Why Envato is sharing its millions in profit with employees and suggesting they buy alpacas with the dividends

Australian design and e-commerce startup Envato’s profits have become so significant the business has decided it has more than it needs to keep growing, and some of that windfall should be shared with its staff.

Considered by some as one of the coolest places to work in Australia, Envato continues to enjoy sustained growth and pulled in $US29.4 million ($37.1 million) in net profit last year.

Speaking to SmartCompany this morning, Envato co-founder Collis Ta’eed said he and his co-founder and partner Cyan Ta’eed made the unusual decision to share the company’s profits with employees when the company celebrated its 10th anniversary last year.

“Last year we found ourselves talking about how we can share the company’s success with our staff, and it was part of the challenge for us as a private company,” he says.

“If we gave our staff equity there would be no way to make them liquid, it would just be a piece of paper, so we wanted to help staff share in what has been a successful set of business circumstances.”

At last estimate at the start of 2017, Envato’s annual revenue was more than $94 million. Ta’eed says the business has been profitable for most of its lifetime, which “certainly helps” when it comes to rewarding staff with profits. The business has also hit some important milestones as of this month, clocking in over 6 million paying customers around the world.

“Profit share felt like the right thing to do for a profitable company, as rewarding staff can be horses for courses. We’re a profitable business and we aren’t using all these profits, so we figured it was a good way to reward staff,” Ta’eed says.

“Normally businesses think of profits as the province of shareholders, but we want to look at it as some profits are for staff, some are for shareholders, and some goes to charity.

“We have capital in the business should we need to use it if we want to fund an acquisition, but we have more than we need in terms of dividends or reinvestment.”

Company ethos comes down to a “fair go”

Envato has around 300 employees working in its Melbourne headquarters, and the total profit share being directed to those employees will increase from $US1 million to $US1.2 in the current financial year, reports Fairfax.

The company has also decided to extend the windfall to any employee who left the company over the past financial year, a decision Ta’eed says was due to the company’s internal ethos of a “fair go”.

“A big component of Envato is that we run our business by our value set, and one of those is that people should have a fair go. In that sense, profit sharing should recognise the people who were in the business and who may have left us,” he says.

“On the flip side, if we can mail a cheque to the new offices of an ex-employee, they’ll have an even nicer view of us.”

Noting it has been “one of the most fun parts of my job all year”, Ta’eed has been responsible for providing suggestions to employees about what they could spend their share on, with Envato wanting to emphasise that the windfall should be seen as something that is on top of their normal salaries.

The company is planning to circulate stories of what people spend their earnings on, with Ta’eed saying one employee has already purchased front row seats to a Paul McCartney concert.

“I’ve spent an inordinate amount of time researching all the weird things you can buy. For example, an alpaca isn’t even that expensive, only around $1000,” Ta’eed said.

Envato’s founders have previously told SmartCompany its hiring practices were “more about purpose than about profit”, and Ta’eed says the choice to reward its employees falls comfortably in line with the company’s culture.

One of the company’s “central drivers” for operations involves a concept of “building a sustainable business that creates wealth for many, not just money for some,” says Ta’eed, who believes businesses looking to reward staff should always make sure the rewards are tied in with the business’ overall outcome.

“For a company who’s raising capital and looking to list, rewarding staff with shares when something positive happens makes sense. Additionally, for a company who wants profits, aligning with profit sharing makes sense too,” he says.

“Doing this helps tie staff into the business’ outcomes. When we release our profit shares we also explain the business’ metrics to staff, and we tie it to our fundamental values within the business.

“Businesses should always look at what their means are because if you don’t have profits, profit sharing is meaningless. Don’t create an empty promise, it’s better to do nothing than do something badly.”

Never miss a story: sign up to SmartCompany’s free daily newsletter and find our best stories on Twitter, Facebook, LinkedIn and Instagram.