Friday, May 30, 2014

The quest for a legendary company structure!

3 years ago we formed a company, 8 months ago we got a success with our game FORCED and started structuring our company with the goal of achieving a creative momentum driven environment. Actually I think the best way to describe it is, that we want people to feel like they are partners and entrepreneurs rather than employees.

Based on that, our goals are to:

  • Make all information available to everyone internally.
  • Create an evaluation system that effectively estimates an individual’s value.
  • Create a transparent salary/bonus system, where everyone shares profits.
  • Establish a culture of agency and momentum, where people can take important decisions without needing vertical permission. So if someone wants to go to a conference, buy a new computer or purchase a marketing spot at a website etc. they should simply seek peer feedback from the most knowledgeable in that area.
There a more goals than these, but these should be enough to explain our vivid dreams for now.
So far we are iterating towards our goal and are basically on our second iteration since we started. We spend a lot of time and money on it, as we find it important to shape our culture as early as possible.

Let me jump right into our current iteration!

We’re 14 developers (2 founders, 7 employees, 3 interns and 2 contractors).
Everyone in the company including founders but excluding interns and contractors gets the same monthly salary of around $3k, but to make up for the low salary we have a very rewarding bonus structure.
The way it works is that every 3 months we have a financial status were potential profit is shared in the following way:
  • 50% is divided among the employees
  • 35% is saved for our company
  • 15% goes to founders
The 50% team profit bonus is divided based on evaluations conducted by a varying part of the team, who collects the whole team’s feedback on each individual as well as self evaluations.
So to be concrete, if we would have a $100k in profits in a given quarter, $50k would be divided among the current 7 employees and so forth. However, our definition of profit is revenue that goes above our “Goldmine capacity”. 
So when we started out on this approach we set that to around $500k, hence as soon as we obtain revenue that exceeds our capacity it will be divided in the aforementioned way.
Additionally almost any information in the company is available to any employee; hence if someone wanted to know how money is spent, he/she could go right ahead.


Now let me openly reflect on this approach

I constantly try to consider if our company would be a place I would be if I hadn’t founded it. If possible I would like to be at a place where I felt like I could make a difference and where I felt that I was a partner more than feeling employed. So I thought what can we do, so that everyone would feel like partners even if we grew to the size of 100+ devs?

Open Information

When you’re a partner, information is rarely hidden from you, and you have a feeling of shared responsibility and care. Hence transparency is important to create trust, similar to relationships between people.
I think we could make information in our company almost 100% transparent. I think that making visible how money is spend, who gets what in salaries, why a particular decision was made and so on, is possible and that it can create trust and motivation. 
I also recognize the challenge and frustrations however, it requires a huge amount of self-critique and a very mature view to openly compare or even rank yourself among others.
This is a massive challenge in itself, that I might want to dedicate a whole blog post to in the future. 
So far we have evaluated each other two times. Each evaluation was different and I think we’ll keep iterating on the process for quite some time before we formalize it. 
The most challenging aspect is probably that you see your evaluation/salary relative to others, which you rarely do in other companies. But if you are a partner you would want to know who gets what and how you spend your companies’ hard earned money.

Sharing profit

When we made Forced, we divided 20% of the revenue (not profit) among the team, so it’s not totally  new to us with rev-shares/bonuses like that. 
I strongly believe profit or rev share is an important team ingredient. In my perspective, teams should experience ups and downs as a whole and everybody should understand the broader perspective of things and have responsibility. 
Right now everybody gets the same salary and when profits occur we share that cake together based on how we have evaluated each other. When done with more than a few partners, that may sound like an impossible ideal to achieve, but Valve’s structure would probably have been perceived the same way when they started. 

Nevertheless I believe it worked out very well when we made Forced, except that we should have put more time into evaluations which we’re now doing.

Transparent salary

I like to compare a development team with a football team as the difference between success or failure is in both cases very depended on the team dynamic. 
With that in mind it is however interesting how football players to a higher degree must deal with transparent value. Not all football players are worth the same and their value is often spoken about openly, but everyone on the field has important roles, and that must lead to a lot of conflicts. 
Yet it’s a culture that has been there for a long time, consequently football players even though many of them might be big ego’s, must have learned to deal with it in some way. 

David Polfeldt (Managing director at Massive) used this analogy as well in a talk at the Nordic game conference 2014, he noted that the best football teams were those who were willing to sacrifice themselves for the team, i.e. not take a chance for a crowd/press pleasing stunt, but rather choose the action with highest probability of team success.
I assume that if you’re part of one of the best teams and respect it, then being perceived as the lowest ranking player on the team is still something you’re proud of – since you’re actually part of that awesome team. That would be what we aim for at BetaDwarf.


The idea behind creating a transparent company, is to form a culture where we understand each others value, it’s important that we pay our tributes to high performers – otherwise their opportunity cost might be too high for them to make their contribution meaningful. 

Additionally I believe that if such a culture is established, people feel much better paying great salaries to great problem solvers, as they were part of that very decision. 

With an entrepreneurial view it is easier to understand why you would pay person X double the salary of person Y. I.e. if you understand the need, you will better understand the cost. No two persons would ever contribute the same value, just as there are no two similar persons in the world.
Overall we want to improve how precise we can evaluate people by making it a team task rather than a “Founder/boss” thing. So instead of two founders evaluating with what little data or gut feeling we might have while wearing a thousand hats, we want the team to be the main evaluation. However evaluating and value estimation is an expertise on its own, which is why I see it as something people should train themselves to be good at. Like everything else one will never perfect it, but one can constantly improve it.


If you’re are interested in this approach I would love comments i.e. suggestions, observations. Would this be interesting for you - why/why not? And is there anything you would like more info about?



  1. Hello, a friend and I started a company a few months ago, and we are aiming for something very similar, so I'm looking forward for your posts!

    I think every topic you touched in this post should have it's own post, since they are quite complex.
    For example as you said, the evaluation is a key part for everything, since after all, will establish how much will an employee earn!
    Second, what happens if for some reason you have let's say, 0 profits? Will they earn only 2k? Do they really know this? and take that into consideration? Because when everything goes well, nobody says anything, but when the ship is sinking, expect people to complain on why is he only earning 2k (at least I'd like to know if you experienced something like this, and how are you planning to manage this scenarios)
    Anyways, will be following your posts, thanks for sharing this! it might help me a lot!!

  2. If we have 0 profits, there's no bonus and people will earn only $3k yes.
    Again it is an aim at creating a culture of feeling as a partner rather than an employee.

    I'm glad you liked it :)

  3. informative post! I really like and appreciate your work, thank you for sharing such a useful facts and information about evaluating rewared system strategies, keep updating the blog, hear i prefer some more information about jobs for your career hr jobs in hyderabad .