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For example, I do think figuring out compensation structures is really important and something the CEO should spend time on. And it’s something that mos

by Endama 8y ago

For example, I do think figuring out compensation structures is really important and something the CEO should spend time on. And it’s something that most CEOs don’t. This. I've been a part of three startups and in all three, the CEO didn't take compensation seriously. In today's economy, you can't sit on your hands and assume that 3-5% annual pay raises and the promise of future stock payouts will keep talent in-house, year over year, when the big guys are pushing the pay bar higher and higher. For example, in my last job, 3 years of startup caused my annual pay as an iOS dev in the Bay to drop ~30k below the average for someone of my tenure. I loved the company, but I couldn't justify the loss in income, especially with housing prices being what they are. CEOs should consider compensation as critical to their company health.

kayoone 8y ago
Maybe true for the bay area, in most of the world 3-5% annual raise and stock options are not bad though.
- ta1234567890 8y ago
  This. It's pretty annoying that whenever there are posts about salary on HN, a lot of people from SF/BayArea start complaining about how their already super inflated salaries are not inflated enough and should be higher because the top 3 largest tech companies in the world pay higher salaries. If you are one of those people, then please stop complaining and just go get a job with the compensation you supposedly deserve at one of the companies that can afford it.
  - akhilcacharya 8y ago
    Who are the top3?
    - zootam 8y ago
      These are the top companies that offer industry leading compensation: Facebook, Google, Apple, Amazon, Microsoft
      - akhilcacharya 8y ago
        Those are 5, I’m curious as to what OP thinks the top3 is.
  - detaro 8y ago
    On the other hand, plenty of startups and their investors insist on being in the Bay area, so I can't really fault employees there that they compare them to the local market. As someone with no desire (and no easy route) to live there, I find this centralization annoying, but startups fueling it IMHO aren't in much of a place to complain.
- draw_down 8y ago
  Come on. It’s silly to pretend SF/SV is just one place among many others with respect to our industry. It is the place.
Alex3917 8y ago
Startup compensation for developers makes zero sense, because market rates can easily jump 50 - 100% per year of experience. This means that at some points of the year a developer might be earning market rate, but other times they are vastly under-compensated and very vulnerable to getting poached. There should be a way that startups can just automatically give people a raise every two weeks, so that way they make the same amount of money over the course of a year but their compensation is always equidistant from a projected fair market rate. Then for the employees you'd just need to give them a tool so they could see how much money is going to hit their bank accounts every two weeks.
- mandelbrotwurst 8y ago
  What's stopping anyone from doing that now?
sonnyblarney 8y ago
Pay raises that rise faster than inflation are unsustainable, rather, you're pointing at a specific asymmetry between the BigCos and startups in the Bay, which is definitely causing strain. Outside the Valley and specific centres, this isn't quite so much an issue. Inside, it's an intractable problem ... Though your point might be valid from the Dev's perspective, consider the other side for a moment and you see how tough it is - i.e. to have the expectations of ever increasing normalized outflows. So we need to look at this kind of objectively (i.e. not from just Exec/Dev perspective) to figure out how to deal with the situation.
- andrestan 8y ago
  They're only unsustainable if the employee's productivity is stagnant. If one year of experience increases an employee's productivity then you can more than happily increase their pay by greater than inflation.
- patrickg_zill 8y ago
  "Pay raises that rise faster than inflation are unsustainable" What? How does your statement hold up if a startup is starting to make a lot of money and revenue is increasing by 20 to 50% a year?
  - CaveTech 8y ago
    Because that growth is not sustainable in the majority of cases. Sure, there are exceptions, but I bet you're not going to be eagerly handing the org money back once growth flattens out.
  - sonnyblarney 8y ago
    In very rare cases do startups have that kind of growth and in many of them their unit costs are bad and they are making less and less money. In the few cases wherein sales are growing, AND they are more profitable, AND it wouldn't make more sense to put the money elsewhere - then yes - fat wage increases are possible, for a short period. In almost no companies is this reasonably sustainable.
- 8y ago
simonebrunozzi 8y ago
I loved reading this just now. I'm CEO of a small young startup (3 co-founders, 3 employees, 1 more coming), and today I spent ~1 hour to think about compensation really, really deeply, before engaging in a conversation with a future hire. I know we're small, but I absolutely agree that compensation is super important from the very beginning. Like company values. It's like a seed. A big tree will come out of it, one day. How you plant the seed, and what seed it is, is super important.
- mathattack 8y ago
  Comp decisions have legs. Every comp decision you make today impacts everyone you hire for that position tomorrow.
EGreg 8y ago
Two years ago, we wrote about a more decentralized compensation model that may be interesting to some startups and open source projects here. It aligns everyone’s incentives and promotes freedom and results-oriented culture: https://qbix.com/blog/2016/11/17/properly-valuing-contributions/ https://qbix.com/blog/2016/11/17/properly-valuing-contributi...
- happythought 8y ago
  This is how you disincentivize security.

by Endama 8y ago

kayoone 8y ago

Maybe true for the bay area, in most of the world 3-5% annual raise and stock options are not bad though.

ta1234567890 8y ago
This. It's pretty annoying that whenever there are posts about salary on HN, a lot of people from SF/BayArea start complaining about how their already super inflated salaries are not inflated enough and should be higher because the top 3 largest tech companies in the world pay higher salaries. If you are one of those people, then please stop complaining and just go get a job with the compensation you supposedly deserve at one of the companies that can afford it.
- akhilcacharya 8y ago
  Who are the top3?
  - zootam 8y ago
    These are the top companies that offer industry leading compensation: Facebook, Google, Apple, Amazon, Microsoft
    - akhilcacharya 8y ago
      Those are 5, I’m curious as to what OP thinks the top3 is.
- detaro 8y ago
  On the other hand, plenty of startups and their investors insist on being in the Bay area, so I can't really fault employees there that they compare them to the local market. As someone with no desire (and no easy route) to live there, I find this centralization annoying, but startups fueling it IMHO aren't in much of a place to complain.
draw_down 8y ago
Come on. It’s silly to pretend SF/SV is just one place among many others with respect to our industry. It is the place.

Alex3917 8y ago

Startup compensation for developers makes zero sense, because market rates can easily jump 50 - 100% per year of experience. This means that at some points of the year a developer might be earning market rate, but other times they are vastly under-compensated and very vulnerable to getting poached. There should be a way that startups can just automatically give people a raise every two weeks, so that way they make the same amount of money over the course of a year but their compensation is always equidistant from a projected fair market rate. Then for the employees you'd just need to give them a tool so they could see how much money is going to hit their bank accounts every two weeks.

mandelbrotwurst 8y ago
What's stopping anyone from doing that now?

sonnyblarney 8y ago

Pay raises that rise faster than inflation are unsustainable, rather, you're pointing at a specific asymmetry between the BigCos and startups in the Bay, which is definitely causing strain. Outside the Valley and specific centres, this isn't quite so much an issue. Inside, it's an intractable problem ... Though your point might be valid from the Dev's perspective, consider the other side for a moment and you see how tough it is - i.e. to have the expectations of ever increasing normalized outflows. So we need to look at this kind of objectively (i.e. not from just Exec/Dev perspective) to figure out how to deal with the situation.

andrestan 8y ago
They're only unsustainable if the employee's productivity is stagnant. If one year of experience increases an employee's productivity then you can more than happily increase their pay by greater than inflation.
patrickg_zill 8y ago
"Pay raises that rise faster than inflation are unsustainable" What? How does your statement hold up if a startup is starting to make a lot of money and revenue is increasing by 20 to 50% a year?
- CaveTech 8y ago
  Because that growth is not sustainable in the majority of cases. Sure, there are exceptions, but I bet you're not going to be eagerly handing the org money back once growth flattens out.
- sonnyblarney 8y ago
  In very rare cases do startups have that kind of growth and in many of them their unit costs are bad and they are making less and less money. In the few cases wherein sales are growing, AND they are more profitable, AND it wouldn't make more sense to put the money elsewhere - then yes - fat wage increases are possible, for a short period. In almost no companies is this reasonably sustainable.
8y ago

simonebrunozzi 8y ago

I loved reading this just now. I'm CEO of a small young startup (3 co-founders, 3 employees, 1 more coming), and today I spent ~1 hour to think about compensation really, really deeply, before engaging in a conversation with a future hire. I know we're small, but I absolutely agree that compensation is super important from the very beginning. Like company values. It's like a seed. A big tree will come out of it, one day. How you plant the seed, and what seed it is, is super important.

mathattack 8y ago
Comp decisions have legs. Every comp decision you make today impacts everyone you hire for that position tomorrow.

EGreg 8y ago

Two years ago, we wrote about a more decentralized compensation model that may be interesting to some startups and open source projects here. It aligns everyone’s incentives and promotes freedom and results-oriented culture: https://qbix.com/blog/2016/11/17/properly-valuing-contributions/ https://qbix.com/blog/2016/11/17/properly-valuing-contributi...

happythought 8y ago
This is how you disincentivize security.