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In startups your risk is that 95% of the value of your labor goes into a pool of options whose underlying security (startup stock) never achieves any liquidity
by jonbarker 9y ago
In startups your risk is that 95% of the value of your labor goes into a pool of options whose underlying security (startup stock) never achieves any liquidity event. Also, you do have to factor into your analysis the fact that the tech giants also have options, which are likely not to expire worthless, and also have some upside as well, since they are listed on public exchanges. If startups thought more like Buffett "preferred holding period is forever" they would counterintuitively actually compensate employees with cash more competitively once they achieved positive cash flow (this actually seems to be occurring in a few companies, there are just too few positive cash flow startup examples for quality analysis on this front). More startup employees I know are actually just enjoying their work and salary instead of making a giant sacrifice on a longshot bet in exchange for work they don't think is sustainable. That being said I think what Bezos wrote about amazon's work ethic will always hold true "you can choose to work harder, longer, or smarter but in our case you can't choose 2 out of 3" - paraphrased from memory. Ultimately startups and big companies are trying to design compensation packages that create maximum productivity and the best description I've heard of this is to "take the issue of money off the table". Hard to do that with under market salaries and iffy stock options.
- arjunrc 9y agoDo you have a link for the comment from Bezos? It would be good to get some context on what he said.
- jonbarker 9y agohttps://www.amazon.com/p/feature/z6o9g6sysxur57t https://www.amazon.com/p/feature/z6o9g6sysxur57t "It’s not easy to work here (when I interview people I tell them, “You can work long, hard, or smart, but at Amazon.com you can’t choose two out of three”)"
- circlefavshape 9y agoI don't understand this quote. Does he mean that you have to choose ONE of the three? Or that you have to do all three (which means his "or" is misplaced)? Or that Amazon.com chooses for you, rather than you choosing yourself?
- arkades 9y agoHe means all 3. His "or" isn't misplaced, because it's a play on an existing phrase: "better, faster, cheaper - you only get to choose two." Meaning you cannot optimize on all 3 dimensions. Here he is saying that Amazon expects you to excel at all 3, by providing a contrast to a known idiom that says you cannot.
- chadwittman 9y agoMaybe I'm being thick, but is he saying you have to choose 3 of 3 or 1 of 3?
- jonbarker 9y agoI actually thought the same thing reading this quote. But the convention is present three, choose two. His example is an appeal to one's sense of what I can only describe as "drama". The "dramatic" realization being of course that Amazon is different; you have to choose three out of three instead of the conventional choose two out of three. Choosing one out of three is less dramatic and therefore must be eliminated. Not logical I know.
- cosmoharrigan 9y agoAmazon's 1997 Letter to Shareholders: http://media.corporate-ir.net/media_files/irol/97/97664/reports/Shareholderletter97.pdf http://media.corporate-ir.net/media_files/irol/97/97664/repo...