We need to rethink employee compensation • Hacker News Board

Re: We need to rethink employee compensation

#401

Post by smileysteve » Thu, Jun 25, 2015, 6:29 PM UTC

ryandrake wrote: post #91

MCRed wrote: post #60

Earlier quoted context omitted.

I've made more money investing in stocks and options than I have from options. Over 20 years as an employee (so excluding time as a founder) my returns from investments is 2-3X the return from startup stock options. And that's as only a part time investor. I like sure things (like I knew in 2001 from an understanding of economics that there would be a housing bubble and that it would eventually burst. I was never abl…

But that's not "getting rich off of salary". That's gambling on the stock market. Sure, there are plenty of people who hit that jackpot too, but let's not lump that together with the idea that 9-5 salary is a way to get rich.

> That's gambling on the stock market.

A gambling game where the house historically doesn't win (if you don't try to day trade). And historically, your money doubles in ~7 years.

> Sure, there are plenty of people who hit that jackpot too

Yes, many people hit that jackpot.

> let's not lump that together with the idea that 9-5 salary is a way to get rich.

There are many well off upper middle class that own multiple homes this way and retire at a reasonable if not early age, with a net worth that will leave substantial amounts to their kids.

Re: We need to rethink employee compensation

#402

Post by dogma1138 » Thu, Jun 25, 2015, 6:41 PM UTC

walshemj wrote: post #380

dogma1138 wrote: post #378

Earlier quoted context omitted.

The UK has an allowance for a company option plan which allows employees to buy stock also. Save As You Earn is different, you get options, but you don't buy in for them directly. SAYE allows the employer to deduct upto 225 GBP a month (pre tax) from the employees salary and put it into an investment scheme that ties that money into a share options plan. The shares have a set value at the entry into the scheme and th…

How are unvested and unexercised options in the USA any different to share save? you don't get the dividends until you vest and you cant vote them until they vest. And BT does have other share schemes I know as my PM got some as a bonus for his work for the millennium dome - these tend to be kept quiet in fact my pm though it was a joke by some of v senior mates

That you actually don't buy anything? Until the Sharesave contract ends the money you "save" is just a normal savings account with a fixed interest rate set by HMRC/Treasury.

Basically BT gave you a very wierd option, the strike price is granted when you enter the SAYE contract e.g. 2010, but the actual share option is given when the contract matures 2013/2015.

To put it in a more simple term, SAYE is a fancy "ISA", basically some one in the British government figured it out that most employees cannot buy into stock options at any reasonable strike price, SAYE only allows you to give a discount of 20% from the stock price on contract entry. After 3/5 years you get a lump sum which you saved + the interest rate and a bonus which is derived from the tax allowance SAYE savings. You can use that bonus to exercise the option you got based on the strike price you had 3 or 5 years ago if the difference is good enough and you buy the stocks and sell them you might get a very nice amount which you pay capital gain tax on, if there's not much difference or the stock price is lower than the option strike price well then you pretty much saved about as much as you would in your minimal interest cash ISA.

What you'r PM got i think is SIP, Share Incentive Plan it's another approved scheme that allows companies to grant company stock to employees, it's works very differently than SAYE. No fixed rate, no tax free bonus, it's taxed as income tax yada yada.

Re: We need to rethink employee compensation

#403

Post by StillBored » Thu, Jun 25, 2015, 10:15 PM UTC

I would like to see someone actually attempt to quantify the chance a random employee (that comes in post series A) at a random startup actually cashes out more than a years salary from stock options.

Everyone would like to think that working their ass off at some start-up increases the chance of being in the big leagues, but I just have never seen it personally happen.

I've spent 15+ years working at small companies/startups, and I have yet to see options that actually resulted in a fraction of what my salary was. I also don't personally know anyone that hit the big time either.

So, do it because you love it and are happy with your current situation, not because you think your going to hit the lottery. I have now twice in my life created products that sold well, and made everyone enough money to live off. But never have I ever even been near a situation where I created a product that made tens of billions. And frankly I don't know anyone who has done that. The few millions a product got sold for here or there, wasn't enough to put even $100k in any single persons pocket.

Re: We need to rethink employee compensation

#404

Post by AdieuToLogic » Fri, Jun 26, 2015, 1:06 AM UTC

Retra wrote: post #398

AdieuToLogic wrote: post #352

I read the article, based on the title, thinking "I wonder what the author is going to address regarding employee compensation." Was it addressing performance? Or perhaps socially valuable contributions which have been traditionally under-compensated (such as teaching)? No. It was bemoaning how stock options offered to employees by a corporation might, might , be "worth less" when restricted sale is applicable. Just…

Who are you making that argument to? If your company is making absurd profits, you should be tap into it as an employee. Comparing your earning to people elsewhere isn't going to mean anything unless the money is there as well. And saying "Oh, but other people don't make any money" doesn't mean that they shouldn't make money. Or that people in the tech sector developing the social tools and economic methods to make f…

> Who are you making that argument to?

The commentary is meant for all, which is why I posted it on its own and not in response to a particular person. This is also why I said "'MCRed' and 'varelse' are only two representative examples. Other statements in this thread would serve equally well and I bear no malice toward either 'MCRed' or 'varelse.'"

My intent was to give a different perspective to a person reading it.

> If your company is making absurd profits, you should be tap into it as an employee.

No, a company which employs a person agrees to remunerate the employee at the rate agreed upon by both parties. The amount of profit a company makes is only relevant to this in the context of how long the employee's check(s) will cash.

> You're not going to convince people that they should except peanuts from a multi-billion dollar industry because "there are starving children in Africa(TM)." That's not a progressive argument.

This is a straw man[1] as I said nothing about convincing people to accept "peanuts from a multi-billion dollar industry." What I did say is that people in tech (myself included) need to have perspective that not everyone makes the kind of money we make. Ignoring this leads to situations such as the rally in SoMa last month entitled "evict techies" and other similar expressions of resentment.

Feel free to ignore this perspective, me, or anything anyone else says or does. It matters not to me. Based on the reception my original post has received, it looks like I need to learn to do the same.

1 - https://en.wikipedia.org/wiki/Straw_man

Re: We need to rethink employee compensation

#405

Post by ConfuciusSay » Fri, Jun 26, 2015, 2:00 AM UTC

bkeroack wrote: post #302

jalonso510 wrote: post #136

Earlier quoted context omitted.

It's perhaps even more clear if you just work in sales rather than engineering for a tech company. Then you have predefined, measurable performance goals and are paid for meeting or exceeding for them each quarter.

Be careful what you wish for. You might end up with "Scrum" and a de facto "story point" weekly/daily quota.

Lines of code. >_<

Re: We need to rethink employee compensation

#406

Post by arbitrage314 » Fri, Jun 26, 2015, 4:48 PM UTC

billmalarky wrote: post #213

arbitrage314 wrote: post #168

I've made this point before, but since it's a bit relevant here, I'll make it again (sorry to repeat): If you're primarily interested in making money, or if you love the startup but not the compensation, you should NOT work at that startup. If you're a good developer, you can get a better deal by working at an established company and simply investing. This has been true for every startup offer I've ever seen. Ever. I…

How are you able to find opportunities to invest in early stage startups though?

Although it's sometimes a bit of work to find these opportunities, there are enough people with good ideas who need money these days. Friend of a friend-type stuff.

Occasionally, after talking to a startup about a potential employment opportunity, I'll ask if I can simply invest. They are usually flattered that someone would be so excited, and they are usually quite happy to take your money.

A final option is to invest in one of these new index funds that track startup performance. E.g., the SharesPost 100.

Re: We need to rethink employee compensation

#407

Post by arbitrage314 » Fri, Jun 26, 2015, 4:55 PM UTC

reinhardt wrote: post #224

arbitrage314 wrote: post #168

I've made this point before, but since it's a bit relevant here, I'll make it again (sorry to repeat): If you're primarily interested in making money, or if you love the startup but not the compensation, you should NOT work at that startup. If you're a good developer, you can get a better deal by working at an established company and simply investing. This has been true for every startup offer I've ever seen. Ever. I…

> most people who work at startups aren't interested in money. That's a bold assertion, bolder than "most people who work at startups usually don't get to have competing offers for $250k to pass up"

Even if your competing offer is ~$150k, it still makes sense to not work at the startup ALMOST every time (given that you are trying to maximize money--most are not). I've seen a few exceptions, but startup offers are usually that bad.

Also, based on my convsations with literally hundreds of startup engineers, I have seen three trends:

1. They care very little about how much they are getting paid due to being passionate about their work (awesome!)

2. If they do care about money, they are under the false belief that their startup options are worth more than than that startup's investors were willing to pay for them in the secondary market (i.e., the price of a nearby round)

3. They are almost always talented enough to get a high-paying job somewhere else

Re: We need to rethink employee compensation

#408

Post by arbitrage314 » Fri, Jun 26, 2015, 4:59 PM UTC

Bahamut wrote: post #313

arbitrage314 wrote: post #168

I've made this point before, but since it's a bit relevant here, I'll make it again (sorry to repeat): If you're primarily interested in making money, or if you love the startup but not the compensation, you should NOT work at that startup. If you're a good developer, you can get a better deal by working at an established company and simply investing. This has been true for every startup offer I've ever seen. Ever. I…

This is a fascinating idea - seems to be a lot less of a lottery than employee options. Are there any other aspects that should be considered?

I can't think of any important ones. As always, manage your risk. Even if you believe 99% in something, you should not put all of your money into it:

https://en.wikipedia.org/wiki/Kelly_criterion

Re: We need to rethink employee compensation

#409

Post by billmalarky » Fri, Jun 26, 2015, 9:21 PM UTC

arbitrage314 wrote: post #406

billmalarky wrote: post #213

Earlier quoted context omitted.

How are you able to find opportunities to invest in early stage startups though?

Although it's sometimes a bit of work to find these opportunities, there are enough people with good ideas who need money these days. Friend of a friend-type stuff. Occasionally, after talking to a startup about a potential employment opportunity, I'll ask if I can simply invest. They are usually flattered that someone would be so excited, and they are usually quite happy to take your money. A final option is to inve…

Wow that's a pretty bold and interesting method. Have you ever tried simply cold emailing? That seems like it could work as well if this works.

Re: We need to rethink employee compensation

#410

Post by JohnyLy » Sat, Jun 27, 2015, 5:07 AM UTC

benjiweber wrote: post #351

JohnyLy wrote: post #331

Earlier quoted context omitted.

I totally agree. I don't like the term "working hard", it doesn't mean anything. I'd rather use "efficiency". If you work 70 hours but you do as much as someone working 20 hours, I don't consider that you are working hard. About the low wages for startup employees with high equity; I don't find it right as if you want to attract great workers, you need to offer them something now and not only something which might co…

I'd rather use "effectiveness" than "efficiency". Doing in in 20hrs what takes someone else 70hrs is efficient, but it may not be effective. There's no point getting loads done if the work is low value. It's more important to focus on doing valuable work than getting lots done imo.

I agree with effectiveness