Comment by ellisv
2 months ago
I wish more people know about profit sharing interests.
I was a part of a startup that offered profit sharing interests. When I joined the profit was X and left it was Y. I received a check for my percentage of the growth in profit. It felt pretty fair.
There was a relatively direct incentive to impact the company bottom line and I didn’t have to wait for the company to exit to get compensated.
Specifically, annual profit not valuation? So if the company had not become more profitable, you get nothing?
Not OC but yes that’s what profit sharing is. You see it in businesses where investment back into the business doesn’t yield much, like sales or recruitment companies, so better to redistribute the profits back to the shareholders, the employees being a major shareholder.
You do this if the founder is not trying to hyper grow and sell the company but is rather content with dividend producing asset.
[dead]