3 ms·

No not really. If I generate $1m of value for a company and they pay me $90k a year that isn't really sharing profit.

by roflyear 4y ago

jstanley 4y ago
But if you cost the company $1m you still get your $90k.
- WitCanStain 4y ago
  More likely you get fired.
- roflyear 4y ago
  Hopefully you do not have many employees that are costing you $1m a year...
  - necovek 4y ago
    Look at the cost of Zuckerberg's metaverse push to Meta, and Musk's work to Twitter: sure, that's currently sitting at a lot more than that, but they are hoping to turn that around in a number of years. Which is to say that cost/value proposition is never simple. I've been at companies where people were paid simply not to jump to competitors.
    - dotnet00 4y ago
      It isn't even limited to high profile cases like those. Same goes for a lot of hiring (in junior positions especially), it often takes some time for the employee to learn the ropes, during which time their cost (both in terms of direct costs like salary, benefits and equipment and indirect costs like the time of the people bringing them up to speed) is almost definitely higher than the value they're bringing to the business.
      - necovek 4y ago
        Definitely: I was just putting out obvious extreme cases to illustrate the point.
ricksunny 4y ago
Not disagreeing; but for clarity you'd want to refer to generating surplus value rather than value, i.e. net of costs. i.e. if my work can be construed as having created $1M of revenue, but $990,000 of cost (say some low-commission dropship affiliate sales structure, or online payments with a small transaction fee), I've only created $10,000 of surplus value, out of which I can make a case for a different distribution scheme based on an update (read: agitation) of normative values.
- roflyear 4y ago
  Sure, yeah. Agreed.
lolinder 4y ago
If you can convincingly demonstrate that you singlehandedly generate $1m revenue for a company, then I'm confident that you have the negotiating power to demand a share. The problem is that in most cases you can't do that. You might have been the person who made the last push to make the revenue possible, but you were building on the work of everyone else who was working for that company and you were leveraging someone else's resources to make it happen. We have to have some way to agree what portion of that profit can reasonably be attributed to you. To avoid complicated math and guesswork every quarter, most of us agree to a fixed salary as a reasonable estimate for a fair share of the value we're creating.
- gremlinsinc 4y ago
  I want to start an agency that does everything digital, but also some mrr micro SaaS projects. I want it to be an equal equity corp basically every hour invested earns you shares based on your senior and tenure.... Sr dev multiplier x 2 years with company for example. Then we'd earmark like 30 percent of revenue to go into profit sharing and each state gets a reward. The shares also calculate your voting threshold. Senior team will be given an edge so there's an ethical dictator but not an insurmountable thing. It might take 10 people to out vote the execs but you can't buy shares it's all earned by actions and time investment etc... I also want to build an ERP system that can actually run a co-op like this with multiple streams of income, multiple point pools to reward employees or even customers etc.... It'd also network with other co-ops to build symmetry like Amazon marketplace does for sellers, everyone would be invested in every other syndicated companies success.
- roflyear 4y ago
  Well, sure. But people are not programmed like that. Sales people often can get up to or more than 50% of the profits (after all expenses) as commission. I've seen up to 80 or 90 percent for companies with extreme growth focus. Programmers don't generate value directly the same way, but often you can attribute value to products they create and compensate them fairly.
  - lolinder 4y ago
ren_engineer 4y ago
in that case you should bet on yourself and start your own company. It comes down to risk and reward
- roflyear 4y ago
  I'm not implying that companies don't bring value by their nature. They absolutely do. I'm also not implying that I could generate this value on my own, though I have before. I'm just saying, if I have an employee and he makes me $1m a year, I'm going to pay him well - I'll pay that employee what is fair in the context of what value we enable him to generate for us. That usually means the employee is worth at least 50% of that in compensation, btw. This is why if you bring a deal to a company as a sales person commissions are around that number (50% of profit).

No not really. If I generate $1m of value for a company and they pay me $90k a year that isn't really sharing profit.

jstanley 4y ago

But if you cost the company $1m you still get your $90k.

WitCanStain 4y ago
More likely you get fired.
roflyear 4y ago
Hopefully you do not have many employees that are costing you $1m a year...
- necovek 4y ago
  Look at the cost of Zuckerberg's metaverse push to Meta, and Musk's work to Twitter: sure, that's currently sitting at a lot more than that, but they are hoping to turn that around in a number of years. Which is to say that cost/value proposition is never simple. I've been at companies where people were paid simply not to jump to competitors.
  - dotnet00 4y ago
    It isn't even limited to high profile cases like those. Same goes for a lot of hiring (in junior positions especially), it often takes some time for the employee to learn the ropes, during which time their cost (both in terms of direct costs like salary, benefits and equipment and indirect costs like the time of the people bringing them up to speed) is almost definitely higher than the value they're bringing to the business.
    - necovek 4y ago
      Definitely: I was just putting out obvious extreme cases to illustrate the point.

ricksunny 4y ago

Not disagreeing; but for clarity you'd want to refer to generating surplus value rather than value, i.e. net of costs. i.e. if my work can be construed as having created $1M of revenue, but $990,000 of cost (say some low-commission dropship affiliate sales structure, or online payments with a small transaction fee), I've only created $10,000 of surplus value, out of which I can make a case for a different distribution scheme based on an update (read: agitation) of normative values.

roflyear 4y ago
Sure, yeah. Agreed.

lolinder 4y ago

If you can convincingly demonstrate that you singlehandedly generate $1m revenue for a company, then I'm confident that you have the negotiating power to demand a share. The problem is that in most cases you can't do that. You might have been the person who made the last push to make the revenue possible, but you were building on the work of everyone else who was working for that company and you were leveraging someone else's resources to make it happen. We have to have some way to agree what portion of that profit can reasonably be attributed to you. To avoid complicated math and guesswork every quarter, most of us agree to a fixed salary as a reasonable estimate for a fair share of the value we're creating.

gremlinsinc 4y ago
I want to start an agency that does everything digital, but also some mrr micro SaaS projects. I want it to be an equal equity corp basically every hour invested earns you shares based on your senior and tenure.... Sr dev multiplier x 2 years with company for example. Then we'd earmark like 30 percent of revenue to go into profit sharing and each state gets a reward. The shares also calculate your voting threshold. Senior team will be given an edge so there's an ethical dictator but not an insurmountable thing. It might take 10 people to out vote the execs but you can't buy shares it's all earned by actions and time investment etc... I also want to build an ERP system that can actually run a co-op like this with multiple streams of income, multiple point pools to reward employees or even customers etc.... It'd also network with other co-ops to build symmetry like Amazon marketplace does for sellers, everyone would be invested in every other syndicated companies success.
roflyear 4y ago
Well, sure. But people are not programmed like that. Sales people often can get up to or more than 50% of the profits (after all expenses) as commission. I've seen up to 80 or 90 percent for companies with extreme growth focus. Programmers don't generate value directly the same way, but often you can attribute value to products they create and compensate them fairly.
- lolinder 4y ago

ren_engineer 4y ago

in that case you should bet on yourself and start your own company. It comes down to risk and reward

roflyear 4y ago
I'm not implying that companies don't bring value by their nature. They absolutely do. I'm also not implying that I could generate this value on my own, though I have before. I'm just saying, if I have an employee and he makes me $1m a year, I'm going to pay him well - I'll pay that employee what is fair in the context of what value we enable him to generate for us. That usually means the employee is worth at least 50% of that in compensation, btw. This is why if you bring a deal to a company as a sales person commissions are around that number (50% of profit).