11 ms·

It's really interesting how AAR scales per employee. The larger you are, better the ratio -- this helps explain why large companies can afford to pay so much mo

It's really interesting how AAR scales per employee. The larger you are, better the ratio -- this helps explain why large companies can afford to pay so much more for top-level employees than small ones. I'm sure this seems obvious to some, but I'm not enough of a business/finance person to have really thought about this before. It helps crystallize some dynamics between, for example, my current employer and my immediately former employer; the former is able to pay dramatically more (around 150% on salary, plus equity) for essentially the same work, and gets more and higher quality talent as a result. I wonder how a smaller org can escape this problem, if at all.

ec109685 5y ago
A growing company doesn’t need to be profitable, so there’s no reason an engineer shouldn’t be compensated at market rate ever.
- ivraatiems 5y ago
  That might be true for startups, but my former employer is a 20+ year old established company with a specific niche. Growth is limited, but business is stable and profitable. It's a different mindset.
  - pm90 5y ago
    In that case it sounds like they have found product market fit and are mostly content with the way the business is growing and likely don’t need the kind of “top talent” that you offer. They’re ok with “mediocre talent” since talent isn’t enabling growth or survival. The market is pretty brutal but I’ve seen many extremely talented folks work at mediocre organizations because of reasons other than financial. I guess everyone is happy with the arrangement.
    - ivraatiems 5y ago
      You'd think and hope so. To be honest, I think they're trying to have their cake and eat it too - that's part of why I left. They wanted to grow and had all these strategies for doing so, but not nearly the resources to do it, and were unwilling to invest in getting more of them. We got a lot done with a little, but there were clear limitations. It was an outlook I never quite understood. The core business was and is strong, reliably profitable and has made plenty of people quite wealthy and employed dozens more gainfully. Why mess with that success? What's in it for them? What's the point of (fake numbers) $100m in sales vs $50m when it comes to our 70-person company and small number of private, non-institutional owners? But I am, of course, not the one who makes such decisions.
- Silhouette 5y ago
  A growing company with investors happy to throw away large amounts of money for years in case they end up with a unicorn doesn't need to be profitable. A growing company that was bootstrapped and is trying to make something actually worth selling in order to fund further growth is an entirely different situation.
  - ec109685 5y ago
    It’s a free market, so if the bootstrap company can find engineers that meet their compensation parameters, good for them. Other option is provide equity to your engineers to help make up for compensation gaps.
    - Silhouette 5y ago
      There are plenty of other options. One that can work well if you have a relatively small organisation and every person really counts is to set up a profit-sharing scheme. That gives everyone a personal stake in the success of the business and it can work out well for everyone without the complexity and uncertainty of any scheme based on equity or options.
- atatatat 5y ago
  > A growing company doesn’t need to be profitable Please let us know which VC firm you're with giving those terms so I can apply.
  - Rastonbury 5y ago
    The poster is technically not wrong, many IPO'd companies eg. Airbnb, Uber, etc all still lossmaking and founders/VCs have cashed out
golergka 5y ago
> my current employer and my immediately former employer; the former is able to pay dramatically more This sentence was a little bit hard to parse because of conflicting meanings of the "former" (in sentence vs in your employment history). You meant that your new employer have you 150% salary and equity, and the previous one couldn't compete, right?
- ivraatiems 5y ago
  Yes, correct.

ec109685 5y ago

A growing company doesn’t need to be profitable, so there’s no reason an engineer shouldn’t be compensated at market rate ever.

ivraatiems 5y ago
That might be true for startups, but my former employer is a 20+ year old established company with a specific niche. Growth is limited, but business is stable and profitable. It's a different mindset.
- pm90 5y ago
  In that case it sounds like they have found product market fit and are mostly content with the way the business is growing and likely don’t need the kind of “top talent” that you offer. They’re ok with “mediocre talent” since talent isn’t enabling growth or survival. The market is pretty brutal but I’ve seen many extremely talented folks work at mediocre organizations because of reasons other than financial. I guess everyone is happy with the arrangement.
  - ivraatiems 5y ago
    You'd think and hope so. To be honest, I think they're trying to have their cake and eat it too - that's part of why I left. They wanted to grow and had all these strategies for doing so, but not nearly the resources to do it, and were unwilling to invest in getting more of them. We got a lot done with a little, but there were clear limitations. It was an outlook I never quite understood. The core business was and is strong, reliably profitable and has made plenty of people quite wealthy and employed dozens more gainfully. Why mess with that success? What's in it for them? What's the point of (fake numbers) $100m in sales vs $50m when it comes to our 70-person company and small number of private, non-institutional owners? But I am, of course, not the one who makes such decisions.
Silhouette 5y ago
A growing company with investors happy to throw away large amounts of money for years in case they end up with a unicorn doesn't need to be profitable. A growing company that was bootstrapped and is trying to make something actually worth selling in order to fund further growth is an entirely different situation.
- ec109685 5y ago
  It’s a free market, so if the bootstrap company can find engineers that meet their compensation parameters, good for them. Other option is provide equity to your engineers to help make up for compensation gaps.
  - Silhouette 5y ago
    There are plenty of other options. One that can work well if you have a relatively small organisation and every person really counts is to set up a profit-sharing scheme. That gives everyone a personal stake in the success of the business and it can work out well for everyone without the complexity and uncertainty of any scheme based on equity or options.
atatatat 5y ago
> A growing company doesn’t need to be profitable Please let us know which VC firm you're with giving those terms so I can apply.
- Rastonbury 5y ago
  The poster is technically not wrong, many IPO'd companies eg. Airbnb, Uber, etc all still lossmaking and founders/VCs have cashed out

golergka 5y ago

> my current employer and my immediately former employer; the former is able to pay dramatically more This sentence was a little bit hard to parse because of conflicting meanings of the "former" (in sentence vs in your employment history). You meant that your new employer have you 150% salary and equity, and the previous one couldn't compete, right?

ivraatiems 5y ago
Yes, correct.