5 ms·

When your boss of a two pizza team is paid more than $600k they are probably overpaid? He seems very capable and is ready to work for that (still good) money.

by JanSt 6y ago

When your boss of a two pizza team is paid more than $600k they are probably overpaid? He seems very capable and is ready to work for that (still good) money. Do you think paying someone tens of millions would improve results for the fund? Why should it?

Akababa 6y ago
It's about supply and demand. If he really is the best person for the job, then there's nothing to be gained from paying him a higher fixed salary. But if there's someone else who's even marginally better that you can get for $10M, it's probably easily worth it - for the size of the fund, one person's pay is a negligible amount.
- JanSt 6y ago
  That's pure theory. How do you know who is marginally better?
  - Akababa 6y ago
    That's the fundamental problem of hiring: you have to make educated guesses about who is going to make a better employee. And you should be willing to pay more to hire someone who you believe is better. For some companies, salaries are such a small part of their revenue that it makes sense to offer some candidates a lot more... and if your first choice happens to accept a lower salary, it doesn't really matter - you've saved a drop in the bucket.
smabie 6y ago
What you're essentially saying is that there's no other person on earth that could generate better returns for the fund. The likelihood of that being true is vanishingly small.
- JanSt 6y ago
  No, I'm saying you can pay as much as you want, you cannot know which person will generate the best returns. What's your process for picking the person?
  - smabie 6y ago
    You could say the same thing about literally any job. Do you really think that paying more money doesn't find you better candidates? Do you think everyone should have the exact same salary and never get any raises? Think about the logical conclusion of your assumptions. It doesn't make any sense.
    - JanSt 6y ago
      You cannot take an argument I make at the extremes and apply it to the whole salary curve. It's way easier to predict performance at the lower, middle and even reasonably higher salary ranges. If you believe otherwise I'd like you to tell me about the process of determining the future success.

by JanSt 6y ago

Akababa 6y ago

It's about supply and demand. If he really is the best person for the job, then there's nothing to be gained from paying him a higher fixed salary. But if there's someone else who's even marginally better that you can get for $10M, it's probably easily worth it - for the size of the fund, one person's pay is a negligible amount.

JanSt 6y ago
That's pure theory. How do you know who is marginally better?
- Akababa 6y ago
  That's the fundamental problem of hiring: you have to make educated guesses about who is going to make a better employee. And you should be willing to pay more to hire someone who you believe is better. For some companies, salaries are such a small part of their revenue that it makes sense to offer some candidates a lot more... and if your first choice happens to accept a lower salary, it doesn't really matter - you've saved a drop in the bucket.

smabie 6y ago

What you're essentially saying is that there's no other person on earth that could generate better returns for the fund. The likelihood of that being true is vanishingly small.

JanSt 6y ago
No, I'm saying you can pay as much as you want, you cannot know which person will generate the best returns. What's your process for picking the person?
- smabie 6y ago
  You could say the same thing about literally any job. Do you really think that paying more money doesn't find you better candidates? Do you think everyone should have the exact same salary and never get any raises? Think about the logical conclusion of your assumptions. It doesn't make any sense.
  - JanSt 6y ago
    You cannot take an argument I make at the extremes and apply it to the whole salary curve. It's way easier to predict performance at the lower, middle and even reasonably higher salary ranges. If you believe otherwise I'd like you to tell me about the process of determining the future success.