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Reading this reminds me of "The Elves Leave Middle Earth – Sodas Are No Longer Free," by Steve Blank.[1] Here's the key passage: "...the new CFO got up to giv

by cs702 10y ago

Reading this reminds me of "The Elves Leave Middle Earth – Sodas Are No Longer Free," by Steve Blank.[1] Here's the key passage: "...the new CFO got up to give her presentation – all kind of expected; Sarbanes Oxley compliance, a new accounting system, beef up IT and security, Section 409A (valuation) compliance, etc. Then she dropped the other shoe. “Do you know how much our company is spending on free sodas and snacks?” And to answer her own question she presented the spreadsheet totaling it all up. There were some experienced VC’s in the room and I was waiting for them to “educate” her about startup culture. But my jaw dropped when the board agreed that the “free stuff” had to go. “We’re too big for that now” was the shared opinion. But we’ll sell them soda “cheap.” ... One day the engineering team was clustered in the snack room looking at the soda machine. The sign said, “Soda now 50 cents.” The uproar began. Engineers started complaining about the price of the soda. Someone noticed that instead of the informal reimbursement system for dinners when they were working late, there was now a formal expense report system. Some had already been irritated when “professional” managers had been hired over their teams with reportedly more stock than the early engineers had. Lots of email was exchanged about “how things were changing for the worse.” A few engineers went to the see the CEO. But the damage had been done. The most talented and senior engineers looked up from their desks and noticed the company was no longer the one they loved. It had changed. And not in a way they were happy with. The best engineers quietly put the word out that they were available, and in less than month the best and the brightest began to drift away." [1] https://steveblank.com/2009/12/21/the-elves-leave-middle-earth-%E2%80%93-soda%E2%80%99s-are-no-longer-free/ https://steveblank.com/2009/12/21/the-elves-leave-middle-ear...

ChuckMcM 10y ago
I remember getting into a long discussion with an engineering director at Google about "the entitled attitude" that engineers had. Their argument was that money spent on "lifestyle perqs" was money not spent on better computers or improved networking, or heaven forbid higher salaries where the engineers could spend the money on something for themselves. They weren't wrong. But at the same time, they really weren't looking at it from the employee's perspective. Being a bit cheeky I mentioned that Google could save lots of money if they stopped heating and cooling the buildings. With the obvious counter argument that if the place was uncomfortable "everyone" would leave. But that is just as wrong. Not everyone would leave, only the people for whom working for Google wasn't as important as being comfortable at work. There were plenty of people who would sit there sweltering just to be "working at Google." And many of those people would do great work and build great things. But the really good people, the people who constantly invent new things and have the skills to communicate their ideas and get them implemented, those people can work literally anywhere and if they can do what they want to do anywhere else, they will leave. So this "tax" of free soda and snacks is just a cost of doing business. And if you look at the revenue per employee, you do yourself no favor trying to maximize that number beyond the value that meets your net income numbers. The other thing that a number of middle managers miss is that once you are paying a person more than their "wants" level, you get more loyalty and commitment spending additional dollars on snacks and sodas etc than you do on cash.
- fdsaaf 10y ago
  https://en.wikipedia.org/wiki/Efficiency_wage https://en.wikipedia.org/wiki/Efficiency_wage
- bane 10y ago
  The amazing thing I've noticed is that employees of many startups have no problem paying a "startup tax" wherein they pay n times the current going rate for x service so long as the service is provided by their company, and the cost is deducted from their pay (+ some inevitably worthless stock options). In other words, pay some employees below market rate, add in worthless stock options, and so long as you keep the "free" soda and dry cleaning cleaning coming (at a 2-4x cost over what they'd pay for themselves) coming, they're fine. Even if the fee they're paying is far more expensive than just going out to get those services themselves. Once that ends, growth hacking ends and everybody gets burned.
- ryankupyn 10y ago
  Absolutely true in my experience. What employees want, even more than additional money, is a lower mental load dealing with the everyday necessities of life, which an employer is perfectly placed to provide, since employees spend 40+ hours a week in the office. A more cynical benefit of sodas/snacks/exercise classes/laundry/dogwalking/social events provided by the company is that it makes leaving a lot less appealing. A competitor can easily offer a higher salary, but when departing means completely restructuring an employee's daily routine, it can be a powerful force keeping people in place.
- crdb 10y ago
  It's not just comfort, it's signalling. A company with a laid back culture, open kitchens, free food, a nice expensive architect-designed office is signalling that it is prosperous ("we don't cut costs here, we don't need to"). A company getting less prosperous is also about to get less promotions, less bonuses, and maybe some layoffs. If you are 10 years old and you see your dad replacing his BMW by a beaten up Toyota, yes, he could just have decided to stop taking on so much credit, but chances are you'll think he's not doing well, even if he reassures you it's for perfectly valid reasons. So you mentally brace for giving up on that new bike you wanted for Christmas. "They've cut the kitchens." "Really? We just got an extra Jura coffee machine in every conference room..." "Interesting, sounds like your cash flow is good at the moment. Are you guys looking?" And the earlier you leave, the less affected you are - you benefit from the still strong brand, you get decent garden leave, you have little competition on the job openings and your former colleagues will be nice to you in case they need a hand out of the sinking ship later.
pkaye 10y ago
A coworker told me about his experience at HP long ago. A new VP come aboard and thought they could save money by cutting out all the free coffee. Many employees were pissed and made a point by taking their 20 minute break outdoors to pick up coffee daily. Management suddenly realized that saving 25 cents for coffee was not worth >20 minutes of lost productivity.

by cs702 10y ago

ChuckMcM 10y ago

I remember getting into a long discussion with an engineering director at Google about "the entitled attitude" that engineers had. Their argument was that money spent on "lifestyle perqs" was money not spent on better computers or improved networking, or heaven forbid higher salaries where the engineers could spend the money on something for themselves. They weren't wrong. But at the same time, they really weren't looking at it from the employee's perspective. Being a bit cheeky I mentioned that Google could save lots of money if they stopped heating and cooling the buildings. With the obvious counter argument that if the place was uncomfortable "everyone" would leave. But that is just as wrong. Not everyone would leave, only the people for whom working for Google wasn't as important as being comfortable at work. There were plenty of people who would sit there sweltering just to be "working at Google." And many of those people would do great work and build great things. But the really good people, the people who constantly invent new things and have the skills to communicate their ideas and get them implemented, those people can work literally anywhere and if they can do what they want to do anywhere else, they will leave. So this "tax" of free soda and snacks is just a cost of doing business. And if you look at the revenue per employee, you do yourself no favor trying to maximize that number beyond the value that meets your net income numbers. The other thing that a number of middle managers miss is that once you are paying a person more than their "wants" level, you get more loyalty and commitment spending additional dollars on snacks and sodas etc than you do on cash.

fdsaaf 10y ago
https://en.wikipedia.org/wiki/Efficiency_wage https://en.wikipedia.org/wiki/Efficiency_wage
bane 10y ago
The amazing thing I've noticed is that employees of many startups have no problem paying a "startup tax" wherein they pay n times the current going rate for x service so long as the service is provided by their company, and the cost is deducted from their pay (+ some inevitably worthless stock options). In other words, pay some employees below market rate, add in worthless stock options, and so long as you keep the "free" soda and dry cleaning cleaning coming (at a 2-4x cost over what they'd pay for themselves) coming, they're fine. Even if the fee they're paying is far more expensive than just going out to get those services themselves. Once that ends, growth hacking ends and everybody gets burned.
ryankupyn 10y ago
Absolutely true in my experience. What employees want, even more than additional money, is a lower mental load dealing with the everyday necessities of life, which an employer is perfectly placed to provide, since employees spend 40+ hours a week in the office. A more cynical benefit of sodas/snacks/exercise classes/laundry/dogwalking/social events provided by the company is that it makes leaving a lot less appealing. A competitor can easily offer a higher salary, but when departing means completely restructuring an employee's daily routine, it can be a powerful force keeping people in place.
crdb 10y ago
It's not just comfort, it's signalling. A company with a laid back culture, open kitchens, free food, a nice expensive architect-designed office is signalling that it is prosperous ("we don't cut costs here, we don't need to"). A company getting less prosperous is also about to get less promotions, less bonuses, and maybe some layoffs. If you are 10 years old and you see your dad replacing his BMW by a beaten up Toyota, yes, he could just have decided to stop taking on so much credit, but chances are you'll think he's not doing well, even if he reassures you it's for perfectly valid reasons. So you mentally brace for giving up on that new bike you wanted for Christmas. "They've cut the kitchens." "Really? We just got an extra Jura coffee machine in every conference room..." "Interesting, sounds like your cash flow is good at the moment. Are you guys looking?" And the earlier you leave, the less affected you are - you benefit from the still strong brand, you get decent garden leave, you have little competition on the job openings and your former colleagues will be nice to you in case they need a hand out of the sinking ship later.

pkaye 10y ago

A coworker told me about his experience at HP long ago. A new VP come aboard and thought they could save money by cutting out all the free coffee. Many employees were pissed and made a point by taking their 20 minute break outdoors to pick up coffee daily. Management suddenly realized that saving 25 cents for coffee was not worth >20 minutes of lost productivity.