Operating Principles

Up: § Buffer thoughts and decisions

AKA "The Squid"

  • Performance / Accountability
    • High performing team with intrinsically motivated accountability
    • No room for people to coast, otherwise efficiency goals won’t be met
    • Strong leaning towards individual accountability and management, with hands-on flexible managers who do not specifically seek power and titles.
  • Career growth
    • A culture and individuals who value company success and personal growth over industry-recognizable titles and specialized skill development.
    • Team members are flexible to serve the company in whatever capacity is needed to reach the next level of success.
  • Information Access
    • High company-level and individual transparency creates strong bonds and leads to better and faster decisions
    • Transparency breeds trust from the team and shareholders in company direction
  • Team Size / Efficiency
    • Tight-knit, small-for-revenues team
    • Aiming for general steady state 15-25% EBITDA margin
    • Employee Expenses should be around 60-70% of revenues. This is a rough directional suggestion to highlight this approach, not hard-and-fast rule.
    • i.e. with $2m in monthly revenue, we can sustain $1.2-1.4m in employee expenses. At $14k/mo all-in per employee, that’s 85-100 people when we reach $2m in revenue, roughly $24m ARR.
    • Generally, as we grow, efficiency should go up, so these numbers should increase. At $40-50m ARR, perhaps 30-35% EBITDA margin.
  • Profitability
    • Goal to generally be operating profitably, 15-25% EBITDA margin.
    • This allows us to provide generous compensation and benefits.
    • This also gives us the cashflow to create regular liquidity, and allow us to meet our ownership and control goals while ensuring people can flow in and out of ownership of Buffer
  • Ownership and Control
  • Funding
  • Time horizon
    • Goal for company to exist and thrive for decades
    • No general plans to sell or go public
  • Ambition, scale, growth rate
    • Company aims to continue to grow at a regular and sustained pace
    • Goal growth levels considered in a graded scale, i.e. 0-10% is red zone, 10-40% is green zone, 40%+ is also a red zone
    • We must be growing in order to serve more customers to fulfill our vision and mission, and to increase generosity in compensation to sustain continued growth from a tight-knit team
    • There is no desire to stay small per se, rather, the goal is to remain highly efficient, small-for-revenues. We see a future where Buffer is hundreds of people and makes over $100m in revenue.
  • Returns
    • Bias towards long-term focused returns, i.e. dividends
    • This creates alignment with shareholders for long-term company path
    • Since we have no plans to sell, we must create a more liquid share environment; more free flowing and regular trading of stock
    • Availability of short-term returns to ensure stability and ownership levels, i.e. share buybacks
    • Annual liquidity program will allow buying and selling of stock
    • Company will tightly control liquidity program to meet ownership / control goals.
  • Compensation + Benefits
    • Generous compensation and benefits allows us to attract and retain high performing people who value ambition and autonomy alongside lifestyle and sustainability
    • We will continue to be more generous, and as we do, we must also have high performance and accountability
    • Higher than average equity ownership for team members, with lower than average short-term potential for returns. i.e. Team members can genuinely become owners and receive dividends and build significant wealth long-term, but cannot expect a fast-track unicorn lottery exit.
    • A mechanism is needed to allow team members to become genuine shareholders / owners in the company (own shares rather than hold options), to allow for receiving of dividends and voting on important decisions.
    • This creates incentives to stay long-term, directly contribute to Buffer’s success, and continue to grow personally with Buffer.
  • Teammate Tenure
    • Value longer tenured teammates who continue to grow
    • When growth stalls, be comfortable with people moving on
    • A higher than average tenure, with continuous personal growth, will allow us to perform better than industry average as a company
    • We highly value outside experience, however due to our very unique approach and path, we put an emphasis on values-fit and taking time to learn the culture