7 ms·

This suffers from the same issue with using a real estate agent to buy / sell a house. Agents are not financially incentivized to get you the best offer. They

by mtgex 9y ago

This suffers from the same issue with using a real estate agent to buy / sell a house. Agents are not financially incentivized to get you the best offer. They are financially incentivized for you to accept any offer, period. The extra commission on negotiating a higher offer does not justify the time and energy. Additionally, it increases the chances that either party will terminate the negotiation outright. Agents are not working for you, they are working on closing a deal and in fact the agent and the company they're selling you to have the exact same incentives. Get you in as quickly and as cheaply as possible. Negotiation is more about soft skills, charisma, information obfuscation, and outright lying than it is about fighting to get what you "deserve."

chapill 9y ago
None of that really applies to 10xmanagement specifically.
d0lph 9y ago
Couldn't you just rebalance the commission so the pay increase is the majority of the commission. Not saying the current situation isn't messed up, but there is no reason it couldn't be fixed.
- mtgex 9y ago
  Yeah I can see that, although in that case you do need to prove to your agent what you were making before, and if they feel it's not worth their time they will be more likely to pass on working with you. But that's a whole paradigm shift in thinking about agency, and they're perfectly happy with how things operate currently. They would have to spend a lot more time actually negotiating. In the case of real estate, the idea that you absolutely need to work with an agent is so entrenched that it's very difficult to get anyone to consider the alternative outlook.
- bradleyjg 9y ago
  It's hard to design an incentive structure that's perfectly aligned. In the case of a commission only on the increase, now they've gone from having too much of an incentive to get any deal done quickly to not enough of an incentive to close a deal even if it isn't a large increase. You can fiddle around with a fixed part and incentive part, but it is very hard to find the right spot. One alternative is to pay by the hour but that comes with its own set of perverse incentives.
  - gowld 9y ago
    You don't need the agent to close the deal. If the agent peters out after the first hour of negotiations, you can take whatever they put on the table and continue yourself. Anyway, look at the numbers here: a good salary negotiation takes maybe 5-20hrs to fight for, I don't know, $10K-$50K/yr gain? And a $5-$50k sign-on bonus? Even targeting an "premium consulting" rate of $500/hour, the agent can make a lot of hay to get their cut, putting in the basic standard amount of work.
cornholio 9y ago
It all depends on the incentive structure. This product here is not the typical job agency, but a negotiation service that you can use when you already have an $100.000+ offer. Presumably, they will get paid proportional to the excess they can get for you on top of that, as either money or benefits (otherwise, you would just accept the offer). The information asymmetry between the employee and company is huge: they know the market inside out, they negociate compensation packages every day and are strongly motivated to hide how bad they need to fill the particular position and how in-demand are those specific experts. Meanwhile, you only know your own salary and expectations, you are unable to objectively rank yourself and go on bits and scraps of information gathered here and there. This is a situation where you are ripe to be taken advantage of, especially on a booming market. Where by "taken advantage of" I of course mean "sell your product for less than fair market value".
- EGreg 9y ago
  I think this incentive structure can actually work! I would use this. If I applied for Jobs.
- jholman 9y ago
  This is precisely the compensation scheme that seems best. I think I'd be comfortable paying 1/3 of the boost, for as long as I keep the job (probably with repeat business for the agent, when I change jobs). Maybe with a cap of a few years? On the other hand, that's probably not a very large slice of total wage, so it's still pretty small compared to the 20% that recruiters apparently get. But maybe agenting is a lot easier than recruitering. Not that I'm looking for a dev job currently.
rb212nyc 9y ago
I'm one of the 10x founders. Just wanted to comments here...I won't answer every question but this one felt important to answer. My thoughts are as follows... There are mitigating factors as it relates to what we are offering and the concerns you raise -- and one misunderstanding. The misunderstanding first...we are not selling anyone to anything. We have no involvement in finding you the job, we are not recruiters, we are not headhunters. So we have no alignment with anyone other than YOU. The first mitigating factor is that we offer two different negotiation options. One is us leading the process and speaking directly to your prosepctive employer, the other is us advising you behind the scenes and you talk directly to your prospective employer. In both cases, we are working hand in hand with you so nothing that is being conveyed is something you're not endorsing. Our goal IS to get to a yes, but ONLY a yes that you feel good about. If you don't feel good about it, then the negotiation ends and we move on. The other thing is that we're offering to provide this service during our beta phase as a pay what you feel it's worth to you. You could choose to pay us nothing...we need to EARN whatever amount you choose to pay us. So we are 100% incentivized to be both ethical and effective during this process. Because if we're not, you're not going to recommend us to others and you're not going to pay us. And honestly, this business will be built and has been built almost exclusively on recommendations and word of mouth so that's a MAJOR incentive to us. I do agree with you about one thing though, negotiating is NOT about fighting. It's about presenting reasonable and substantiated reasons why certain points should be adjusted. It's about knowing the myriad of areas TO negotiate. It's about understanding the standards and practices across different verticals. And most importantly it's about truly understanding what YOU want out of a deal. Fighting has NO place in this process. As a concluding comment, agenting is a VERY old profession and widely used in many other verticals. There is a very good reason for this, put simply, most people are not the best at advocating for themselves. But if that doesn't describe you, if you possess all the knowledge required to get you the best deal possible, that's great. No need for our help. Otherwise, let us prove to you why there is a difference. If you don't like it, don't pay us.
- Aloha 9y ago
  What I'd really love a company to do is offer a service where I can pay them to look for a job for me - I work 50+ hour weeks now, I dont have the time to go job hunting, I'd be nice if I could find a recruitment firm, who would work for me.
michaelmior 9y ago
This doesn't seem to be taking reputation into account. Sure an agent can just try to close any deal to get their cut and move on. However, an agent who does this as a matter of practice is not going to have the same long payout.
- __jal 9y ago
  Can't point to a study or anything, but the behavior of real estate agents in the wild would seem to contradict you.
  - tibbetts 9y ago
    Real estate agents have a lot less reputation, their clients are less able to compare outcomes, and their clients are less highly connected than clients of an agency like this.
  - michaelmior 9y ago
    Perhaps. I'm not a homeowner so I have no practical experience here.
gowld 9y ago
This is a middlebrow dismissal that argues against evidence (the pricing model and the negotiation style) that doesn't even exist in the OP.
Kiro 9y ago
No idea where you live but that's definitely not how it works in my country. Real estate agents here do a lot. They decorate your apartment, take professional photos, create marketing campaigns on Facebook and all the big listing sites. You set a date and they handle the showings. After that there's one bidding. The only way they would be able to sell it before the bidding is if someone makes an offer before the showings.

by mtgex 9y ago

chapill 9y ago

None of that really applies to 10xmanagement specifically.

d0lph 9y ago

Couldn't you just rebalance the commission so the pay increase is the majority of the commission. Not saying the current situation isn't messed up, but there is no reason it couldn't be fixed.

mtgex 9y ago
Yeah I can see that, although in that case you do need to prove to your agent what you were making before, and if they feel it's not worth their time they will be more likely to pass on working with you. But that's a whole paradigm shift in thinking about agency, and they're perfectly happy with how things operate currently. They would have to spend a lot more time actually negotiating. In the case of real estate, the idea that you absolutely need to work with an agent is so entrenched that it's very difficult to get anyone to consider the alternative outlook.
bradleyjg 9y ago
It's hard to design an incentive structure that's perfectly aligned. In the case of a commission only on the increase, now they've gone from having too much of an incentive to get any deal done quickly to not enough of an incentive to close a deal even if it isn't a large increase. You can fiddle around with a fixed part and incentive part, but it is very hard to find the right spot. One alternative is to pay by the hour but that comes with its own set of perverse incentives.
- gowld 9y ago
  You don't need the agent to close the deal. If the agent peters out after the first hour of negotiations, you can take whatever they put on the table and continue yourself. Anyway, look at the numbers here: a good salary negotiation takes maybe 5-20hrs to fight for, I don't know, $10K-$50K/yr gain? And a $5-$50k sign-on bonus? Even targeting an "premium consulting" rate of $500/hour, the agent can make a lot of hay to get their cut, putting in the basic standard amount of work.

cornholio 9y ago

It all depends on the incentive structure. This product here is not the typical job agency, but a negotiation service that you can use when you already have an $100.000+ offer. Presumably, they will get paid proportional to the excess they can get for you on top of that, as either money or benefits (otherwise, you would just accept the offer). The information asymmetry between the employee and company is huge: they know the market inside out, they negociate compensation packages every day and are strongly motivated to hide how bad they need to fill the particular position and how in-demand are those specific experts. Meanwhile, you only know your own salary and expectations, you are unable to objectively rank yourself and go on bits and scraps of information gathered here and there. This is a situation where you are ripe to be taken advantage of, especially on a booming market. Where by "taken advantage of" I of course mean "sell your product for less than fair market value".

EGreg 9y ago
I think this incentive structure can actually work! I would use this. If I applied for Jobs.
jholman 9y ago
This is precisely the compensation scheme that seems best. I think I'd be comfortable paying 1/3 of the boost, for as long as I keep the job (probably with repeat business for the agent, when I change jobs). Maybe with a cap of a few years? On the other hand, that's probably not a very large slice of total wage, so it's still pretty small compared to the 20% that recruiters apparently get. But maybe agenting is a lot easier than recruitering. Not that I'm looking for a dev job currently.

rb212nyc 9y ago

I'm one of the 10x founders. Just wanted to comments here...I won't answer every question but this one felt important to answer. My thoughts are as follows... There are mitigating factors as it relates to what we are offering and the concerns you raise -- and one misunderstanding. The misunderstanding first...we are not selling anyone to anything. We have no involvement in finding you the job, we are not recruiters, we are not headhunters. So we have no alignment with anyone other than YOU. The first mitigating factor is that we offer two different negotiation options. One is us leading the process and speaking directly to your prosepctive employer, the other is us advising you behind the scenes and you talk directly to your prospective employer. In both cases, we are working hand in hand with you so nothing that is being conveyed is something you're not endorsing. Our goal IS to get to a yes, but ONLY a yes that you feel good about. If you don't feel good about it, then the negotiation ends and we move on. The other thing is that we're offering to provide this service during our beta phase as a pay what you feel it's worth to you. You could choose to pay us nothing...we need to EARN whatever amount you choose to pay us. So we are 100% incentivized to be both ethical and effective during this process. Because if we're not, you're not going to recommend us to others and you're not going to pay us. And honestly, this business will be built and has been built almost exclusively on recommendations and word of mouth so that's a MAJOR incentive to us. I do agree with you about one thing though, negotiating is NOT about fighting. It's about presenting reasonable and substantiated reasons why certain points should be adjusted. It's about knowing the myriad of areas TO negotiate. It's about understanding the standards and practices across different verticals. And most importantly it's about truly understanding what YOU want out of a deal. Fighting has NO place in this process. As a concluding comment, agenting is a VERY old profession and widely used in many other verticals. There is a very good reason for this, put simply, most people are not the best at advocating for themselves. But if that doesn't describe you, if you possess all the knowledge required to get you the best deal possible, that's great. No need for our help. Otherwise, let us prove to you why there is a difference. If you don't like it, don't pay us.

Aloha 9y ago
What I'd really love a company to do is offer a service where I can pay them to look for a job for me - I work 50+ hour weeks now, I dont have the time to go job hunting, I'd be nice if I could find a recruitment firm, who would work for me.

michaelmior 9y ago

This doesn't seem to be taking reputation into account. Sure an agent can just try to close any deal to get their cut and move on. However, an agent who does this as a matter of practice is not going to have the same long payout.

__jal 9y ago
Can't point to a study or anything, but the behavior of real estate agents in the wild would seem to contradict you.
- tibbetts 9y ago
  Real estate agents have a lot less reputation, their clients are less able to compare outcomes, and their clients are less highly connected than clients of an agency like this.
- michaelmior 9y ago
  Perhaps. I'm not a homeowner so I have no practical experience here.

gowld 9y ago

This is a middlebrow dismissal that argues against evidence (the pricing model and the negotiation style) that doesn't even exist in the OP.

Kiro 9y ago

No idea where you live but that's definitely not how it works in my country. Real estate agents here do a lot. They decorate your apartment, take professional photos, create marketing campaigns on Facebook and all the big listing sites. You set a date and they handle the showings. After that there's one bidding. The only way they would be able to sell it before the bidding is if someone makes an offer before the showings.