4 ms·

You might be right, but we are pretty certain that we pay at least 20% more than the larger companies around here. Nobody has requested a salary that we have sa

by polack 11y ago

You might be right, but we are pretty certain that we pay at least 20% more than the larger companies around here. Nobody has requested a salary that we have said no to. The feedback we have been given is that we do pay better, but that it feels safer for them at a larger place or that they have found something more interesting. I understand that the domain (finance) we are in isn't the most attracting for some people, but we try to pitch the exiting parts like scalability and machine learning.

tonyarkles 11y ago
As a curiosity, how much are you paying your consultants vs. your employees? I ask this as a consultant who has had several clients try to hire me as an FTE. The consulting life isn't always awesome, but there are certainly financial and lifestyle perks to it. Here's a few of them: - work remote/from home pretty much whenever I want to - "unlimited" unpaid holidays (as in, if I don't do any work on Tuesday, I don't get paid, but I don't get fired either) - 100% paid "overtime", I get paid for every hour I work at the same rate. No multipliers for extra time, but no expectation that I'm going to work for free. - No penalty for "moonlighting" - If an interesting project comes my way and I can fit it into my schedule, I'm more than welcome to. - My current invoicing rate is $120CAD/hr. I'm definitely not at a 100% utilization on that, but the given the other perks, it works out to a very comfortable living. As an unrelated curiosity, do you have developers right now who you feel are awesome? Do they not having anyone in their close networks that they could try to bring in?
- polack 11y ago
  I think we are paying around 1.6 times more for the consultants right now. I understand that many of them have pretty sweet deals, but at the same time there is a lot of perks being employed over here too, especially if you have kids. We have some great developers now, all of whom came in on personal connections, but it feels like we hit a stop there.
  - tonyarkles 11y ago
    So using my numbers and fudging a little bit for the CAD/USD exchange rate and not knowing where you're located... My consulting rate is $120CAD -> $90USD. $90USD/1.6 = $56.25USD. On a pure hourly basis, that works out to ~$125kUSD/yr. Is that in the ballpark of what you're offering for salary?
p4wnc6 11y ago
Many people are uncomfortable talking about or negotiating salary. So the feedback you are receiving might just be a candidate's polite way of reframing their choice that was actually based on salary. Also, are you factoring equity into the total value of your offer when you say something like '20% more than ...'? I'm not sure it would be reasonable if you are. I experienced a start-up offer once that handled it that way. There was a base salary offer, then a listing of stock options and their current value, and then the "offer" was equal to the sum of the two. That showed me the company has a serious flaw in understanding the riskiness of their own stock, or in empathizing with people who can't use stock options to pay the rent, or both.
- poof131 11y ago
  I think you are exactly right on equity and expose a problem of startups and recruiting that borders on disingenuous at the very least. VCs fund multiple startups expecting many to fail. As I’ve seen first hand, a prototype can land a million dollar convertible note at a $10m cap. For the founders to then turn around and act like 1 percent of the stock is really worth $100k isn’t even close to reality. To account for realistic exits you probably need to cut that by 1/3. So to match a big company offer of $100k salary and $100k equity (of liquid stock), you need to match the salary and offer 3x equity for the compensation to be about equal. Yet most startups won’t match salary and then try to pretend that their equity is worth way more than it is. “We’ll pay you $70k but give you $150k in equity so the comp is more!” When the reality is the comp is actually significantly less if equity is more fairly valued. In this fictitious example, the $220k offered comp is really more like $130k, so about a 30% pay cut from the $200k offered by the big co. Startup equity isn’t worthless, but it needs to be valued at a significant discount which varies by the stage.
  - p4wnc6 11y ago
    This is one of my favorite posts about valuing start-up options: < http://www.danshapiro.com/blog/2010/11/how-much-are-startup-options-worth/ http://www.danshapiro.com/blog/2010/11/how-much-are-startup-... >. But, funny enough, any time I have been in a negotiating position with a start-up, they act deeply offended that I would even ask about liquidity preference, makeup of the board, etc. Many of them refuse to answer these questions. It really flushes out a lot of insecurity and reveals toxic attitudes when founders won't talk frankly about this stuff. Basically, the start-up world is about providing lifestyle employment that subtly devalues and manipulates skilled workers who don't happen to know enough about employment, or haven't had much life experience with it yet. Sometimes this can be profitable for early stage employees, but most often it is only profitable for outright founders and investors. Holders of regular options rarely make money from them, and when they do it rarely is significant in their lives and usually doesn't compensate them for foregone wage they could have earned in other jobs. Unfortunately, there is a steady supply of people who value affiliation with a certain tech in-group, and lifestyle aspects of a job, like foosball tables, beer night, dog-friendly offices, etc., more than competitive wage. Usually these people don't realize they aren't being paid or that their options are not worth what they think they are worth, and later they become dissatisfied with the arrangement but have no negotiating power to change it. Another toxic side effect of this is that some start-ups can have wildly varying pay levels for employees of the same stature in the firm. If two different people are brought in as data scientists, say, but while one of them was completing a Ph.D. the other was working and experienced some of the poor compensation stuff, then when each is hired, one of them will do a better job at negotiating and have a better understanding of what is reasonable. The other may just be happy to have a job after grad school. Fast forward a few months and both of the data scientsts are each doing a great job and are each adding about the same amount of value to the firm, but one is paid more, and by being paid more is probably also viewed as a higher-status employee and may be closer in line for a promotion or an additional raise. Virtually never will the firm "do the right thing" and adjust the lower-paid person up to a matching salary, because there's no market force compelling them to (due to that employee's asymmetric lack of knowledge about the situation). Founders and investors often foolishly think of these information asymmetries as arbitrage opportunities, as one might in a financial market. But for extracting productivity from human workers, it usually doesn't work that way, and you're carrying a lot of risk that the whole company will become a toxic place that can't be saved even by vast amounts of "culture" engineering. Note that rarely is it the founders / investors who are behaving irrationally in these cases (at least not w.r.t. their hiring efforts). It's more often the entry level or bright-eyed engineer who doesn't want to think about unpleasant negotiation or fairness in salary levels, and accepts free lunches in place of 401(k) matching.
brudgers 11y ago
Offering too high a salary may lead candidates to believe that there's a problem analogous to an individual who is willing to pay a higher interest rate. I think the right candidates are those who are already excited about scaling systems and machine learning [and have a strong track record]. I suspect that that pool would also contain a high proportion of people who have previously worked at startups.
pyb 11y ago
Many developers will be looking for a larger premium (50-100%) to work in finance, rather than a tech company. To express this with arbitrary numbers: Who'd actively choose Goldman Sachs at 120k over Google at 100k ?
- pyb 11y ago
  Also, for a European fintech startup, not being located in London is a riskier choice re. staffing.

by polack 11y ago

tonyarkles 11y ago

As a curiosity, how much are you paying your consultants vs. your employees? I ask this as a consultant who has had several clients try to hire me as an FTE. The consulting life isn't always awesome, but there are certainly financial and lifestyle perks to it. Here's a few of them: - work remote/from home pretty much whenever I want to - "unlimited" unpaid holidays (as in, if I don't do any work on Tuesday, I don't get paid, but I don't get fired either) - 100% paid "overtime", I get paid for every hour I work at the same rate. No multipliers for extra time, but no expectation that I'm going to work for free. - No penalty for "moonlighting" - If an interesting project comes my way and I can fit it into my schedule, I'm more than welcome to. - My current invoicing rate is $120CAD/hr. I'm definitely not at a 100% utilization on that, but the given the other perks, it works out to a very comfortable living. As an unrelated curiosity, do you have developers right now who you feel are awesome? Do they not having anyone in their close networks that they could try to bring in?

polack 11y ago
I think we are paying around 1.6 times more for the consultants right now. I understand that many of them have pretty sweet deals, but at the same time there is a lot of perks being employed over here too, especially if you have kids. We have some great developers now, all of whom came in on personal connections, but it feels like we hit a stop there.
- tonyarkles 11y ago
  So using my numbers and fudging a little bit for the CAD/USD exchange rate and not knowing where you're located... My consulting rate is $120CAD -> $90USD. $90USD/1.6 = $56.25USD. On a pure hourly basis, that works out to ~$125kUSD/yr. Is that in the ballpark of what you're offering for salary?

p4wnc6 11y ago

Many people are uncomfortable talking about or negotiating salary. So the feedback you are receiving might just be a candidate's polite way of reframing their choice that was actually based on salary. Also, are you factoring equity into the total value of your offer when you say something like '20% more than ...'? I'm not sure it would be reasonable if you are. I experienced a start-up offer once that handled it that way. There was a base salary offer, then a listing of stock options and their current value, and then the "offer" was equal to the sum of the two. That showed me the company has a serious flaw in understanding the riskiness of their own stock, or in empathizing with people who can't use stock options to pay the rent, or both.

poof131 11y ago
I think you are exactly right on equity and expose a problem of startups and recruiting that borders on disingenuous at the very least. VCs fund multiple startups expecting many to fail. As I’ve seen first hand, a prototype can land a million dollar convertible note at a $10m cap. For the founders to then turn around and act like 1 percent of the stock is really worth $100k isn’t even close to reality. To account for realistic exits you probably need to cut that by 1/3. So to match a big company offer of $100k salary and $100k equity (of liquid stock), you need to match the salary and offer 3x equity for the compensation to be about equal. Yet most startups won’t match salary and then try to pretend that their equity is worth way more than it is. “We’ll pay you $70k but give you $150k in equity so the comp is more!” When the reality is the comp is actually significantly less if equity is more fairly valued. In this fictitious example, the $220k offered comp is really more like $130k, so about a 30% pay cut from the $200k offered by the big co. Startup equity isn’t worthless, but it needs to be valued at a significant discount which varies by the stage.
- p4wnc6 11y ago
  This is one of my favorite posts about valuing start-up options: < http://www.danshapiro.com/blog/2010/11/how-much-are-startup-options-worth/ http://www.danshapiro.com/blog/2010/11/how-much-are-startup-... >. But, funny enough, any time I have been in a negotiating position with a start-up, they act deeply offended that I would even ask about liquidity preference, makeup of the board, etc. Many of them refuse to answer these questions. It really flushes out a lot of insecurity and reveals toxic attitudes when founders won't talk frankly about this stuff. Basically, the start-up world is about providing lifestyle employment that subtly devalues and manipulates skilled workers who don't happen to know enough about employment, or haven't had much life experience with it yet. Sometimes this can be profitable for early stage employees, but most often it is only profitable for outright founders and investors. Holders of regular options rarely make money from them, and when they do it rarely is significant in their lives and usually doesn't compensate them for foregone wage they could have earned in other jobs. Unfortunately, there is a steady supply of people who value affiliation with a certain tech in-group, and lifestyle aspects of a job, like foosball tables, beer night, dog-friendly offices, etc., more than competitive wage. Usually these people don't realize they aren't being paid or that their options are not worth what they think they are worth, and later they become dissatisfied with the arrangement but have no negotiating power to change it. Another toxic side effect of this is that some start-ups can have wildly varying pay levels for employees of the same stature in the firm. If two different people are brought in as data scientists, say, but while one of them was completing a Ph.D. the other was working and experienced some of the poor compensation stuff, then when each is hired, one of them will do a better job at negotiating and have a better understanding of what is reasonable. The other may just be happy to have a job after grad school. Fast forward a few months and both of the data scientsts are each doing a great job and are each adding about the same amount of value to the firm, but one is paid more, and by being paid more is probably also viewed as a higher-status employee and may be closer in line for a promotion or an additional raise. Virtually never will the firm "do the right thing" and adjust the lower-paid person up to a matching salary, because there's no market force compelling them to (due to that employee's asymmetric lack of knowledge about the situation). Founders and investors often foolishly think of these information asymmetries as arbitrage opportunities, as one might in a financial market. But for extracting productivity from human workers, it usually doesn't work that way, and you're carrying a lot of risk that the whole company will become a toxic place that can't be saved even by vast amounts of "culture" engineering. Note that rarely is it the founders / investors who are behaving irrationally in these cases (at least not w.r.t. their hiring efforts). It's more often the entry level or bright-eyed engineer who doesn't want to think about unpleasant negotiation or fairness in salary levels, and accepts free lunches in place of 401(k) matching.

brudgers 11y ago

Offering too high a salary may lead candidates to believe that there's a problem analogous to an individual who is willing to pay a higher interest rate. I think the right candidates are those who are already excited about scaling systems and machine learning [and have a strong track record]. I suspect that that pool would also contain a high proportion of people who have previously worked at startups.

pyb 11y ago

Many developers will be looking for a larger premium (50-100%) to work in finance, rather than a tech company. To express this with arbitrary numbers: Who'd actively choose Goldman Sachs at 120k over Google at 100k ?

pyb 11y ago
Also, for a European fintech startup, not being located in London is a riskier choice re. staffing.