As of Q3 2023, Kicksaw, a bootstrapped company founded in 2019 by entrepreneurs Kenny Goldman and Kyle Morris, shares 50% of profits back with team members. It’s a distinction we are incredibly proud of, and one that we had to work hard to achieve. We sat down with Kyle and Kicksaw Director of Finance Brooke Arevalo to talk about how Kicksaw approaches our profit-sharing program.
First of all, can you give us an overview of the profit-sharing at Kicksaw?
Kyle: The profit-sharing program is something that Brooke and I, as well as the rest of the leadership team at Kicksaw, are very excited about. In some way, shape, or form, we’ve been talking about rolling this out for at least the last four years. The program is designed to distribute half of our profits back to employees, and it truly is that simple. We want to capitalize on the success of our organization by giving money back to the employees who are the reason for that success.
Brooke: There’s a portion of our profits that is distributed based on tenure, as well as a portion that is evenly split amongst all employees, which guarantees that even our new folks can immediately benefit from this program. The full breakdown of how our profits are distributed is pretty simple, and it’s available to all employees via our internal documentation.
Kyle: The hard and fast breakdown is that 40% is for our general pool, which is all employees except co-founders, and then we have 10% that we set aside for senior leadership, then 10% for owners, and then 40% is for savings and cash reserves.
Brooke: This profit-sharing model replaces our previous bonus program, which was only for our Delivery team members and strictly based on hours. That program became problematic because people wanted to hoard hours, and rightfully so. The number of hours they worked affected their bonus. So, maybe Engineering was better suited to log hours on a particular project, but the Delivery team didn’t want to give it to Engineering, because that work would not count towards their bonus. But now that we’re all united towards the greater goal of generating more profits to share back with the entire company, that inclination to hoard hours or work is gone. If Engineering is the best team for the job, great — give Engineering those hours, and that frees you up to spend your hours on other projects and deliver better products to all of our clients.
Another huge plus is that profit-sharing covers the entire company, not just those folks who did client work. We know how important our internal services people are, and we’re thrilled to be able to include them in this new model.
Kyle: We want people who work here to feel like they own a piece of Kicksaw. You own a piece of our profits for as long as you work here at Kicksaw. When you have that sense of ownership, you tend to take care of it. When you don’t have that sense of ownership, it can be very tempting to say, “You know, who cares? I’m gonna trash this thing.” I’ve seen that many times. That’s really why I’ve wanted profit-sharing and phantom equity for so long, and I’m so glad we finally rolled it out. It was obviously a huge undertaking, and so much credit goes to Brooke for championing this and getting it on the calendar, and pulling the teeth needed to get it done. I’m very happy with the model we came up with.
What led Kicksaw’s leadership to decide to implement a profit-sharing program?
Brooke: Profit-sharing is something that’s been talked about for several years at Kicksaw. That’s why I wasn’t afraid to present this to first Kenny, then Kyle. I knew it was already on their radar, and I felt like it was the right time — we were getting to a very profitable point in Kicksaw, and also finding that the existing bonus program wasn’t lining up with our core values. We needed to do something different, and this led me to the realization that it was the right time to implement profit-sharing.
Kyle: When Brooke first brought this up to me, the first thing that went through my mind was that this is exactly the sort of thing that plays into my larger goal of always striving to create the company I truly want to work for. I want to be creating a place where people can thrive for 20+ years. In order to do that, there are a lot of things you have to do, but one of the most critical is that you have to align the incentives of the company itself with incentives for the employees who are doing the day-to-day work.
When we started having these conversations around the concept of profit-sharing, it was because we were finally generating profits for the very first time, that was a big win. The question then was, how can we set it up so that if the company succeeds, everyone else feels that success as well? The model that Brooke proposed was aligned with our core values in that it was extremely simple; it was easy to explain, it was easy to administer, and it aligned everyone’s incentives towards a single metric, instead of various KPIs. We still do care about those KPIs, of course, but this new approach simplified how we incent employees and reward success.
It’s important to note that Kicksaw is a bootstrapped company. We don’t have infinite resources, and we’ve had to create everything for ourselves. And what we created is a profitable company, and it took time and hard work. But we did it without any investors, and now we can reward the people that worked so hard to build this company.
How does profit-sharing at Kicksaw differ from profit-sharing at other companies?
Brooke: Well, first of all, our founders are incredibly generous. Probably the biggest difference you will see between profit-sharing at Kicksaw and profit-sharing at other companies is how much is going back to the employees and that general pool. That 40% is a very high percentage, and extremely generous.
Kyle: The fact that we are bootstrapped gives us complete control. We get to do whatever we want. If we had a bunch of investors who had poured millions of dollars into Kicksaw, they would likely say, “You can never do this. It’s not allowed in any way.”
One of the sticking points we came upon while working through our plan for profit-sharing was how much to put into this bucket vs. that bucket. All the advisors and mentors I have told me, basically, that I was crazy. That it was a terrible idea to give 50% of profits back to the company. But if everyone’s going one direction…I kind of want to go the opposite. I leaned into the idea that this is an advantage for us. Pretty much no one else will do this — almost no other company you’re going to interview with is going to say to you, “50% of company profits are shared to the team, and we’re not going to think twice about it.” That really sets us apart from our competition. Over time, we want to share even more with the team, as we become more and more profitable.
Brooke: Another difference is that we don’t have a ceiling on our profit-sharing. We’re not capping anybody. Even if we don’t grow the percentage we’re sharing, we certainly hope our profits still grow, and we’re not limiting anyone in the amount of profit they can receive — they don’t max out after a certain number of years, their tenure doesn’t max out, nothing like that.
How does profit-sharing at Kicksaw benefit Kicksaw?
Brooke: One big reason we did this was to align Kicksaw’s bonusing with our actual profits. Before we rolled out profit-sharing, we were giving people bonuses that were not tied directly to our profits. Our profit-sharing program ensures that we are only giving out when we have funds to give out, and in direct correlation with what we want to see from our team. This helps us stay financially healthy, but beyond that, I think profit-sharing will draw in the right talent and help retain them. It encourages people to stick around and invest in Kicksaw. Kicksaw is very big on company culture — we want to put our people first, and I think this model really does this, and it sets us apart.
Kyle: The tenure aspect is important. The longer team members are at Kicksaw, the better they get at their job. And so, the longer we can encourage people to stay, the better we are as a company. Salesforce talent is in very high demand — people have a lot of options. I encourage people to interview at other places to understand what other kinds of jobs are out there, but I also want Kicksaw to be the place they ultimately choose to be, rather than the place they get stuck.
What’s more, we’re already seeing the concept of profit-sharing affect the way that our team members approach initiatives, and we know we will see more of that as time goes on. People aren’t going to request tools they don’t need, and they aren’t going to over-hire. They’re going to be…not stingy, but aware of how we spend money, because half of that should be going back to them in some form. Having a culture that prioritizes that really sets us up for health in the long term.
How do the Kicksaw core values play into the profit-sharing?
Brooke: Kicksaw’s core values, which are Be You, Own It, Keep It Simple, and Work Together, were the driving factor behind our profit-sharing.
The two that had the biggest influence were Keep It Simple and Work Together. Our profit-sharing model is very simple. We don’t want it to be confusing for people to understand. They need to be able to easily calculate and know what to expect. Work Together ties into it in that this model encourages an environment where we are all working towards one collective goal, rather than a lot of individual goals. The Be You and Own It values are present here as well, because that’s how we generate those profits — when people are able to be themselves and take ownership and pride in their work, we all win.
Kyle: I wanted a profit-sharing model that I could explain to my mom and dad and have them understand it right away. (No offense, Mom!) I don’t want to sit and explain the details of the bonus program, like, “If you hit this many hours, you get this or that.” I want to just say, “50% of the profits are going back to the organization.” That clicked with them, so that gave me the sense that we were on the right track and that this is going to be very easy for every employee to understand and explain to others. Everyone will know exactly how they are rewarded for their contributions to our overall success.
What groundwork did you lay in order to be able to introduce profit-sharing?
Kyle: For our first three years, we were basically breaking even, or even losing a bit of money. Every day we were putting down a new brick, and then after three years, we finally got to turn the heat on, and that’s fantastic. A lot of credit goes to Finance for helping us become more profitable, and some of that profitability came with growth, too. As we’ve grown larger, we’ve gained a lot of efficiencies in the organization.
But what often happens with organizations at this stage is that they’ll just bloat. They’ll keep hiring in different departments rather than turning an eye toward generating the cash reserves that make big initiatives such as profit-sharing possible. By creating an environment where every department is fully incentivized to find those efficiencies and generate profits, we’re aren’t just killing two birds with one stone, we’re killing, like, 10 of them.
Brooke: From 2022-2023, we grew our staff by 15%, but grew our revenue by 30%, which means we’re getting more efficient, as Kyle said, and honing in our processes really well. There was a point in time when we thought that in order to see the revenue growth we wanted to we were going to have to grow our team. That probably would’ve led to that bloated growth. What we’ve actually focused on this year, though, was the opposite. We focused on what we already have, and we refined those processes and our people.
So many tech companies these days are in trouble — they’re having to scale back, do rounds of layoffs, etc. But Kicksaw is the healthiest it’s ever been, and I think that speaks volumes of the strength of our team, our core values, and the way we approach consulting.
Kyle: We want to see other companies create similar programs for their teams. We’re very unique as an organization, and I want us to act as a guidepost for what other companies can do to create really solid cultures, great tenure, and happy customers. We don’t want to be alone out here — we want to see the industry trend toward models like this, and we’re happy to chat with anyone who wants to learn more or has further questions on how profit-sharing can work for them.
Brooke: Absolutely — our Finance team is happy to offer advice on how to get there. We’d be thrilled, really. Don’t hesitate to reach out.
Please reach out to the Kicksaw Finance team at this email address, or fill out the Contact Us form at the bottom of this page to get in touch with our team.