10 ms·

Based on what I've seen/heard, they seem to follow a similar comp philosophy to Netflix -- pay top of market to get the best people. But it's also important to

Based on what I've seen/heard, they seem to follow a similar comp philosophy to Netflix -- pay top of market to get the best people. But it's also important to note that only $300K of that is in cash. The other $600K is in profit participation, which could take years (maybe even a decade!) to be realized. It could also be worth $6M a year when it's realized. But ultimately it's an investment of your time. Or to think of it another way, you're getting paid $900K a year but you're also investing $600K a year in OpenAI, which may end up being an amazing return or nothing at all, just like any startup investment. Although with Sam at the helm, my guess is it will probably be worth more than $600K a year.

ed25519FUUU 3y ago
I guess the first part of that is like netflix, but as you know the second part is not since netflix is 100% cash unless you want to participate some portion of that in the employee stock plan.
- jedberg 3y ago
  Yes, the first part of the philosophy, pay top of market. Not the second part, where they employee gets to choose their level of exposure to investment risk. But Netflix is a public company, and OpenAI is not.
  - scarface_74 3y ago
    If I can’t use “the pay” to exchange for goods and services when I earn it, it’s not “pay”
    - gambiting 3y ago
      Obviously wrong - a company car or a gym membership plan are part of your pay even though you can't use either to pay for goods and services
      - User23 3y ago
        Obviously wrong. You’re confusing pay with compensation.
      - scarface_74 3y ago
        And I’m still trading labor for compensation that I’m exchanging for goods and services. What type of goods and services can I exchange for illiquid equity or profit sharing that may or may not come years later?
- TenJack 3y ago
  The part about paying top of market to get the best talent is the same. The breakdown of comp is not.
  - swores 3y ago
    Sorry to be perhaps slightly rude, but you don't seem to have added anything other than saying the same thing as the person you replied to?
echelon 3y ago
This is why Sam wants regulation. All this money spent, yet if the open source world can catch up, it'll all be for naught. They need a world where everyone sits atop OpenAI, not a thousand different startups with their own models. OpenAI might pay its engineers $900k, but an AI startup founder can easily get to a $5M, $10M valuation in under a year.
- deleted 3y ago
  [deleted]
scarface_74 3y ago
No, Netflix pays top of market like you said “in cash”. Paying “profit sharing” in a company that isn’t profitable isn’t nearly as valuable. Edit: I love this analogy > Or to think of it another way, you're getting paid $900K a year but you're also investing $600K a year in OpenAI, which may end up being an amazing return or nothing at all, just like any startup investment. Would someone invest 2/3rds of their compensation in one company? I know I diversify my RSUs within six months after getting them.
- ladberg 3y ago
  I feel like person you're replying to specifically implied that OpenAI does it differently in that aspect, and they were also high up at Netflix so is likely very familiar :)
- jedberg 3y ago
  > Would someone invest 2/3rds of their compensation in one company? I know I diversify my RSUs within six months after getting them. I also sell my RSUs right away. But you're forgetting one thing -- if I make $600K somewhere else, I can't invest it in OpenAI. It's the opportunity to invest in a startup that you wouldn't get otherwise that is most valuable, if you think the startup will be valuable.
  - scarface_74 3y ago
    Do you think the next funding round or when it goes public will increase its valuation? Can you name on tech company that went public in the past decade that has outperformed the S&P? What’s OpenAIs moat that couldn’t be duplicated by a deep pocketed public tech company like Facebook, Google or Amazon (my employer)? Two of those companies already have large publicly available data centers and an existing customer base to sell to.
jocaal 3y ago
Honestly, if you take 300k home, the risk isn't that high. But the reward is insane.
- deleted 3y ago
  [deleted]
- dheera 3y ago
  To be realistic ... 300K in the bay is barely livable if you're targeting a middle class life with kids and targeting retiring at 65. First, ~46% of it is gone in taxes including federal tax (~25%), state tax (~8%), FICA (~4%), and sales tax on everything you eventually use the money for (~9%). So that's 162K left. Not a lot to pay sky-high rents, car payments, insane medical bills despite insurance, lawyers to fight said bills, save up money for parental elderly care, save up money for yourself for retirement, etc. And yeah, having kids on that money? Very difficult. If you're not in the bay area, different story, it's a very nice income. But they probably won't give you that package if you're remote. And if you're in the bay and not planning on having kids, it's an okay salary.
  - tyingq 3y ago
    I get what you're saying, but the median income for SFO is way below what tech people get paid. "barely livable" is perhaps a bridge too far for the $300k+ crowd. :)
    - dheera 3y ago
      > but the median income for SFO is way below Yes, it's a huge problem. There are greedy people buying more houses than they can use as investment vehicles, renting them out to everyone else who can't afford housing at unaffordable prices, and that ultimately increases prices across the board on everything because local businesses and service industry also need to rent commercial space and personal space -- and that ultimately comes from greedy landlords who keep lobbying against building more housing. Most of SF is NOT living a life that I would call "livable". Having roommates in late 30s out of necessity rather than choice, and working out of a bedroom with no sunlight and not retrofitted for earthquake and fire safety and removed of mold spores isn't even ethical IMO, but that's the reality that lots of people live in.
yieldcrv 3y ago
sure but it looks like you can sell PPU's to investors? no "right to first refusal" or some transfer restriction?
- fragmede 3y ago
  even if there was, while it might take a decade before IPO and market price discovery, it's almost expected that they would make a private tender offer sometime before that, letting employees realize some value of their shares long before 10 years is up.
  - yieldcrv 3y ago
    or you could just sell and take the $900k or so, and plop it into some PE funds where you’ll be a preferred investor in a variety of high quality, lower valued, offerings and don't have to waste a decade of your life on the graciousness of one employer’s management and prospects fingers crossed. don't forget to buy some of the S&P too.
ren_engineer 3y ago
yeah, Netflix is almost all cash in comparison. No clue what kind of liquidity OpenAI provides to cash out. Since it's "profit based" it actually seems even riskier, Microsoft could prevent OpenAI from showing any profit if they really want to and if the info about the actual architecture of GPT-4 is legit, OpenAI might not have as much of an edge on the competition as they'd like people to believe. So that equity might not be worth quite as much as they think and explains why they so cagey about it in their paper on it. And why Sam Altman is calling for restrictions on research to slow down competitors https://twitter.com/soumithchintala/status/1671267150101721090 https://twitter.com/soumithchintala/status/16712671501017210...
tmaly 3y ago
I would take it. There are some interesting things to work on.
elwell 3y ago
> you're getting paid $900K a year but you're also investing $600K a year in OpenAI It might sound simple, but I've never viewed startup equity like that; thanks for the slightly different perspective.
ipqk 3y ago
Beware of taxes though. If you leave the company before it's public, and the stock has increased in value, you have to pay capital gains taxes when exercising and there's the possibility that stock may end up worthless. There have been many startup employees that have paid hundreds of thousands of dollars in taxes only to see their paper gains eventually disappear.
908B64B197 3y ago
I recall a story someone told me a while ago. Software business that did local CoL/prevailing wages. Hired an intern one summer that was just running around in circles around the other, more senior devs. Useless to say they loved him and the next summer they tried to get him back, even offering a signing bonus for an internship (something they considered unheard of) but he was already at a large search engine company down in the Bay. You can guess the comp was probably already 3x what his previous job was offering. Of course, he wouldn't return. There's a whole class of engineers were completely invisible to most companies, even if they are in the same "local market" [0][1] (Some use the term "dark matter devs" but I know it has another meaning [2]). These guys tend to fly under the radar quite a bit. If you are in a tier 2 market or company, your chances of attracting one are close to nil. Because they are extremely valuable, they don't interview a lot and tend to hop between companies where they know people (or get fast tracked internally). FAANG companies have internship pipelines, with bonus for returning interns. These guys are off the market years before they even graduate. [0] https://blog.pragmaticengineer.com/software-engineering-salaries-in-the-netherlands-and-europe/ https://blog.pragmaticengineer.com/software-engineering-sala... [1] http://danluu.com/bimodal-compensation/ http://danluu.com/bimodal-compensation/ [2] https://www.hanselman.com/blog/dark-matter-developers-the-unseen-99 https://www.hanselman.com/blog/dark-matter-developers-the-un...
paulpauper 3y ago
Open AI does not make profits though Although with Sam at the helm, my guess is it will probably be worth more than $600K a year. or not . I would rather work for facebook with profit participation. zuck seems to know how to make a profit.
ryan93 3y ago
I don't understand why people think sam has magic powers. He started one failed company and has no technical ability to make openai into anything more than it is.

ed25519FUUU 3y ago

I guess the first part of that is like netflix, but as you know the second part is not since netflix is 100% cash unless you want to participate some portion of that in the employee stock plan.

jedberg 3y ago
Yes, the first part of the philosophy, pay top of market. Not the second part, where they employee gets to choose their level of exposure to investment risk. But Netflix is a public company, and OpenAI is not.
- scarface_74 3y ago
  If I can’t use “the pay” to exchange for goods and services when I earn it, it’s not “pay”
  - gambiting 3y ago
    Obviously wrong - a company car or a gym membership plan are part of your pay even though you can't use either to pay for goods and services
    - User23 3y ago
      Obviously wrong. You’re confusing pay with compensation.
    - scarface_74 3y ago
      And I’m still trading labor for compensation that I’m exchanging for goods and services. What type of goods and services can I exchange for illiquid equity or profit sharing that may or may not come years later?
TenJack 3y ago
The part about paying top of market to get the best talent is the same. The breakdown of comp is not.
- swores 3y ago
  Sorry to be perhaps slightly rude, but you don't seem to have added anything other than saying the same thing as the person you replied to?

echelon 3y ago

This is why Sam wants regulation. All this money spent, yet if the open source world can catch up, it'll all be for naught. They need a world where everyone sits atop OpenAI, not a thousand different startups with their own models. OpenAI might pay its engineers $900k, but an AI startup founder can easily get to a $5M, $10M valuation in under a year.

deleted 3y ago
[deleted]

scarface_74 3y ago

No, Netflix pays top of market like you said “in cash”. Paying “profit sharing” in a company that isn’t profitable isn’t nearly as valuable. Edit: I love this analogy > Or to think of it another way, you're getting paid $900K a year but you're also investing $600K a year in OpenAI, which may end up being an amazing return or nothing at all, just like any startup investment. Would someone invest 2/3rds of their compensation in one company? I know I diversify my RSUs within six months after getting them.

ladberg 3y ago
I feel like person you're replying to specifically implied that OpenAI does it differently in that aspect, and they were also high up at Netflix so is likely very familiar :)
jedberg 3y ago
> Would someone invest 2/3rds of their compensation in one company? I know I diversify my RSUs within six months after getting them. I also sell my RSUs right away. But you're forgetting one thing -- if I make $600K somewhere else, I can't invest it in OpenAI. It's the opportunity to invest in a startup that you wouldn't get otherwise that is most valuable, if you think the startup will be valuable.
- scarface_74 3y ago
  Do you think the next funding round or when it goes public will increase its valuation? Can you name on tech company that went public in the past decade that has outperformed the S&P? What’s OpenAIs moat that couldn’t be duplicated by a deep pocketed public tech company like Facebook, Google or Amazon (my employer)? Two of those companies already have large publicly available data centers and an existing customer base to sell to.

jocaal 3y ago

Honestly, if you take 300k home, the risk isn't that high. But the reward is insane.

deleted 3y ago
[deleted]
dheera 3y ago
To be realistic ... 300K in the bay is barely livable if you're targeting a middle class life with kids and targeting retiring at 65. First, ~46% of it is gone in taxes including federal tax (~25%), state tax (~8%), FICA (~4%), and sales tax on everything you eventually use the money for (~9%). So that's 162K left. Not a lot to pay sky-high rents, car payments, insane medical bills despite insurance, lawyers to fight said bills, save up money for parental elderly care, save up money for yourself for retirement, etc. And yeah, having kids on that money? Very difficult. If you're not in the bay area, different story, it's a very nice income. But they probably won't give you that package if you're remote. And if you're in the bay and not planning on having kids, it's an okay salary.
- tyingq 3y ago
  I get what you're saying, but the median income for SFO is way below what tech people get paid. "barely livable" is perhaps a bridge too far for the $300k+ crowd. :)
  - dheera 3y ago
    > but the median income for SFO is way below Yes, it's a huge problem. There are greedy people buying more houses than they can use as investment vehicles, renting them out to everyone else who can't afford housing at unaffordable prices, and that ultimately increases prices across the board on everything because local businesses and service industry also need to rent commercial space and personal space -- and that ultimately comes from greedy landlords who keep lobbying against building more housing. Most of SF is NOT living a life that I would call "livable". Having roommates in late 30s out of necessity rather than choice, and working out of a bedroom with no sunlight and not retrofitted for earthquake and fire safety and removed of mold spores isn't even ethical IMO, but that's the reality that lots of people live in.

yieldcrv 3y ago

sure but it looks like you can sell PPU's to investors? no "right to first refusal" or some transfer restriction?

fragmede 3y ago
even if there was, while it might take a decade before IPO and market price discovery, it's almost expected that they would make a private tender offer sometime before that, letting employees realize some value of their shares long before 10 years is up.
- yieldcrv 3y ago
  or you could just sell and take the $900k or so, and plop it into some PE funds where you’ll be a preferred investor in a variety of high quality, lower valued, offerings and don't have to waste a decade of your life on the graciousness of one employer’s management and prospects fingers crossed. don't forget to buy some of the S&P too.

ren_engineer 3y ago

yeah, Netflix is almost all cash in comparison. No clue what kind of liquidity OpenAI provides to cash out. Since it's "profit based" it actually seems even riskier, Microsoft could prevent OpenAI from showing any profit if they really want to and if the info about the actual architecture of GPT-4 is legit, OpenAI might not have as much of an edge on the competition as they'd like people to believe. So that equity might not be worth quite as much as they think and explains why they so cagey about it in their paper on it. And why Sam Altman is calling for restrictions on research to slow down competitors https://twitter.com/soumithchintala/status/1671267150101721090 https://twitter.com/soumithchintala/status/16712671501017210...

tmaly 3y ago

I would take it. There are some interesting things to work on.

elwell 3y ago

> you're getting paid $900K a year but you're also investing $600K a year in OpenAI It might sound simple, but I've never viewed startup equity like that; thanks for the slightly different perspective.

ipqk 3y ago

Beware of taxes though. If you leave the company before it's public, and the stock has increased in value, you have to pay capital gains taxes when exercising and there's the possibility that stock may end up worthless. There have been many startup employees that have paid hundreds of thousands of dollars in taxes only to see their paper gains eventually disappear.

908B64B197 3y ago

I recall a story someone told me a while ago. Software business that did local CoL/prevailing wages. Hired an intern one summer that was just running around in circles around the other, more senior devs. Useless to say they loved him and the next summer they tried to get him back, even offering a signing bonus for an internship (something they considered unheard of) but he was already at a large search engine company down in the Bay. You can guess the comp was probably already 3x what his previous job was offering. Of course, he wouldn't return. There's a whole class of engineers were completely invisible to most companies, even if they are in the same "local market" [0][1] (Some use the term "dark matter devs" but I know it has another meaning [2]). These guys tend to fly under the radar quite a bit. If you are in a tier 2 market or company, your chances of attracting one are close to nil. Because they are extremely valuable, they don't interview a lot and tend to hop between companies where they know people (or get fast tracked internally). FAANG companies have internship pipelines, with bonus for returning interns. These guys are off the market years before they even graduate. [0] https://blog.pragmaticengineer.com/software-engineering-salaries-in-the-netherlands-and-europe/ https://blog.pragmaticengineer.com/software-engineering-sala... [1] http://danluu.com/bimodal-compensation/ http://danluu.com/bimodal-compensation/ [2] https://www.hanselman.com/blog/dark-matter-developers-the-unseen-99 https://www.hanselman.com/blog/dark-matter-developers-the-un...

paulpauper 3y ago

Open AI does not make profits though Although with Sam at the helm, my guess is it will probably be worth more than $600K a year. or not . I would rather work for facebook with profit participation. zuck seems to know how to make a profit.

ryan93 3y ago

I don't understand why people think sam has magic powers. He started one failed company and has no technical ability to make openai into anything more than it is.