Zero salary might sound like some sort of joke dreamed up by a ruthless big business mogul. However, there is a new type of company ownership salary emerging in the tech space that could create a more committed and enjoyable workforce. Helen Walton (one of the founders of Gamevy) explains how this new model is working out for them and where they plan to go next. It sounds like an exciting and fun journey. Having recently met the team at ICE Expo - their energy and enjoyment for what they do is very apparent.
A NEW MODEL: GAMEVY AND EMPLOYEE OWNERSHIP
When we set up Gamevy about 18 months ago, we wanted to fix some of the problems we saw in other companies. Most companies try to maximise the return for somebody else – normally a few concentrated shareholders – and those returns often happen at the expense of other stakeholders. Employees are expected to maximise their own return by battling their way through ranks of hierarchy to reach the Board. Here they can vote themselves large amounts of pay and share options (often at the expense of the shareholders and those lower down the hierarchy). The result is wasteful, damaging and – we believe – inherently flawed.
We wanted to do something different – employee ownership.
Well OK. What’s so new about that? Several companies do it. That’s true, but either they tend to continue the rigid hierarchy of a traditional company and over-reward shares to those at the top; or over time, it becomes difficult for new and dynamic employees to make much impression or be rewarded proportionately for their work. We needed a model that rewarded those who risked most – the people who worked for Gamevy at the start, who invested their time and money when there seemed little chance of success… but which also evened out over time so that eventually rewards would be shared out more equally.
The Big Divide
- Being an employee is great. You get a salary; there’s security –and statutory rights
- Being an owner is great. There’s freedom to create, to take risks, to own your destiny – and the potential rewards are massive.
- Being an employee sucks. You never get the big rewards or real freedom.
- Being an owner sucks. Money is never a certainty and a feast often comes after long months or years of famine.
It should be obvious, right? We all know that there’s an upside and a downside to ownership and to employment. At different stages in our lives and depending on how many dependents we have, one may appeal to us more than the other. Wouldn’t it be great if there was some way of combining both models? Some method by which – rather than seeing ownership and employment as two diametrically opposed states – we could put them on a scale? Is there a way that we can choose to balance security and risk, salary and asymmetric pay-off depending on where we are in our lives or what our personal risk appetite happens to be? Gamevy is founded on precisely that idea. Every employee of Gamevy is also an owner. We can own shares of the company in 3 basic ways:
1. invest cash in the business
2. invest time by sacrificing part of your salary
3. simply work for Gamevy
The first one is really simple – everyone gets this because it’s how traditional company structures work. People also kind of get the third because there are several companies that have a pool of ‘employee shares’ which are held in trust for existing employees. They give employees voting rights in big company decisions and give them a share of profits that are released as dividends. These employee shares are lost when an employee leaves the company. What makes Gamevy’s model different is the second point. This essentially eIfnables employees to choose how much risk they want to take on. In Gamevy, at the moment, several people take no salary at all. They are deemed to be investing the whole of their market rate salary in Gamevy on an annual basis. Others take what we call our ‘living wage salary’ of £30,000, the difference between this and their ‘market rate’ is an amount they are deemed to invest in the company. Members of Gamevy choose to sacrifice more or less of their salary on a monthly basis – depending on their personal circumstances. When someone who has chosen to invest cash or salary sacrifice in Gamevy leaves, they retain their ownership shares. But those shares are instantly converted to non-voting shares. Why? Because the people in control of Gamevy should be those who work there at the time and who are thinking of the future of the company – not a short-term cash-in. The model rewards those who have risked and sacrificed the most, but without ignoring those who were unable to match such a sacrifice, but whose contribution is nonetheless part of the company’s success.
Time and the Pivot Point
Gamevy’s aim is to eventually reduce all salaries to zero – on the understanding that dividends paid out to employees (as per share ownership) should always be higher than any expected salary. We’re a way off that! Nonetheless, it’s the ideal and remains part of our philosophy. Gamevy money is not some corporate budget to be exploited, grabbed or frittered away – it is ours, our actual wages, and we should never be cavalier in how we treat it. There comes a pivot point in the company at which owners will begin to earn less than their ‘shares’ of the business might supposedly entitle them to. At this point, extra rewards are shared out equally between all employees. We have settled this pivotal figure as being the salary of the highest paid criminal UK Legal Aid lawyer. Two principles hold true. As profit increases, those who have invested most and worked longest receive the highest rewards. However, as the profits increase, smaller shareholders receive a higher percentage - evening out differences between shareholdings. It means that if Gamevy ever makes it really, really big, then no-one will be as rich as Zuckerberg. But we would all do quite nicely.
Why are you doing this again?
When we talk to people about Gamevy’s structure, people sometimes assume that we’re a set of crazy hippies who hug each other twice a day. So we want to reiterate that we set Gamevy up this way because we genuinely believe we are more likely to succeed when all of us are owners. And the reasons for that are simple but incredibly powerful – especially for a start-up.
1) We attract the best people who are creative, entrepreneurial, responsible and deeply invested in the company’s success
2) We have an exceptionally low cost base due to our low salary bill. Put simply that means we can survive for longer, giving us more chances at success.
3) We run with low overheads in terms of bureaucracy, management and other forms of waste
4) It’s a great big experiment and we love it!
Only time will tell if Gamevy will succeed – but right now, our structure is one of our biggest strengths!
Article kindly provided by Gamevy, founded by Paul Dolman Darrall, Helen Walton and Dan Rough. It has 9 employees and is about to launch BornLucky Gameshows on the App Store.