How Our Company Saves $1,200,000 a Year and Pays Profit Sharing Instead

Aha! no offices

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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About Brian and Aha!

Brian seeks business and wilderness adventure. He is the co-founder and CEO of Aha! — the world’s #1 product roadmap software — and the author of Lovability. His two previous startups were acquired by well-known public companies. Brian writes and speaks about product and company growth and the adventure of living a meaningful life.

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Comments

  1. Adam

    “There are no work trips with limo rides to the airport and lobster dinners.” — I think this speaks more to your company culture than to your profit sharing. When an employee says “no” to a $100 extravagance at a 100 person company, he saves each employee (including himself) a single dollar at most. Meanwhile, he’s out a hundred dollars of value that would otherwise have gone to him directly.

    Reply
  2. Abdul

    Not seeing the first for the trees. When a hundred employees skip a lobster dinner each month over the course of the year, they EACH save each other $1200. Besides, most employees would get fired if I paid for a $100 meal just for themselves.

    Reply
  3. Rich Bodo

    I’m impressed by the Aha product and it’s good to hear that you guys are able to share profit with employees. Congratulations on the accomplishment!

    It would be more interesting to me (and perhaps others) to know what you guys feel were the most important early decisions that enabled you to stay fully remote. It seems clear that setting early technical strategy played a huge role in your ability to grow fully remotely. A fully remote dev environment, a solid tech stack, emphasis on quality and reliability, choosing SaaS for everything not in-house, etc. are the ways people plan ahead for remote growth from a technical viewpoint – that’s fairly well understood. But from a remote culture viewpoint, there are a lot of companies that struggle with accountability, performance, and what are typically mundane management/HR issues in non-remote work environments. I’ve struggled with those issues and seen other companies struggle with them. What are your top 10 recommendations for managers of businesses like yours, growing remotely?

    Reply

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