4 ms·

> If I provide 1M of value to the company, why would it not be ridiculously bad to get 10% of that value for myself? If you generate 1m of profit, I don't thin

> If I provide 1M of value to the company, why would it not be ridiculously bad to get 10% of that value for myself? If you generate 1m of profit, I don't think 10% is that bad. If you generate 1m of revenue then 10% is pretty good depending on operational costs. If you're talking about 1m of saving 10% is not bad. That 10% is paid in a salary. > You call it a "commission" as if this was a salesman getting a cut of the cost of the product they sold You can call it whatever you want, salary, bonus, commission etc. I use the word commission because it is easy to relate the concept, if you generate 4m for example what is your worth, and it is probably easier to count that as a percentage. But fell free to use whatever nomenclature you want. > but a salesperson selling a $1M product is not providing $1M to the company If you are not producing sales or a product which is sold, or reducing costs just how are you adding 1m of value. By this I mean tangible value, value which you can be paid for. Because that is what we are actually talking about monetary value being added somewhere. > On the other hand, an investor who gives the company $1M normally expects to get more than 100% of that back (with some risks, of course). Or would you say that an investment where you pay $1M to get $100K back is a good investment? Why would I ever say investing 1m to get 100k back is a good investment, getting 1.1m back might be a good investment depending on risk though, sticking 1m in a bank I am unlikely to get that rate of return for example. But I don't understand this part at all.

tsimionescu 5y ago
> If you are not producing sales or a product which is sold, or reducing costs just how are you adding 1m of value. By this I mean tangible value, value which you can be paid for. Because that is what we are actually talking about monetary value being added somewhere. The precise mechanism isn't that important, but if it helps, imagine the following artifical scenario: a small startup buys 2 1000$ computers and hires a programmer and a salesperson, for 10k$ a month each. The programmer produces an app in 6 months, and the salesperson sells it for $3M. The two together have brought the company $3M in worth, minus $130k that they cost. Exactly how much esch contributed to the $2.8M is harder to say, but certainly each only contributed a portion of the $2.8M - even though the salesperson actually caused the revenue to flow in, they are not solely responsible; and neither is the programmer, even though they single-handedly created the product. > Why would I ever say investing 1m to get 100k back is a good investment, getting 1.1m back might be a good investment depending on risk though, sticking 1m in a bank I am unlikely to get that rate of return for example. But I don't understand this part at all. Well, a worker who, through their time and expertise, is adding $1M to the company's value is almost precisely equivalent to the investor investing $1M. However, you believe that the worker should get back 10% of what they invested, while the investor should get back 110% of what they invested. Do you see the double standard?
- HeyZuess 5y ago
  > The two together have brought the company $3M in worth, minus $130k that they cost. Exactly how much esch contributed to the $2.8M is harder to say, but certainly each only contributed a portion of the $2.8M - even though the salesperson actually caused the revenue to flow in, they are not solely responsible; and neither is the programmer, even though they single-handedly created the product. This would be a rare occurrence, but let's run with it. I don't think anywhere I have alluded to anything which could be considered as making such judgement on whom is worth more but rather the idea that businesses are systems with many actors. But I think we are running around the obvious question, out of $2.8m, and ignoring any other costs and expenses like taxes for example (21% in the US), how much should the programmer get paid, how much should the sales person be paid? If I had a company and I had 1 person sewing t-shirts which sold for $5, and another person sewing the same amount of t-shirts, same skill level, same quality of work but they were supreme t-shirts selling for $38. Should I pay the second work many times more, since they make me 7+ times more doing the same job. I don't think the market would say I would. Unless you have a unique skill or go beyond the level of the second employee, the rate would be the same. Even your software selling for 3m is set by the market, you cannot stick a price on it and say it is worth 50m and it's worth 50m. The same argument goes for developers, it's a generic pool of skilled workers. While there maybe an argument for paying a high profit generating developer more, the majority of developers are likely to be the lower end. Maybe some people just get lucky, for example it is probably easier generating 1m of revenue working at Facebook (developer A), than it would be working at a small boutique development firm (developer B), developer A being no different than developer B, should developer A get paid more just because of the opportunity they have. > Well, a worker who, through their time and expertise, is adding $1M to the company's value is almost precisely equivalent to the investor investing $1M. However, you believe that the worker should get back 10% of what they invested, while the investor should get back 110% of what they invested. Do you see the double standard? There is no double standard, and they are not equivalent. The employee earns a salary, the invest earns via capital gains (excluding cases of dividends and profit shares). An investor can lose everything, while an employee gets paid. If you think an employee == investor then you should not expect a salary at all, you getting paid depends on whether the company makes a profit and if there are capital gains to be had. I think you should consider that employees are more like businesses, you are selling you product/services (aka skills) to a customer.

tsimionescu 5y ago

> If you are not producing sales or a product which is sold, or reducing costs just how are you adding 1m of value. By this I mean tangible value, value which you can be paid for. Because that is what we are actually talking about monetary value being added somewhere. The precise mechanism isn't that important, but if it helps, imagine the following artifical scenario: a small startup buys 2 1000$ computers and hires a programmer and a salesperson, for 10k$ a month each. The programmer produces an app in 6 months, and the salesperson sells it for $3M. The two together have brought the company $3M in worth, minus $130k that they cost. Exactly how much esch contributed to the $2.8M is harder to say, but certainly each only contributed a portion of the $2.8M - even though the salesperson actually caused the revenue to flow in, they are not solely responsible; and neither is the programmer, even though they single-handedly created the product. > Why would I ever say investing 1m to get 100k back is a good investment, getting 1.1m back might be a good investment depending on risk though, sticking 1m in a bank I am unlikely to get that rate of return for example. But I don't understand this part at all. Well, a worker who, through their time and expertise, is adding $1M to the company's value is almost precisely equivalent to the investor investing $1M. However, you believe that the worker should get back 10% of what they invested, while the investor should get back 110% of what they invested. Do you see the double standard?

HeyZuess 5y ago
> The two together have brought the company $3M in worth, minus $130k that they cost. Exactly how much esch contributed to the $2.8M is harder to say, but certainly each only contributed a portion of the $2.8M - even though the salesperson actually caused the revenue to flow in, they are not solely responsible; and neither is the programmer, even though they single-handedly created the product. This would be a rare occurrence, but let's run with it. I don't think anywhere I have alluded to anything which could be considered as making such judgement on whom is worth more but rather the idea that businesses are systems with many actors. But I think we are running around the obvious question, out of $2.8m, and ignoring any other costs and expenses like taxes for example (21% in the US), how much should the programmer get paid, how much should the sales person be paid? If I had a company and I had 1 person sewing t-shirts which sold for $5, and another person sewing the same amount of t-shirts, same skill level, same quality of work but they were supreme t-shirts selling for $38. Should I pay the second work many times more, since they make me 7+ times more doing the same job. I don't think the market would say I would. Unless you have a unique skill or go beyond the level of the second employee, the rate would be the same. Even your software selling for 3m is set by the market, you cannot stick a price on it and say it is worth 50m and it's worth 50m. The same argument goes for developers, it's a generic pool of skilled workers. While there maybe an argument for paying a high profit generating developer more, the majority of developers are likely to be the lower end. Maybe some people just get lucky, for example it is probably easier generating 1m of revenue working at Facebook (developer A), than it would be working at a small boutique development firm (developer B), developer A being no different than developer B, should developer A get paid more just because of the opportunity they have. > Well, a worker who, through their time and expertise, is adding $1M to the company's value is almost precisely equivalent to the investor investing $1M. However, you believe that the worker should get back 10% of what they invested, while the investor should get back 110% of what they invested. Do you see the double standard? There is no double standard, and they are not equivalent. The employee earns a salary, the invest earns via capital gains (excluding cases of dividends and profit shares). An investor can lose everything, while an employee gets paid. If you think an employee == investor then you should not expect a salary at all, you getting paid depends on whether the company makes a profit and if there are capital gains to be had. I think you should consider that employees are more like businesses, you are selling you product/services (aka skills) to a customer.