Profit sharing

Word from our founder, Sid :

The existential risk to legacy corporations, big tech, and boomer-managed businesses isn't increased competition or the lack of a b.s. diversity & inclusion policy.  It's an impending brain drain.  People will simply leave companies that suck and move on to those projects and companies that are exciting beyond the prospect of a massive salary and a fancy title.

I've been a champion of remote work for over a decade. Not really because I like working in my pjs (I don’t) but because 95-99% of knowledge work is digital. We no longer NEED to work in a soul-sucking office where you can't escape toxic coworkers or the inherently repetitive nature of work.

The result: I'm more productive, make more money and have more free time when I'm working remotely. There are drawbacks to this: there are many weeks where I work insane hours. However, over the course of a year, I actually work less and do more meaningful work.

Profit Sharing

We are working hard to turn Intempt profitable. This is a company-wide effort and we'd like to make it clear where the profits are going to go and how are we going to distribute it?

Employee Profit Sharing

Intempt plans to share 30% of its annual company profits with employees, which is distributed in shares based on tenure. Profits are distributed after the books are closed on the previous fiscal year, usually around May.

You’re eligible to participate in profit sharing after two years of working at Intempt as soon, as company will start to earn some profit.

We ask that you think of any compensation from this program as not something to be counted upon, not something to be budgeted with, but as a true windfall. To balance re-investing in our growth with year to year, profits and therefore the amount we’re able to share with employees may swing substantially or not be paid out at all.

This Program does not have any set expiration date, but the company reserves the right to amend it or cancel it at any time.

So how exactly are we going to distribute profits?

We knew that time with the company was going to be a factor, but it wasn’t the most important factor. Instead, we wanted each team member's individual performance to be the biggest driver.

After a lot of deliberation we came up with a simple system.

  1. 50% is based on time with the company.
  2. 50% is based on performance on a 0-4 scale.

The immediate question is, what’s the scale and how do I get the highest score? It breaks down like this:

  • 0 — Fail. Terrible performance. Actually, you should have been fired already.
  • 1 — Good. We have a high standard and you are in the ballpark it. This is painful to hear, but we will work with them to create a plan to get them back on track.
  • 2 — Very Good. You are meeting our high standards for this position. A 2 means you are doing great work. This is the most common score.
  • 3 — Excellent. You have done extraordinary work and leveled up your own skills as well as delivered an important project. Out of 15 team members, there are typically two or three that score a 3.
  • 4 — Exceptional. You have not only leveled up yourself, but also driven the company forward in a substantial way. The bar is set very high to receive this score. We haven’t yet awarded a 4.

That’s the scale. The most important thing is that every quarter every team member knows where they stand and has time to improve their performance before the next bi-annual profit sharing or bonus distribution.

The formula is then the total pool (say $100,000) divided into two buckets: time with the company ($50,000) and performance ($50,000). Then all the total days with the company and performance scores are divided from their respective buckets to get a value for each day and performance point.

We expect everyone on the team to start making meaningful contributions immediately. Because of that we don’t require waiting any period until you are able to participate. That said it wouldn’t be fair to get the full value of performance points if you just joined for a portion of the 6-month period. So the last step is to multiply each number by the percentage of the period each person worked. For most that is 100%, but for anyone new that will be a smaller percentage.

How does profit get calculated?

We divide our profit (revenue-expenses) into a few buckets: taxes, cash-on-hand for innovation and growth, and profit for distribution. Profit for distribution is then divided between three groups:

30% — Team profit sharing, including senior leadership bonuses (2% for leading each of the 5 major functions) - nobody is in this bucket the moment, will not trigger until we are further along at scale.

70% — Investor distributions

With 30% of profit for distribution going to employees, each member can see how their daily decisions affect their own profit sharing checks.

Salary is not a factor

One key difference between our system and most other profit sharing systems we’ve seen is that we don’t account for salary. Our theory is that salary is a reflection of your market value and not exactly your value to the company. A higher market value such as an engineer versus a customer support team member is already reflected in salary, so we don’t need to account for it again in profit sharing.

Spend like it’s your money

A year ago someone on the team suggested going to Greece instead of Vilnius for our winter team retreat. We thought it was a great idea and started to price it out.

The estimate for Vilnius came back at $20,000. Greece was closer to $40,000. We asked the team and everyone said, “Vilnius is great. Let’s save $20,000.

Another time someone accidentally left an extra server running, which cost about $1,000 for the month. Once it was discovered and shut off the message from the team was clear, “It’s not a big deal in the grand scheme of things, but please be careful. It’s our money.”

Senior Leadership bonuses

As part of this we have 10% allocated for bonuses for leadership. This is based on quarterly goals each leader sets and the percentage they hit during that period. They also receive their share of the team profit sharing.

So if a leader set 10 goals for themselves and their team each quarter they would receive their share of the total based on goals completed. So with 5 leaders they would each have a pool of 2% of the profit for distribution. Then if they complete 7/10 goals in the first quarter and 8/10 in the second quarter they would receive 75% (15/20) of the pool they are eligible for.

This is a simple system that is decently effective. It rewards smart goal-setting and peer pressure from other leaders ensuring that you don’t set unambitious goals you are guaranteed to hit.