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Oxide’s compensation model: how is it going?

oxide.computer

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Re: Oxide’s compensation model: how is it going?

#11

Post by ahl »

TZubiri wrote: post #7
jszymborski wrote: post #3

I wonder why not just make it an employee-owned cooperative at that point? I understand there are funding considerations, and founders won't get the lion share, but it fits the stated values better.

But compensation is the opposite of ownership? And there's no mention of equity here. In fact equity compensation is very common in SF startups.

Equity is mentioned in the previous post:

> Some will say that we should be talking about equity, not cash compensation. While it’s true that startup equity is important, it’s also true that startup equity doesn’t pay the orthodontist’s bill or get the basement repainted. We believe that every employee should have equity to give them a stake in the company’s future (and that an outsized return for investors should also be an outsized return for employees), but we also believe that the presence of equity can’t be used as an excuse for unsustainably low cash compensation. As for how equity is determined, it really deserves its own in-depth treatment, but in short, equity compensates for risk – and in a startup, risk reduces over time: the first employee takes much more risk than the hundredth.

Re: Oxide’s compensation model: how is it going?

#12

Post by ziddoap »

throwaway81523 wrote: post #8

Is there a 1 sentence description of the model? It wasn't apparent in a minute of scrolling down the long winded blog post.

In short, they pay everyone the same as they pay themselves.

"We decided to do something outlandishly simple: take the salary that Steve, Jess, and I were going to pay ourselves, and pay that to everyone. The three of us live in the San Francisco Bay Area, and Steve and I each have three kids; we knew that the dollar figure that would allow us to live without financial distress – which we put at $175,000 a year – would be at least universally adequate for the team we wanted to build. And we mean everyone literally: as of this writing we have 23 employees, and that’s what we all make."

Later update:

"Since originally writing this blog entry in 2021, we have increased our salary a few times, and it now stands at $207,264. We have also added some sales positions that have variable compensation, consisting of a lower base salary and a commission component."

Re: Oxide’s compensation model: how is it going?

#13

Post by steveklabnik »

endianswap wrote: post #2

Wish they would've gone into more detail about the sales exemption - it seems to undermine many of the other points on the page...

I forget the details, but the rough shape of it is that sales makes a lower base salary, but with a commission component that can lead to a higher salary than the standard one. I can't remember if there's also some sort of cap.

You could take it as undermining those other points, but I don't. (I am, of course, biased.) We didn't do this because we needed to address some failing of these other things, we did it because sales has an incredibly strong culture of this compensation model, to the degree that it would be difficult to hire otherwise. That isn't an issue with other staff.

Additionally, some of the points don't work the same way with sales, that is, the variability is easily measured and objective. Sales people don't write promo packets, you count up the amount they sold.

Re: Oxide’s compensation model: how is it going?

#14

Post by skadamat »

endianswap wrote: post #2

Wish they would've gone into more detail about the sales exemption - it seems to undermine many of the other points on the page...

Honestly it makes sense and resembles how other companies pay sales people. Lower base salary than other roles in the company for similar years of experience (roughly) but with a commission component that's some percentage of each sale. Commission is a big big part of sales culture that I suspect is hard to eliminate in an effort to be different.

What's interesting is that often times the commission has no cap, so top sales people can take home higher income than even than executives (at least in cash compensation).

But to the commenter's point, true transparency would share the commission % as well :)

Re: Oxide’s compensation model: how is it going?

#15

Post by [deleted] »

setheron wrote: post #6
jszymborski wrote: post #3

I wonder why not just make it an employee-owned cooperative at that point? I understand there are funding considerations, and founders won't get the lion share, but it fits the stated values better.

Good point. The other aspect that I didn't buy too much was the original blog entry claims the salary is enough since the founders themselves have kids and are living in San Francisco. They are coming from a point of economic safety from prior successful ventures and maybe are on multiple boards with other income streams. Anyways. I like the intent so I won't be too critical.

[deleted]

Re: Oxide’s compensation model: how is it going?

#17

Post by steveklabnik »

setheron wrote: post #6
jszymborski wrote: post #3

I wonder why not just make it an employee-owned cooperative at that point? I understand there are funding considerations, and founders won't get the lion share, but it fits the stated values better.

Good point. The other aspect that I didn't buy too much was the original blog entry claims the salary is enough since the founders themselves have kids and are living in San Francisco. They are coming from a point of economic safety from prior successful ventures and maybe are on multiple boards with other income streams. Anyways. I like the intent so I won't be too critical.

The Bay Area is expensive, but I assure you that many families with kids live on less than $207,264.

That said, everyone has their own personal requirements, and startups aren't for everyone. Around a quarter of the company, last I checked, lives in the Bay area, so while we obviously miss out on some good people who want more money, we haven't had an issue with finding enough people who are happy with the compensation.

(I myself took a pay cut to join Oxide, but I live in Austin, which isn't cheap but also isn't as expensive.)

Re: Oxide’s compensation model: how is it going?

#18

Post by tptacek »

endianswap wrote: post #2

Wish they would've gone into more detail about the sales exemption - it seems to undermine many of the other points on the page...

Especially if you're doing account manager-type high-touch sales, which I assume Oxide is given its product, it would be difficult to hire strong sales people at all without variable compensation. It's best to think of sales as an entirely different kind of animal as the rest of the company. Like the post says, when they're making lots of money, everybody else is making even more money.

One thing people who have never managed direct sales teams might not immediately grok is: good sales people are experts at gaming incentive schemes. Their work and output adapts to their comp schemes in ways nobody else's does. If you cap a salesperson's comp in a quarter, they will work to move sales out of that quarter; exactly what you don't want.

Re: Oxide’s compensation model: how is it going?

#19

Post by tptacek »

jszymborski wrote: post #3

I wonder why not just make it an employee-owned cooperative at that point? I understand there are funding considerations, and founders won't get the lion share, but it fits the stated values better.

Presumably because it would be untenable to fund a hardware startup that needs to carry inventory as an employee-owned co-op.

Re: Oxide’s compensation model: how is it going?

#20

Post by jasode »

jszymborski wrote: post #3

I wonder why not just make it an employee-owned cooperative at that point? I understand there are funding considerations, and founders won't get the lion share, but it fits the stated values better.

>I wonder why not just make it an employee-owned cooperative at that point? I understand there are funding considerations,

The ~75 employees probably don't have enough personal money to buy out the previous investors to convert it into a true workers co-op. Reportedly ~$78 million total raised (over 3 rounds) and last round was $44 million:

https://www.google.com/search?q=0xide+raised+funding

https://www.crunchbase.com/organization/oxide/company_financ...

The alternative of turning it into a hybrid/partially employee-owned company where the VC investors still own their % shares is still too expensive for employees to "buy" because you're supposed to value the shares at the same present price as the investors' shares. (We're not talking backdating stock options at an artificially lower price here.)

I guess one could create loans where company let's employees pay for their ownership over time. The current investors probably won't agree to that.

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