
Ask HN: Experience with profit sharing? - ian0
We have considering profit sharing VS ESOP for employees as:<p>- Profit sharing is tangible
 - We monetise from the start and can roll down KPIs
 - Many of our employees would struggle to understand an ESOP scheme
 - Those that understand equity undervalue it
 - Those that understand options discount them completely :P<p>Wondering have anyone here has implemented or taken part in one:<p>- Did it have any impact with regards to fund raising?
 - Did it have any impact on exiting?
 - Did it make it harder to attract new employees at any stage?
 - Any best practices we should take into account?<p>We are weighting it on join-date &#x2F; risk taken not seniority. We still maintain a small ESOP scheme for advisors.
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muzani
It also depends a lot of the kind of company it is. I had a few profit sharing
offers from a social media company. Mostly it was to get their e-commerce
component off the ground.

It seemed like a poor deal to sign so early, as opposed to a company that is
already making profits. If something like a CRM or other B2B company offered
profit sharing it would be a much better deal.

An ESOP deal for things that monetize poorly is better, a profit sharing deal
with something rolling in cash flow is better.

Often employees are not risk takers. If they wanted risk, many would be
founders. Just paint it really clearly how much they would get out of it and
in some cases expect them to be skeptical, not of your word, but of your
optimism.

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Top19
Look into Joseph Stiglitz and the Roosevelt Institute. Stiglitz has heavily
influenced, no joke, Steve Bannon, Bernie Sanders, and I believe was chief
economic advisor for Hillary Clinton in 2008 campaign.

His “rewriting the rules” book calls for profit sharing as one of its main
tenets. It’s now a strong core of modern liberal economic theory (along with
employee representation on the board).

Wish you the best of luck and sorry if you are already aware.

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ian0
I wasn't already aware - ill check it out - Thank you!

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danieltillett
The problem with profit sharing is most employees heavily discount it to the
point of it not being an effective motivation tool. Personally I would spend
the money ensuring everyone is paid well and tightening up the unity of the
team.

On thing I have wanted to try is to give the employees a certain amount of
“free” money tied to profits and let them spend it as a team on anything that
will make the team better/happier.

