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Obviously a great story and he does sound like quite a class act. However, I strongly disagree with building a company that lacks proper equity distribution fo

Obviously a great story and he does sound like quite a class act. However, I strongly disagree with building a company that lacks proper equity distribution for employees. A lot of the culture problems he alluded to could have been prevented by keeping the team smaller and increasing team ownership. It's great to be a founder and own 100%. But I'm not sure it's smart to build companies where people aren't on the same page when it comes to owning the creation they build together.

sivers 18y ago
Actually the problems started when equity distribution started. That's what changed some focus of the company away from the clients and on to profit-sharing, benefits, etc. I let the CFO choose the profit-sharing plan and blindly trusted her choice, until 6 months later my accountant showed me it was giving almost all net profits back to the employees, and had doubled most people's salaries. So I tried to scale it back, which of course led to huge upset, and endless company-wide meetings and votings and such, which at that point the whole mess had changed the day-to-day focus of the company so much I just felt like shutting it all down and starting something new. But I sold it instead. Lots of great lessons in what not to do. :-)
- pchristensen 18y ago
  Yet another reason I love HN. Some company founder gets mentioned in a news story, then they show up HERE to discuss it. Congrats and thanks for stopping by, Derek!
  - sivers 18y ago
    I'm a long-time HN fan (PG fan, YC fan, etc) - so HN is actually my main source of news! It was weird to see my name on the list of news yesterday.
- rantfoil 18y ago
  Derek, thanks for chiming in and clarifying. This is super helpful. It'd be interesting to hear what the reaction was. Honestly I've often wondered what would happen if you had a "gilded-company" style compensation -- everyone gets paid twice as well as anyone else in the industry, but at the same time, it's far more difficult to get hired / easier to get fired for nonperformance. There's a lot of research that suggests employee compensation is inversely correlated with satisfaction with one's job -- no matter what the job is. How strange is that? If you get paid more, you actually feel like your job is less important or interesting, and vice versa. What sort of macro effects did you see?
  - sivers 18y ago
    Unfortunately, profit-sharing didn't improve anything except people were happier (sure! their salaries doubled!). But performance didn't improve. Neither did responsibility, initiative, etc. In hindsight if I had to do it all over again, I would have tied profit-sharing to improvement in performance above the current baseline, and also had healthy bonuses instead of everyone sharing equally, whether they were coasting or thriving. Keep in mind this was a company of 85 people, 50 of which were in the warehouse $8/hr pick-pack-ship, 28 were customer service answering emails, and only 6 jobs were "other", such as bizdev, tech, or management.
    - rantfoil 18y ago
      Makes a lot of sense. This is a very important lesson to share -- and learn from.

sivers 18y ago

Actually the problems started when equity distribution started. That's what changed some focus of the company away from the clients and on to profit-sharing, benefits, etc. I let the CFO choose the profit-sharing plan and blindly trusted her choice, until 6 months later my accountant showed me it was giving almost all net profits back to the employees, and had doubled most people's salaries. So I tried to scale it back, which of course led to huge upset, and endless company-wide meetings and votings and such, which at that point the whole mess had changed the day-to-day focus of the company so much I just felt like shutting it all down and starting something new. But I sold it instead. Lots of great lessons in what not to do. :-)

pchristensen 18y ago
Yet another reason I love HN. Some company founder gets mentioned in a news story, then they show up HERE to discuss it. Congrats and thanks for stopping by, Derek!
- sivers 18y ago
  I'm a long-time HN fan (PG fan, YC fan, etc) - so HN is actually my main source of news! It was weird to see my name on the list of news yesterday.
rantfoil 18y ago
Derek, thanks for chiming in and clarifying. This is super helpful. It'd be interesting to hear what the reaction was. Honestly I've often wondered what would happen if you had a "gilded-company" style compensation -- everyone gets paid twice as well as anyone else in the industry, but at the same time, it's far more difficult to get hired / easier to get fired for nonperformance. There's a lot of research that suggests employee compensation is inversely correlated with satisfaction with one's job -- no matter what the job is. How strange is that? If you get paid more, you actually feel like your job is less important or interesting, and vice versa. What sort of macro effects did you see?
- sivers 18y ago
  Unfortunately, profit-sharing didn't improve anything except people were happier (sure! their salaries doubled!). But performance didn't improve. Neither did responsibility, initiative, etc. In hindsight if I had to do it all over again, I would have tied profit-sharing to improvement in performance above the current baseline, and also had healthy bonuses instead of everyone sharing equally, whether they were coasting or thriving. Keep in mind this was a company of 85 people, 50 of which were in the warehouse $8/hr pick-pack-ship, 28 were customer service answering emails, and only 6 jobs were "other", such as bizdev, tech, or management.
  - rantfoil 18y ago
    Makes a lot of sense. This is a very important lesson to share -- and learn from.