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>we pay people based on their work No, companies pay based on the supply/demand economics of the particular job and the individual. The work done merely sets a

>we pay people based on their work No, companies pay based on the supply/demand economics of the particular job and the individual. The work done merely sets a maximum that the company is willing to pay and still get a profit out of the deal. How much you get offered below that is set by the market. The place you live impacts the market of jobs available to you.

motohagiography 6y ago
Depends on company stage. If you are growing a startup, you pay for their contribution to high growth. If you are a profitable low growing company, sure, you're optimizing for cost reduction, and not upside. The economics of each stage are very different, as in you burn more fuel on the runway getting into the air than at cruising altitude, or to get off the launchpad and to escape velocity.
- marcinzm 6y ago
  In the end every company does a supply/demand calculation versus a candidates other opportunities (real and potential). After all, if you can get someone for $150k why would you pay $250k? Sure, some may pay more for a faster hiring or to offset risk or whatever but in the end it's built on top of supply/demand. The theoretical maximum a company could afford to pay is academic since no one offers close to that unless supply/demand forces it. And if the supply/demand goes over the theoretical maximum then the role is outsourced or strategy is adjusted to not need it or some such.
  - motohagiography 6y ago
    If I offer a 50%-75% raise for a role, I'm going to attract the very best talent for it, people who will leave their current roles for the one I'm offering. Supply and demand exist for a specific good, and 1x vs. a 5x or 10x talent aren't comparable goods. This is why I like the flat salary with variable equity model. The incentives are almost beautiful. If the role I'm looking to fill can be filled by cheaper people whose work I'm indifferent to, I should just be outsourcing it because they aren't delivering anything above the transaction, and they won't be be assets to growing a company.

motohagiography 6y ago

Depends on company stage. If you are growing a startup, you pay for their contribution to high growth. If you are a profitable low growing company, sure, you're optimizing for cost reduction, and not upside. The economics of each stage are very different, as in you burn more fuel on the runway getting into the air than at cruising altitude, or to get off the launchpad and to escape velocity.

marcinzm 6y ago
In the end every company does a supply/demand calculation versus a candidates other opportunities (real and potential). After all, if you can get someone for $150k why would you pay $250k? Sure, some may pay more for a faster hiring or to offset risk or whatever but in the end it's built on top of supply/demand. The theoretical maximum a company could afford to pay is academic since no one offers close to that unless supply/demand forces it. And if the supply/demand goes over the theoretical maximum then the role is outsourced or strategy is adjusted to not need it or some such.
- motohagiography 6y ago
  If I offer a 50%-75% raise for a role, I'm going to attract the very best talent for it, people who will leave their current roles for the one I'm offering. Supply and demand exist for a specific good, and 1x vs. a 5x or 10x talent aren't comparable goods. This is why I like the flat salary with variable equity model. The incentives are almost beautiful. If the role I'm looking to fill can be filled by cheaper people whose work I'm indifferent to, I should just be outsourcing it because they aren't delivering anything above the transaction, and they won't be be assets to growing a company.