Idea · carried by 1 source
Profits as Your Annual Funding Round
Instead of raising venture capital, treat each year's profits as your funding round: allocate a portion to employee liquidity (an annual tender), a portion to growth, and a portion to reserves. This eliminates dilution, removes the preference stack, and creates genuine long-term alignment.
Where it comes from
William Hockey, describing Column's self-funding model, in highlights/william-hockey-bet-on-yourself (~24:00): “When I kind of tell people, 'Okay, I'm at like our profits every year.' It's like, 'Imagine that's like our funding round.' Like, each year, like on January 1st, we like raise a massive round each year. That's how I view it.”
How it works
- Three-way allocation: Each year's earnings are split: (1) 25% goes to buying back employee shares via annual tender, (2) remainder to growth, (3) buffer for reserves.
- No dilution: Employees keep what they're granted. “Over a 10-year period, you're not going to be diluted.”
- No preference stack: “By the way, you also don't have any pref stack. By the way, like we get to make our own decisions.”
- Yearly liquidity: Employees don't wait for an exit — they get liquidity annually. This changes the retention calculus entirely.
- Operates like a high-growth startup: “Structurally, we look exactly the same as like a high-growth startup... We grow after the same people. We have all the same perks, if not more. We happen to also be quite profitable.”
The standard startup model forces employees to bet on a single liquidity event years away while watching their equity erode. Annual profit-funded liquidity flips this: employees get cash when they need it without waiting for an IPO.