year through profit sharing is something we practice at Aha!
Not many companies do this. In fact, Aha! is the only private software company of our size I know that does. The reason we do it is because there is nothing more important to our future than our team. Not even customers. And we need teammates to think of both the top and bottom line — to spend money as if their financial success depends on it. Because it does.
When you have a stake in the business, you treat the company’s money like your own. There are no work trips with limo rides to the airport and lobster dinners. You cannot justify the costs by saying, “It is on the company’s dime!” With profit sharing, the money the company makes is also your own.
But beyond the company benefit, sharing the success of the company with the people who helped us grow is also the right thing to do.
We are building something unique together. And our values put a focus on customer and employee joy — it should be the aim and core of a company’s existence. It is not easy, which is why hard work should be rewarded. My co-founder Dr. Chris Waters and I are not the reason that Aha! is one of the fastest-growing software companies in the U.S. The incredible Aha! team is what got us here.
The benefits are clear — but how do we actually make it happen? There are a few reasons why Aha! is able to grow quickly, spend wisely, and offer profit sharing.
The first is that we are 100 percent self-funded. This means there is no one telling us how to spend our money. There is nothing wrong with taking venture capital, plenty of meaningful companies relied on funding to grow their businesses. But like I said earlier, investors tend to want to spend every last dime to drive more growth. So, people come second to growth and investor returns.
The second is that we are a 100 percent remote team, with teammates working around the world from home offices and co-working spaces. Aha! was founded in the Bay Area, where the average rental cost in San Francisco just hit a high of $81.25 per square foot. Per square foot. This cost is expected to rise 8 to 10 percent this year alone. With our team approaching 100 people, the savings is easily $1.2 million dollars a year. We are happy to give significant money back to the team instead. And they are happy to work from a stable location wherever they choose.
There is one more reason we are able to save and offer profit sharing, and it is perhaps the most unique.
Aha! is a team of product management experts — we only hire experienced product managers to work with our customers. This means we do not need additional technical experts or industry overlay professionals to solve customer problems. The experts are already part of our team. And since no one at Aha! works on a commission (nope, there are no salespeople), there is a clear alignment with customers and margin.
We have always pursued success on our own terms, and as a result, we have been able to give back generously to our team. We built the company in a way that ensures that every single teammate feels invested. This approach motivates us all to do our best and connects us to each other. We all want to continue contributing to the success of the company.
But more than anything, profit sharing shows the team how grateful we are for their efforts.
Have you worked for a company that paid profit sharing?
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