1. Introduction

At Demand.io, we're not just building great products—we're reimagining how a technology company can create and distribute value in the digital age. Our mission is to be the world's leading source of e-commerce knowledge, helping people find and acquire the things they'll love. To achieve this ambitious goal, we've developed a unique approach to compensation and team alignment that sets us apart from traditional startups and tech companies.

This guide will introduce you to our innovative compensation model, including our Profit-Sharing Bonus (PSB) system and Partners Program. Whether you're a potential recruit, a prospective partner, or simply curious about alternative business models, we hope this overview will give you a clear picture of how we're building a more sustainable, aligned, and rewarding way of doing business.

While we prioritize sustainable growth and ongoing rewards, we remain open to strategic opportunities that could provide additional value to our team and stakeholders, including potential future liquidity events.

2. The Demand.io difference

Our self-funded, profitable business model

Unlike many startups, Demand.io is self-funded and has been profitable for over a decade. We've achieved this by focusing on sustainable, organic growth and operating with a lean startup ethos. This unique position allows us to make decisions that prioritize long-term value creation over short-term gains or the pursuit of a quick exit.

Why we've chosen a different path

We believe that the traditional startup model, with its emphasis on rapid growth and exit events, often creates misaligned incentives and unsustainable practices. By remaining independent and profitable, we can focus on building products that truly serve our users and create lasting value for all our stakeholders.

Our focus on sustainable, long-term value creation

Our goal isn't to build a company for a quick sale or IPO. Instead, we're committed to growing Demand.io into a lasting, impactful business that continues to innovate and lead in the e-commerce knowledge space for decades to come. This long-term perspective shapes everything we do, from product development to team building and compensation.

Balancing independence with strategic flexibility

While we value our independence and profitability, we maintain strategic flexibility. We regularly engage with investors and potential acquirers, ensuring we're well-positioned to capitalize on opportunities that align with our long-term vision and could provide significant value to our team and stakeholders.

3. Our concentric circles model

At the heart of our approach is what we call the "concentric circles model" of value alignment. This philosophy guides how we create and distribute value across our entire ecosystem.

Explanation of the concentric circles philosophy

Imagine Demand.io at the center of a series of expanding circles:

1. Core: Our mission and values
2. Inner circle: Our team (Partners and employees)
3. Second circle: Our product users and community members
4. Third circle: Our business partners (brands, affiliates)
5. Fourth circle: The broader e-commerce ecosystem
6. Outer circle: Society at large

Each circle builds upon and supports the others, with value flowing both inward and outward.

How this model shapes our approach

This model ensures that:

• Every stakeholder wins when we succeed
• Our products truly solve real problems for users
• We build lasting relationships instead of chasing quick profits
• Innovation is driven by those who understand the problems best
• Our team is deeply invested in our collective success

The role of aligned incentives

By aligning incentives across all these circles, we create a resilient ecosystem where everyone is motivated to contribute to our collective growth. This alignment is reflected in every aspect of our business, including our unique compensation model.

4. Components of our compensation model

Our compensation model is designed to create perfect alignment between individual success and company success. It consists of three main components:

4.1 Base salary

• We offer competitive base salaries that are in line with industry standards for each role.
• Our base salaries provide a stable foundation, allowing team members to focus on high-impact work without financial stress.
• We regularly benchmark our salaries against industry data to ensure we remain competitive.

4.2 Profit-sharing bonus (PSB)

The PSB is the cornerstone of our unique compensation model. Here's how it works:

• Every Partner (more on this in the next section) receives a monthly bonus calculated as a percentage of the company's revenue growth since they joined the program.
• The PSB percentage increases as you advance through Partner levels, allowing your compensation to grow with your impact and tenure.
• PSBs are capped at approximately 3x to 20x your base salary, meaning your earnings can increase significantly as the company grows.
• The PSB is paid monthly, providing regular rewards for ongoing company success.

Example: A Level 5 HQ Partner can earn between $20,000 to $50,000 per month in PSB, depending on individual and company performance. This is in addition to their base salary.

4.3 Equity grants

While our PSB system provides significant ongoing compensation, we also offer equity grants to provide long-term alignment and upside potential:

• All employees receive stock options as part of their compensation package.
• Our latest company valuation is $103M (as of July 2023), meaning our equity represents substantial value from day one.
• For example, a 0.1% equity grant would be worth $103,000 at our current valuation.
• Unlike early-stage startups where equity might have minimal initial worth, our equity represents substantial value from day one due to our profitability and high valuation.
• As we continue to grow, the value of this equity has the potential to increase significantly, either through our continued independent growth or potential future liquidity events.
• While not our primary focus, we remain open to strategic opportunities such as investment rounds, acquisitions, or public offerings that could provide liquidity for equity holders.
• Additional equity grants ("refreshers") may be awarded for exceptional performance or upon promotion.

Our equity offering combines the best of both worlds: immediate value like a public company stock, with significant growth potential like a promising startup.

5. The Partners program

The Partners Program is our unique system for rewarding exceptional performance and aligning individual success with company success.

Eligibility and advancement

• Employees typically become eligible for the Partners Program after six months of employment.
• Advancement through Partner levels is based on performance, impact, and alignment with our values.
• There are multiple Partner levels, each offering increasing PSB percentages.

Ongoing rewards and future potential

• The Partners Program provides immediate, ongoing rewards as the company grows through increasing PSB payments.
• While not our primary focus, potential future liquidity events (such as investment rounds, acquisitions, or public offerings) could provide additional value for equity holders.
• We regularly engage with venture investors, private equity firms, and potential acquirers, maintaining optionality for future growth and liquidity scenarios.
• Any liquidity event would likely only be considered at a significant valuation (1B+), ensuring substantial potential upside for equity holders.

Balancing current value and future potential

• Partners benefit from the immediate value of PSB payments and the current value of their equity. With our current valuation of $100M+, even small equity grants represent significant value.
• For context, our goal is to reach a $1B+ valuation, which would represent a nearly 10x increase from our current valuation.
• Simultaneously, Partners hold equity with significant growth potential, whether through our continued independent growth or potential future liquidity events.
• This approach combines the stability and immediate rewards of our profitable business model with the long-term upside potential typically associated with high-growth startups.

Examples of potential earnings

While individual results may vary, here are some examples of potential earnings at different Partner levels:

• Level 1 Partner: PSB of $750 - $3,000 per month
• Level 4 Partner: PSB of $10,000 - $25,000 per month
• Higher levels: Potential for six-figure monthly PSB earnings

Remember, these PSB earnings are in addition to base salary and potential equity appreciation.

6. Career growth and development

Our unique model doesn't just offer financial benefits—it also provides exceptional opportunities for career growth and development.

Our deep generalist approach

We value individuals who develop expertise across multiple, adjacent domains. This "deep generalist" approach allows for:

• Greater adaptability to new challenges
• More innovative problem-solving
• Effective collaboration across different areas of the business

Opportunities for cross-functional experience

Our flat organizational structure and collaborative culture provide numerous opportunities to work across different functions and products. This allows team members to:

• Broaden their skill sets
• Gain a holistic understanding of the business
• Identify new areas for innovation and growth

Supporting continuous learning

We're committed to supporting the ongoing growth and development of our team:

• We provide a generous annual learning stipend for courses, conferences, and educational resources.
• Our internal knowledge sharing sessions and mentorship programs facilitate continuous learning.
• We encourage experimentation and provide time for team members to explore new ideas and technologies.

7. Comparing Demand.io's model to traditional startups

Our compensation model offers several advantages over traditional startup compensation:

Immediate and ongoing rewards

• Traditional startup: Primarily offers the potential for a large payout in the event of an acquisition or IPO, which may never materialize.
• Demand.io: Provides significant ongoing compensation through the PSB, as well as immediate equity value and long-term growth potential.

Stability and growth

• Traditional startup: Often operates at a loss, with the constant pressure of raising funds and the risk of running out of money.
• Demand.io: As a profitable, self-funded company, we offer the stability of an established business with the growth potential of a startup.

Aligned incentives

• Traditional startup: Incentives can be misaligned, with pressure to prioritize growth over sustainability or user value.
• Demand.io: Our model creates perfect alignment between individual success, company success, and value creation for all stakeholders.

Transparency and control

• Traditional startup: Employees often have limited visibility into company financials and decision-making.
• Demand.io: Our Partners have access to detailed financial data and input on key decisions, fostering a true sense of ownership.

Balanced upside potential

• Traditional startup: Relies heavily on the possibility of a future exit event for significant returns.
• Demand.io: Offers immediate value through PSB and valuable equity, while still maintaining the potential for significant upside through future growth or liquidity events.

8. Frequently asked questions

Q: Is this compensation model too good to be true?

A: While our model offers significant benefits, it's the result of careful design and our unique business position. Our profitability and lean operations allow us to share a substantial portion of our success with our team.

• Q: How does this model handle economic downturns?
• Q: What happens if Demand.io gets acquired or goes public?
• Q: How does this model scale as the company grows?
• Q: What is the current value of Demand.io's equity?
• Q: Is there a possibility of a liquidity event or exit in the future?

9. Success stories

While respecting privacy, here are a few anonymized examples of team members who have thrived in our model:

• Engineer A: Joined as a mid-level engineer four years ago. Has since advanced to a senior role and Partner Level 4. Their total compensation (including PSB) has increased by over 250% since joining.
• Designer B: Started as an entry-level designer three years ago. Now a Level 2 Partner leading key projects. Has used their PSB earnings to buy a home and invest in further education.

These stories illustrate the potential for significant financial growth and career advancement within our model.