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If you could find someone to do the same work for half the cost, you'd be able to make a pretty penny as a retained executive recruiter. Knowing a couple of fr

If you could find someone to do the same work for half the cost, you'd be able to make a pretty penny as a retained executive recruiter. Knowing a couple of friends who run such firms, let me tell you -- it would be hard to find someone of 25% of that caliber for even 75% of that price. Value is what the market is willing to pay. There is only 1 Andy Jassy in the world in the same way there is only 1 Jeff Bezos.

jka 4y ago
I'd be curious to see the results of (crowds of?) normal people paid to say what their responses would be in the type of situations that leaders on these pay packages have to deal with, when given similar levels of context. No doubt that's not the entire job: there's also networking, communication and thought leadership involved. But similar approaches could apply. Liability could be a trickier one.
- yowlingcat 4y ago
  Of those three, "networking" and "thought leadership" are more hobbies rather than concrete responsibilities of the job. There are actual concrete responsibilities that a CEO at that level needs to accomplish, a sample of which include: - fundraising - organizational structuring - hiring - strategic planning + competitive positioning - go to market motions - R&D - investor relations There's nothing fungible about any of these responsibilities, so no matter how many ordinary people you stack together, you'll never arrive at even a fraction of what a competent executive can do. Companies have executives for the same reasons countries do. Executives rotate in and out of power subject to the ongoing favor of their stakeholders, but the hierarchical structure of retaining an executive to represent the will of those stakeholders remains in place because there's no efficient way to operate otherwise.
  - jka 4y ago
    Thanks for the comprehensive response. > There's nothing fungible about any of these responsibilities, so no matter how many ordinary people you stack together, you'll never arrive at even a fraction of what a competent executive can do. I think I'd disagree with that - you state it fairly strongly, but I think that each of the items you mention is possible to delegate and distribute successfully, to varying degrees. Much of that is aided by referring to existing patterns that have succeeded elsewhere. > Executives rotate in and out of power subject to the ongoing favor of their stakeholders, but the hierarchical structure of retaining an executive to represent the will of those stakeholders remains in place because there's no efficient way to operate otherwise. That I do find harder to challenge (and I don't necessarily think it's worth challenging). Conversation and consensus can arise, but even then it's useful to have someone to canvas that and say "ok, I've heard the commentary on this topic, here is our selected outcome".
    - yowlingcat 4y ago
      > I think I'd disagree with that - you state it fairly strongly, but I think that each of the items you mention is possible to delegate and distribute successfully, to varying degrees. Much of that is aided by referring to existing patterns that have succeeded elsewhere. I think we're getting a lot closer to the meat of the issue here. I agree with you that it is possible to delegate and distribute /most/ of what I mentioned successfully to varying degrees. But that leaves the "incompressible" part of the CEO, which is fundraising/investor relations and hiring/org building. Fundraising is completely impossible to delegate (if you delegate that to someone else, you'll alienate investors) and even with hiring/org building, you have to at least do the recruiting/candidate selection of top lieutenants yourself as a CEO in order to make sure that you are putting the right team of divisional heads in place to execute. You have to be a better coach than the vast majority of coaches out there to succeed in this endeavor, and to even attract and accurately assess the kind of talent that will set up the org for success. It is very easy to mess this up. On the whole, a lot of what I'm talking about is high stakes high rewards strategic dealmaking. This isn't a common skill for most people to have. It's a blend of analytical (determining leverage points, BATNA in negotiations) and creative (figuring out how to grow the pie) that is hard to practice unless you've done it before. Most decisions you make here are irreversible. The other challenge with this kind of dealmaking is that the stakes are so high and the counterparties so formidable that if you put anyone except an equally formidable party in place to negotiate with them, you'd end up in a bloodbath that ended up unfavorably for the company and favorably for the counterparty. In my opinion, that's why we end up at the steady state of executive compensation across most of the world that we see today. It's a miserable job unless you really enjoy it because everyone will (and should) blame you when things go wrong. That is made more challenging by the fact that by the time one becomes a successful CEO, one can generally retire off earnings and/or become an investor with much better WLB and risk adjusted returns. PS: I'm also realizing another interesting petri dish where we could see parts of what you're suggesting play out are DAOs in crypto. Theoretically, if we can arrive at a DAO that works efficiently, it would serve as proof that for certain kinds of commercial organizations, the chief executive role may be able to be diminished or even eliminated. I am very curious about whether these experiments pan out (and inside my heart hope they do) although I remain skeptical.
- jka 4y ago
  (...and perhaps that's what Hacker News is, albeit voluntary)
giantg2 4y ago
Frankly, that all reputation. It's like paying for a brand name. There are likely people who can do similar work for less money. It's just that the people putting up the money want the status that comes with the name.
- kevincox 4y ago
  I'm not sure it is "just" that. You are paying for the reputation. He has a proven track record of being incredibly effective. That is worth a lot. There are certainly people who can do similar or better work but how do you know who they are? Plus one false-positive here has astronomical impact. Not only but that reputation means that he can fetch huge compensation at competitors, so you need to pay to cover that as well.
- yowlingcat 4y ago
  If that was the case, people would make money arbitraging by doing just that. Fortunately, we don't have to speculate here! One case where you can see how the results play out here are leveraged buyouts by private equity firms. In this case, the PE firm is incentivized to cut costs in order to magnify the returns on their leverage. Obviously, the largest line item in OpEx is generally compensation, and executive compensation the largest line item there. If PE firms could cut costs here without issue, they would, because they'd make a LOT of money doing it. But...they don't. Why?
  - giantg2 4y ago
    Who says they don't? It's SOP for them to roll heads, especially at the executive level.
    - yowlingcat 4y ago
      Doesn't mean they end up cutting costs. That's generally to make sure to make sure they get a pliant executor loyal to them.
kbelder 4y ago
I think, rather, that settling for somebody 95% the caliber of Jassy can cost far more than Jassy's compensation in a company as large as Amazon. In those sorts of companies, it's worth hundreds of millions of dollars to eke out a one percent gain in revenue.
- yowlingcat 4y ago
  A more eloquent way of putting it :) I agree!

jka 4y ago

I'd be curious to see the results of (crowds of?) normal people paid to say what their responses would be in the type of situations that leaders on these pay packages have to deal with, when given similar levels of context. No doubt that's not the entire job: there's also networking, communication and thought leadership involved. But similar approaches could apply. Liability could be a trickier one.

yowlingcat 4y ago
Of those three, "networking" and "thought leadership" are more hobbies rather than concrete responsibilities of the job. There are actual concrete responsibilities that a CEO at that level needs to accomplish, a sample of which include: - fundraising - organizational structuring - hiring - strategic planning + competitive positioning - go to market motions - R&D - investor relations There's nothing fungible about any of these responsibilities, so no matter how many ordinary people you stack together, you'll never arrive at even a fraction of what a competent executive can do. Companies have executives for the same reasons countries do. Executives rotate in and out of power subject to the ongoing favor of their stakeholders, but the hierarchical structure of retaining an executive to represent the will of those stakeholders remains in place because there's no efficient way to operate otherwise.
- jka 4y ago
  Thanks for the comprehensive response. > There's nothing fungible about any of these responsibilities, so no matter how many ordinary people you stack together, you'll never arrive at even a fraction of what a competent executive can do. I think I'd disagree with that - you state it fairly strongly, but I think that each of the items you mention is possible to delegate and distribute successfully, to varying degrees. Much of that is aided by referring to existing patterns that have succeeded elsewhere. > Executives rotate in and out of power subject to the ongoing favor of their stakeholders, but the hierarchical structure of retaining an executive to represent the will of those stakeholders remains in place because there's no efficient way to operate otherwise. That I do find harder to challenge (and I don't necessarily think it's worth challenging). Conversation and consensus can arise, but even then it's useful to have someone to canvas that and say "ok, I've heard the commentary on this topic, here is our selected outcome".
  - yowlingcat 4y ago
    > I think I'd disagree with that - you state it fairly strongly, but I think that each of the items you mention is possible to delegate and distribute successfully, to varying degrees. Much of that is aided by referring to existing patterns that have succeeded elsewhere. I think we're getting a lot closer to the meat of the issue here. I agree with you that it is possible to delegate and distribute /most/ of what I mentioned successfully to varying degrees. But that leaves the "incompressible" part of the CEO, which is fundraising/investor relations and hiring/org building. Fundraising is completely impossible to delegate (if you delegate that to someone else, you'll alienate investors) and even with hiring/org building, you have to at least do the recruiting/candidate selection of top lieutenants yourself as a CEO in order to make sure that you are putting the right team of divisional heads in place to execute. You have to be a better coach than the vast majority of coaches out there to succeed in this endeavor, and to even attract and accurately assess the kind of talent that will set up the org for success. It is very easy to mess this up. On the whole, a lot of what I'm talking about is high stakes high rewards strategic dealmaking. This isn't a common skill for most people to have. It's a blend of analytical (determining leverage points, BATNA in negotiations) and creative (figuring out how to grow the pie) that is hard to practice unless you've done it before. Most decisions you make here are irreversible. The other challenge with this kind of dealmaking is that the stakes are so high and the counterparties so formidable that if you put anyone except an equally formidable party in place to negotiate with them, you'd end up in a bloodbath that ended up unfavorably for the company and favorably for the counterparty. In my opinion, that's why we end up at the steady state of executive compensation across most of the world that we see today. It's a miserable job unless you really enjoy it because everyone will (and should) blame you when things go wrong. That is made more challenging by the fact that by the time one becomes a successful CEO, one can generally retire off earnings and/or become an investor with much better WLB and risk adjusted returns. PS: I'm also realizing another interesting petri dish where we could see parts of what you're suggesting play out are DAOs in crypto. Theoretically, if we can arrive at a DAO that works efficiently, it would serve as proof that for certain kinds of commercial organizations, the chief executive role may be able to be diminished or even eliminated. I am very curious about whether these experiments pan out (and inside my heart hope they do) although I remain skeptical.
jka 4y ago
(...and perhaps that's what Hacker News is, albeit voluntary)

giantg2 4y ago

Frankly, that all reputation. It's like paying for a brand name. There are likely people who can do similar work for less money. It's just that the people putting up the money want the status that comes with the name.

kevincox 4y ago
I'm not sure it is "just" that. You are paying for the reputation. He has a proven track record of being incredibly effective. That is worth a lot. There are certainly people who can do similar or better work but how do you know who they are? Plus one false-positive here has astronomical impact. Not only but that reputation means that he can fetch huge compensation at competitors, so you need to pay to cover that as well.
yowlingcat 4y ago
If that was the case, people would make money arbitraging by doing just that. Fortunately, we don't have to speculate here! One case where you can see how the results play out here are leveraged buyouts by private equity firms. In this case, the PE firm is incentivized to cut costs in order to magnify the returns on their leverage. Obviously, the largest line item in OpEx is generally compensation, and executive compensation the largest line item there. If PE firms could cut costs here without issue, they would, because they'd make a LOT of money doing it. But...they don't. Why?
- giantg2 4y ago
  Who says they don't? It's SOP for them to roll heads, especially at the executive level.
  - yowlingcat 4y ago
    Doesn't mean they end up cutting costs. That's generally to make sure to make sure they get a pliant executor loyal to them.

kbelder 4y ago

I think, rather, that settling for somebody 95% the caliber of Jassy can cost far more than Jassy's compensation in a company as large as Amazon. In those sorts of companies, it's worth hundreds of millions of dollars to eke out a one percent gain in revenue.

yowlingcat 4y ago
A more eloquent way of putting it :) I agree!