4 ms·

So by giving them a $10k carrot they can basically lock them in to the company because it would be much more difficult to interview for competitors or even star

So by giving them a $10k carrot they can basically lock them in to the company because it would be much more difficult to interview for competitors or even start startups. That's pretty genius.

briandear 9y ago
Exactly. Because startups are only allowed to interview on site in an approved conference room within a 10 mile radius of Sunnyvale. I also heard a rumor that getting funding for a startup requires a product with some traction. It isn’t like Sand Hill Road is lined with VC ATMs. Read The San Francisco Fallacy by Jonathan Siegel if you think success with a startup has anything to do with a Silicon Valley proximity.
tehlike 9y ago
The reason is probably super inflated salaries in bay area due to high cost of living. Lock in has probably less to do with this than pure money aspect.
- tmh79 9y ago
  the salaries are not due to cost of living, they are due to a competetive labor market.
  - tehlike 9y ago
    Positive feedback loop.
    - logfromblammo 9y ago
      High cost of living because competitive labor market. Competitive labor market because high cost of living. You could break the vicious circle from either end. Build more houses, costs go down, more immigrants attracted, wages go down and costs go back up. Destroy local jobs, wages go down, fewer immigrants attracted, costs go down and wages go back up. Every tech company that moves out eases the pressure, but that part about wages going down is tough for some people to swallow.
      - tehlike 9y ago
        It is not just more housing, but also denser housing. And more distributed campuses. Also the higher savings amount from bay area leaks into other regions. I hear texanians complain about swes from bay area inflating housing over there, for example.
  - TallGuyShort 9y ago
    But compared to cost of a certain standard of living the salaries aren't that great.
- eldavido 9y ago
  I think there's a collective realization happening in the Bay Area that the landlords are the real winners and everyone else is just playing their game. Employees hate seeing 3k/month fly out the door in rent just as much as CEOs hate paying it, just as much as investors hate seeing their capital ultimately end up with landlords. Big companies in general are conservative. They've made it and don't want to take unnecessary risks. Trying to introduce remote culture into a company that isn't used to it/tooled for it is a HUGE risk. The innovation in hiring is going to come from small companies who need to hire but can't afford Bay Area salaries. Mid-career folks here, not even particularly good ones, are routinely looking at 200k or more out the door from their employers. 400k seed rounds, hell even 800k seed rounds, don't go very far on that kind of money. So what has to happen is that (a) founders have to get comfortable giving up a lot more equity for more capital, (b) investors have to be comfortable paying much higher valuations for early-stage companies, (c) employees have to be willing to take more stock in lieu of cash, or (d) companies have to do more remote hiring. I see a mix of all four happening depending on the particular circumstances of each company (e.g. famous founders will be able to raise more at higher valuation) It's all pretty simple. The landlords win and everyone else loses. The situation will only get better once remote work is more widely accepted, but I'm starting to think it might come to that, with how expensive things are here. A nothing-special sandwich in Oakland, CA where I live is almost $15, at some point you say enough is enough and go somewhere where such an obscene price level is a joke, not day-to-day reality.
  - cousin_it 9y ago
    That's why Georgism is a thing.
  - Karrot_Kream 9y ago
    I never realized it until you wrote it down explicitly, but you're right. Landlords laugh all the way to the bank, while the rest of the economy pays their tax. Amazing.
    - quickthrower2 9y ago
      I guess both commercial and residential landlords at that.
- aetherson 9y ago
  They aren't reducing people's salaries who "de-locate." So if they're clawing back any salary, it's long-term by giving them lower raises. It takes a while for that to kick in. I think it is lock-in. Not just because it makes it somewhat harder to get in front of other companies, but because making a Bay Area kind of salary in a place with a non-Bay-Area cost of living sounds like the kind of thing that could make an employee very comfortable and very unwilling to go looking for another job. If you're getting like an equivalent of +$30k (or more), even if another company says, "Oh, sure, we'll hire you for $20k over your current salary... but you'll need to move back to the Bay Area," that's an offer you're much less likely to take than if you were already in the Bay Area. And local companies in your new place-of-work are unlikely to be able to match your existing salary.
tonyedgecombe 9y ago
If they are foolish enough to inflate their standard of living to a level unsupportable by local employers.

So by giving them a $10k carrot they can basically lock them in to the company because it would be much more difficult to interview for competitors or even start startups. That's pretty genius.

briandear 9y ago

Exactly. Because startups are only allowed to interview on site in an approved conference room within a 10 mile radius of Sunnyvale. I also heard a rumor that getting funding for a startup requires a product with some traction. It isn’t like Sand Hill Road is lined with VC ATMs. Read The San Francisco Fallacy by Jonathan Siegel if you think success with a startup has anything to do with a Silicon Valley proximity.

tehlike 9y ago

The reason is probably super inflated salaries in bay area due to high cost of living. Lock in has probably less to do with this than pure money aspect.

tmh79 9y ago
the salaries are not due to cost of living, they are due to a competetive labor market.
- tehlike 9y ago
  Positive feedback loop.
  - logfromblammo 9y ago
    High cost of living because competitive labor market. Competitive labor market because high cost of living. You could break the vicious circle from either end. Build more houses, costs go down, more immigrants attracted, wages go down and costs go back up. Destroy local jobs, wages go down, fewer immigrants attracted, costs go down and wages go back up. Every tech company that moves out eases the pressure, but that part about wages going down is tough for some people to swallow.
    - tehlike 9y ago
      It is not just more housing, but also denser housing. And more distributed campuses. Also the higher savings amount from bay area leaks into other regions. I hear texanians complain about swes from bay area inflating housing over there, for example.
- TallGuyShort 9y ago
  But compared to cost of a certain standard of living the salaries aren't that great.
eldavido 9y ago
I think there's a collective realization happening in the Bay Area that the landlords are the real winners and everyone else is just playing their game. Employees hate seeing 3k/month fly out the door in rent just as much as CEOs hate paying it, just as much as investors hate seeing their capital ultimately end up with landlords. Big companies in general are conservative. They've made it and don't want to take unnecessary risks. Trying to introduce remote culture into a company that isn't used to it/tooled for it is a HUGE risk. The innovation in hiring is going to come from small companies who need to hire but can't afford Bay Area salaries. Mid-career folks here, not even particularly good ones, are routinely looking at 200k or more out the door from their employers. 400k seed rounds, hell even 800k seed rounds, don't go very far on that kind of money. So what has to happen is that (a) founders have to get comfortable giving up a lot more equity for more capital, (b) investors have to be comfortable paying much higher valuations for early-stage companies, (c) employees have to be willing to take more stock in lieu of cash, or (d) companies have to do more remote hiring. I see a mix of all four happening depending on the particular circumstances of each company (e.g. famous founders will be able to raise more at higher valuation) It's all pretty simple. The landlords win and everyone else loses. The situation will only get better once remote work is more widely accepted, but I'm starting to think it might come to that, with how expensive things are here. A nothing-special sandwich in Oakland, CA where I live is almost $15, at some point you say enough is enough and go somewhere where such an obscene price level is a joke, not day-to-day reality.
- cousin_it 9y ago
  That's why Georgism is a thing.
- Karrot_Kream 9y ago
  I never realized it until you wrote it down explicitly, but you're right. Landlords laugh all the way to the bank, while the rest of the economy pays their tax. Amazing.
  - quickthrower2 9y ago
    I guess both commercial and residential landlords at that.
aetherson 9y ago
They aren't reducing people's salaries who "de-locate." So if they're clawing back any salary, it's long-term by giving them lower raises. It takes a while for that to kick in. I think it is lock-in. Not just because it makes it somewhat harder to get in front of other companies, but because making a Bay Area kind of salary in a place with a non-Bay-Area cost of living sounds like the kind of thing that could make an employee very comfortable and very unwilling to go looking for another job. If you're getting like an equivalent of +$30k (or more), even if another company says, "Oh, sure, we'll hire you for $20k over your current salary... but you'll need to move back to the Bay Area," that's an offer you're much less likely to take than if you were already in the Bay Area. And local companies in your new place-of-work are unlikely to be able to match your existing salary.

tonyedgecombe 9y ago

If they are foolish enough to inflate their standard of living to a level unsupportable by local employers.