The notion that fast growth doesn't or shouldn't go with profitability (which can then be distributed), is a recent premise (post mid 1990s), made possible only by bubbling private capital markets (and the dotcom bubble before it).
In terms of fast, are we talking 100% annual growth? 50%? 20%? SAS is not fast growing for example compared to recent Facebook performance. Things have turned out extremely well for them. They've routinely been regarded as one of the top places in the US to work, which without question has helped them attract higher caliber employees. No public stock necessary, no need to drown in red ink for artificially fast growth.
Would you rather work at SAS for 30 years earning a lucrative profit share (their CEO has talked about routinely signing off on 15 and 30 year awards for employment longevity among employees), or risk working for FireEye or Splunk or Box for seven years until they run out of money and are forced into an acquisition as they run the growth & negative profit model into an inevitable wall?
Ultimately it's a choice, as to what a company decides to focus more heavily on. It can also be portioned, you don't have to give up all growth for profit sharing.
To use one outsized example, Facebook staying private and implementing a profit sharing arrangement with its employees and shareholders in 2011, would have been a vastly superior deal for most of the people involved. They'll hit ~$16b in net income this year. They could nearly make every one of their employees a millionaire in one year, in 2018, via profit sharing.
Most of these private companies will not remain particularly fast growing for very long, not more than 5-10 years tops. You can see a lot of these now-public red ink machines still blowing their brains out with this failed business approach (growth over profit), while their growth slow dramatically and the red ink continues. Eg: Box, Splunk, Workday, FireEye.
It's the same business model mistake Twitter made. They could have been radically profitable, instead they mistakenly focused on growing the size (bloat) of the company. In the end, they remain unprofitable, and the grow slows to nothing. Then what? Forced sale, forced firings, etc.
"Ultimately it's a choice, as to what a company decides to focus more heavily on."
I think you are conflating two issues.
If any company were growing at more than 50% a year - there would probably not be much in the way of 'profit share' because it would be a really bad move. Those profits should almost assuredly be 're-invested' in the growth of the company.
The 'profit share to employees' issue is really about a fundamentally different way to incentivize staff than other means.
" Facebook staying private and implementing a profit sharing arrangement with its employees and shareholders in 2011, would have been a vastly superior deal for most of the people involved. They'll hit ~$16b in net income this year. They could nearly make every one of their employees a millionaire in one year, in 2018, via profit sharing."
No - there is absolutely no reason that FB should be handing out 'a million dollars in profit' to each employee? Why on earth would it do that? It doesn't have to. Every company will pay more or less market wages.
If you owned FB, why on earth would you want managers to be paying people 10x what they need to?
FB private/public thing doesn't matter.
If they stayed private, they'd have to compensate in 'rev share' something roughly along the lines of the value of the stock options they handed out.
"They could have been radically profitable, instead they mistakenly focused on growing the size (bloat) of the company"
???
You're contradicting yourself here. The 'bloat' you're talking about is payment to employees. So you're saying they should have paid people less?
Yes - I agree - they could have been profitable a long time ago, but they are 'not profitable' precisely because they are giving away too much 'revenue share' in the form of 'salary' to too many people.
In terms of fast, are we talking 100% annual growth? 50%? 20%? SAS is not fast growing for example compared to recent Facebook performance. Things have turned out extremely well for them. They've routinely been regarded as one of the top places in the US to work, which without question has helped them attract higher caliber employees. No public stock necessary, no need to drown in red ink for artificially fast growth.
Would you rather work at SAS for 30 years earning a lucrative profit share (their CEO has talked about routinely signing off on 15 and 30 year awards for employment longevity among employees), or risk working for FireEye or Splunk or Box for seven years until they run out of money and are forced into an acquisition as they run the growth & negative profit model into an inevitable wall?
Ultimately it's a choice, as to what a company decides to focus more heavily on. It can also be portioned, you don't have to give up all growth for profit sharing.
To use one outsized example, Facebook staying private and implementing a profit sharing arrangement with its employees and shareholders in 2011, would have been a vastly superior deal for most of the people involved. They'll hit ~$16b in net income this year. They could nearly make every one of their employees a millionaire in one year, in 2018, via profit sharing.
Most of these private companies will not remain particularly fast growing for very long, not more than 5-10 years tops. You can see a lot of these now-public red ink machines still blowing their brains out with this failed business approach (growth over profit), while their growth slow dramatically and the red ink continues. Eg: Box, Splunk, Workday, FireEye.
It's the same business model mistake Twitter made. They could have been radically profitable, instead they mistakenly focused on growing the size (bloat) of the company. In the end, they remain unprofitable, and the grow slows to nothing. Then what? Forced sale, forced firings, etc.