Buffer’s ownership now and in the future
Up: § 2023 Shareholder Letter Index
As of the end of 2023, Buffer’s ownership break down is as follows:
- Founder CEO: 57.12% of issued, 44.49% fully diluted
- Investors: 38.06% of issued, 29.64% fully diluted
- Teammates: 1.16% of issued, 6.75% fully diluted
- Alumni: 3.66% of issued, 5.86% fully diluted
- Vendors: 0.2% fully diluted
Our ownership breakdown by share class:
- Common: 91.4% of issued, 71.2% fully diluted
- Series AA (seed): 5.6% of issued, 4.4% fully diluted
- Series A: 3.0% of issued, 2.3% fully diluted
- Stock options: 8.9% fully diluted
- Remaining option pool: 13.0% fully diluted
- Warrants: 0.2% fully diluted
We have raised just $4M in total over our 13 year journey, and our last round of funding was in 2014. Since 2017, we have repurchased 21.2% of fully diluted shares, increasing the value of existing shareholders. This has also enabled us to shift the shareholder base to a group aligned with our long-term approach.
Given our strong bank balance going into a period of decline, with some investors seeking liquidity, we have taken a number of opportunities to repurchase stock in the past few years. As we started to see the signs of a turnaround year and our journey back towards growth with a healthy bank balance, we took the opportunity to carry out three stock repurchases in 2023, at a collective cost of $889K.
For most technology companies, the path to liquidity is through an exit, i.e. being acquired or going public. As a company with plans to continue to exist independently for the long-term, our approach to liquidity needs to be different than the norm.
The topic of achieving liquidity in alignment with our independence and long-term goals is one I’ve given considerable thought to over the years. At times, I even considered whether it makes most sense to do away with stock options, and instead focus more on profit sharing.
However, I’d like to give team members the opportunity for real ownership in Buffer, and for those who stay at Buffer and grow in seniority to become meaningful genuine owners of the company. To accomplish this, we need a way to issue options for new team members, and additional options for tenure and growth in impact.
An ownership mindset is a core part of our culture and strategy. Having a team who feel a genuine sense of ownership is integral to making the equation of Buffer as a company work. We provide a lot of flexibility and aim to have a working environment that enables people to thrive and contribute long-term without burning out. This doesn’t work if team members don’t feel a connection to and a sense of ownership of Buffer. The ownership mindset is one element that motivates people to go above and beyond in order to make Buffer successful.
There are few ways more powerful in creating an ownership mindset in the team, than giving people true ownership in the company. Combining this with documentation and education that helps in understanding that ownership stake they hold, is where it becomes especially effective. For this reason, in 2024 we will be rolling out a new approach to equity and stock options with a new formula with initial grants as well as evergreen (tenure) and promotion grants. I plan to use sizable portion of the remaining option pool to get this off the ground, accounting for future team growth too.
To make Buffer sustainable long-term with stock options and genuine ownership, as well as liquidity, without a plan to exit; I have started to reflect on opportunities for regular liquidity events where we invite long-term minded investors to purchase stock from team members, alumni and investors who have held Buffer stock over the long-term. In this way, I believe we can achieve a long-term, independent company with great returns over time for everyone involved.