I was interested to read an article by buffer CEO Joel Gascoigne, where he published the company’s financials for January.
I’ve been a buffer user for years — I signed up the year it was released — and it’s always been impressive just how much they share through their blog. I think that’s what has made following their founders, Joel and Leo, and reading their updates so interesting to me over the last few years. I’m always interested in the intricacies of how businesses work, and in particular to see how an exploding start-up like buffer has performed financially. From a curiosity standpoint, I love knowing just how much money they’re making.
For example, they report that they have $361,000 cash in the bank. At first read this sounded pretty hefty, but is it really? In wages alone, for 16 people at an average take-home salary of, say $5,433k/month (roughly worked out from their list of salaries), that’s $around $86k/month in wages alone. Add to that the operations costs of operating in 12 cities around the world, and the monthly out-going costs seem pretty high. Far be it for my backyard accounting to determine any proper conclusions though.
So committed are the buffer team to transparency, in December last year they introduced open salaries. Open salaries means just that — they publish the wages of everyone who works at buffer, and also the formula they use to calculate them.
The salary formula is:
Salary = job type X seniority X experience + location (+ $10K if salary choice)
job type = base
- happiness hero = $45,000
- content crafter = $50,000
- engineer = $60,000
- designer = $60,000
- Operations officer base = $70,000
- Executive officer base = $75,000
seniority = base multiplier
- Senior + 5% base and 3k/$m revenue
- Lead +7% base and 4k/$m revenue
- VP + 10% and 6k/$m revenue
- C-level +20% and 8k/$m revenue
- COO +20% and 10k/$m revenue
- CEO + 20% and 12k/$m revenue
experience = multiplier
- Master: 1.3X
- Advanced: 1.2X
- Intermediate: 1.1X
- Junior: 1X
location = additional
- A: +$22K (e.g. San Francisco, Hong Kong, Sydney, London, Paris, New York)
- B: +$12K (e.g. Nashville, Birmingham, Vienna, Austin, Vegas, Tel Aviv)
- C: +$6K (e.g. Talinn, Warsaw, Bucharest, Santiago)
- D: +$0K (e.g. Manila, Delhi, Hanoi)
equity / salary choice
- you get a choice of more equity or more salary, if you choose salary, you get +$10K
The CEO Joel (who pulls in $158,800pa if you’re interested) wrote:
“Sticking to radical transparency was probably both one of the most frightening and exciting things to do over the past months. It meant to open up and make ourselves extremely vulnerable for ideas, since they were easily accessible to everyone on the team.”
However at the same time remarked:
“It feels incredibly liberating to put this out in the open”
The only potential obstacle with this model is making sure the employees share the same enthusiasm for revealing their salary to the public. But considering they had 3,864 applications to their job ads in January 2014 alone, their approach to open salaries doesn’t seem to be scaring anybody off.
As companies, organisations and governments tend to default to more secrecy and less transparency, particularly when things are going wrong, it’s really interesting to see just how much interest buffer have been able to generate by doing just the opposite.
image credit: thefost on flickr