3 ms·

How can employee costs be 1.5B/year?

bgirard 2y ago
Keyword is "could". Currently 2.5k employees, that's $600k per employees but if there's plans to significantly increase employees that can be quite a bit lower. That's likely including equity grants. It could also have to do with how the accounting works for equity grants, I heard they were charged on year 0 at time of hire but I'm not sure. Does anyone know better? Clearly they're paying to attract talent.
- kristopolous 2y ago
  How do you normalize for prestige and clout chasing to actually get quality though?
  - bgirard 2y ago
    That's a question for their hiring team, not me. But normally companies apply a culture fit interview. Also it's not inertially bad. Non-compete agreements allow employees to become field expert in niche areas and to jump between companies standing up their infrastructure. Getting better and learning from their mistake each time. Hiring those individuals is a costly but effective way to scale up quickly. I don't think we should shame anyone for doing that if they're delivering value doing that.
- bbatha 2y ago
  $600k per employee doesn't sound unreasonable even without a hiring plan, overhead per employee is typically in the 150-200% range putting average pay at 300-400k. At Bay Area salaries at one of the most prestigious places to work requiring a highly specialized skill set that sounds pretty reasonable.
  - jedberg 2y ago
    That rule of thumb tends to break down at high salaries. Most of those costs don't scale with salary (like desk space, insurance costs, 401k match which is usually capped, etc).
  - michaelt 2y ago
    Is "a highly specialized skill set" consistent with "2.5k employees" ?
office_drone 2y ago
https://www.bizjournals.com/sanfrancisco/inno/stories/news/2023/06/26/open-ai-is-paying-3x-the-industry-median.html https://www.bizjournals.com/sanfrancisco/inno/stories/news/2...
summerlight 2y ago
Why not? Employment can cost a lot. They have 2.5k employees so the base of the estimation is $600K on average. Even if you don't count their equity compensation, their base salary is known to be best in the industry ($250K~$500K?) so $600K makes sense since then the real cost of employment include other various stuffs other than just cashes.

Keyword is "could". Currently 2.5k employees, that's $600k per employees but if there's plans to significantly increase employees that can be quite a bit lower. That's likely including equity grants. It could also have to do with how the accounting works for equity grants, I heard they were charged on year 0 at time of hire but I'm not sure. Does anyone know better? Clearly they're paying to attract talent.

kristopolous 2y ago
How do you normalize for prestige and clout chasing to actually get quality though?
- bgirard 2y ago
  That's a question for their hiring team, not me. But normally companies apply a culture fit interview. Also it's not inertially bad. Non-compete agreements allow employees to become field expert in niche areas and to jump between companies standing up their infrastructure. Getting better and learning from their mistake each time. Hiring those individuals is a costly but effective way to scale up quickly. I don't think we should shame anyone for doing that if they're delivering value doing that.
bbatha 2y ago
$600k per employee doesn't sound unreasonable even without a hiring plan, overhead per employee is typically in the 150-200% range putting average pay at 300-400k. At Bay Area salaries at one of the most prestigious places to work requiring a highly specialized skill set that sounds pretty reasonable.
- jedberg 2y ago
  That rule of thumb tends to break down at high salaries. Most of those costs don't scale with salary (like desk space, insurance costs, 401k match which is usually capped, etc).
- michaelt 2y ago
  Is "a highly specialized skill set" consistent with "2.5k employees" ?

office_drone 2y ago

https://www.bizjournals.com/sanfrancisco/inno/stories/news/2023/06/26/open-ai-is-paying-3x-the-industry-median.html https://www.bizjournals.com/sanfrancisco/inno/stories/news/2...

summerlight 2y ago

Why not? Employment can cost a lot. They have 2.5k employees so the base of the estimation is $600K on average. Even if you don't count their equity compensation, their base salary is known to be best in the industry ($250K~$500K?) so $600K makes sense since then the real cost of employment include other various stuffs other than just cashes.