4 ms·

I doubt it has a good ROI via recruiting, etc. Joel mentioned he spent more than a million on improving the interior design. No recruiting is going to make up f

by jd 18y ago

I doubt it has a good ROI via recruiting, etc. Joel mentioned he spent more than a million on improving the interior design. No recruiting is going to make up for that, any time soon#. And in a few years Fog Creek will move to a different location again - at which point they'll have to build a new high end office. So really, this seems to be a case of spending money to improve quality of life. The other benefits, such as for recruiting and PR are just a nice side effect. #) Assuming 50 employees, over 5 years, the costs are roughly $4000 per employee per year. That's maybe 15% of their salary, probably less. Given the choice, I would probably give up 15% of my salary to work in a nice place with good food, a good view, good equipment, and so on.

tptacek 18y ago
I agree, but then of course, spending a shit ton of money just to make yourself feel better is one of the luxuries of not being beholden to outside investors. Between ludicrous offices and the 37s "4 days a week" plan, I'd probably go with 37s.
- webwright 18y ago
  Heh, you just won't let go of that "beholden to outside investor" thing, will you? Are you suggesting that investors keep startups from getting ludicrous office space? From my experience with well-funded dotcom startups, they all tend to spend staggering amounts on sexy office space. We're lightly funded, so we sure as hell didn't. In any case, Joel isn't spending a shit ton-- he's spending ~4-6% of revenue, as he said. Decent investors would only involve themselves if you were spending an unreasonable amount of money. Joel could be up to his armpits in Series D financing and not have an investor blink at this expenditure. (if it isn't obvious, I think it's a dumb expenditure for an unprofitable startup, and a fine expenditure for Joel)
  - tptacek 18y ago
    Hm. You're right. I'm wrong. (Although I'm unlikely to "let go" of the outside investor thing; I help run a bootstrapped company, and had a bad VC experience).
- timf 18y ago
  Between ludicrous offices and the 37s "4 days a week" plan, I'd probably go with 37s. Or I was idly thinking once of a plan where you sprint for 3 weeks (still with weekends off) and then everyone has an entire week off. Over and over, ~13 weeks of vacation a year. I wonder if a refreshed, happy, and likely less compensated team like that could keep up with a full time one.
mechanical_fish 18y ago
the costs are roughly $4000 per employee per year. That's maybe 15% of their salary, probably less. You think that top software engineering graduates in New York City make $26k per year? Recalibrate! Recalibrate! I think the number you're looking for is "less than 4%". Remember that the office-construction expenses can be massaged by accountants to reduce taxes on them, and that an employee's (e.g.) $80k salary costs the employer considerably more than $80k, thanks to the employer share of things like Social Security and health insurance. To say nothing of the costs of recruiting a single employee. Note that a headhunter will charge you a cool $30k to recruit an employee with a $100k salary: http://www.asktheheadhunter.com/basics2.htm http://www.asktheheadhunter.com/basics2.htm ...and who knows what kind of stiff that headhunter is going to try to foist off on you? The chances that the $4k per employee per year is paying off for Fog Creek are much, much better than you think.
- spolsky 18y ago
  By the time we left the old office, it was costing us 2% of revenue. The new office is not full yet and is somewhat more expensive, but I expect that in the long run our real estate costs will be around 4%-6% of revenue, which is the norm for office-based workforces. The specific upgrades we paid cash for will probably end up costing 1% of an employee's salary, averaged out over everything, over the lifetime of the lease.
  - robertk 18y ago
    Just curious, how come your profile is written in 3rd person? Is this really Joel Spolsky, or a representative?
    - immad 18y ago
      spolsky gives way too many interesting comments to be just a representative.
      - captainobvious 18y ago
        wait a minute, are you spolsky?
njharman 18y ago
That's like 3-5% of their salary or at least I hope so. Just how little do you think they earn?
bootload 18y ago
"... I doubt it has a good ROI via recruiting, etc. Joel mentioned he spent more than a million on improving the interior design. No recruiting is going to make up for that, any time soon# ..." The key is to spend capital to get the best programmers to create profit. This idea isn't something Joel made up it's an idea by Phil Greenspun, "Building and keeping a good software engineering team" ~ http://philip.greenspun.com/ancient-history/managing-software-engineers http://philip.greenspun.com/ancient-history/managing-softwar... So what's your idea?
kragen 18y ago
To have "a good ROI via recruiting," never mind the etc., he just has to improve his profits by more than 40k per year, by making better products than he would have otherwise, by hiring better people than he would have otherwise --- or by having to pay 40k less per year in salary, although that seems less likely. Although the chain of causality here has a lot of randomness attached to it, if he has a few million dollars in revenue per year, such an improvement hardly seems implausible. The flip side is that spending a lot of money on something apparently unnecessary might incline you to spend more money on things that are actually unnecessary. (I'm assuming "a good ROI" means 4% per year.)

by jd 18y ago

tptacek 18y ago

I agree, but then of course, spending a shit ton of money just to make yourself feel better is one of the luxuries of not being beholden to outside investors. Between ludicrous offices and the 37s "4 days a week" plan, I'd probably go with 37s.

webwright 18y ago
Heh, you just won't let go of that "beholden to outside investor" thing, will you? Are you suggesting that investors keep startups from getting ludicrous office space? From my experience with well-funded dotcom startups, they all tend to spend staggering amounts on sexy office space. We're lightly funded, so we sure as hell didn't. In any case, Joel isn't spending a shit ton-- he's spending ~4-6% of revenue, as he said. Decent investors would only involve themselves if you were spending an unreasonable amount of money. Joel could be up to his armpits in Series D financing and not have an investor blink at this expenditure. (if it isn't obvious, I think it's a dumb expenditure for an unprofitable startup, and a fine expenditure for Joel)
- tptacek 18y ago
  Hm. You're right. I'm wrong. (Although I'm unlikely to "let go" of the outside investor thing; I help run a bootstrapped company, and had a bad VC experience).
timf 18y ago
Between ludicrous offices and the 37s "4 days a week" plan, I'd probably go with 37s. Or I was idly thinking once of a plan where you sprint for 3 weeks (still with weekends off) and then everyone has an entire week off. Over and over, ~13 weeks of vacation a year. I wonder if a refreshed, happy, and likely less compensated team like that could keep up with a full time one.

mechanical_fish 18y ago

the costs are roughly $4000 per employee per year. That's maybe 15% of their salary, probably less. You think that top software engineering graduates in New York City make $26k per year? Recalibrate! Recalibrate! I think the number you're looking for is "less than 4%". Remember that the office-construction expenses can be massaged by accountants to reduce taxes on them, and that an employee's (e.g.) $80k salary costs the employer considerably more than $80k, thanks to the employer share of things like Social Security and health insurance. To say nothing of the costs of recruiting a single employee. Note that a headhunter will charge you a cool $30k to recruit an employee with a $100k salary: http://www.asktheheadhunter.com/basics2.htm http://www.asktheheadhunter.com/basics2.htm ...and who knows what kind of stiff that headhunter is going to try to foist off on you? The chances that the $4k per employee per year is paying off for Fog Creek are much, much better than you think.

spolsky 18y ago
By the time we left the old office, it was costing us 2% of revenue. The new office is not full yet and is somewhat more expensive, but I expect that in the long run our real estate costs will be around 4%-6% of revenue, which is the norm for office-based workforces. The specific upgrades we paid cash for will probably end up costing 1% of an employee's salary, averaged out over everything, over the lifetime of the lease.
- robertk 18y ago
  Just curious, how come your profile is written in 3rd person? Is this really Joel Spolsky, or a representative?
  - immad 18y ago
    spolsky gives way too many interesting comments to be just a representative.
    - captainobvious 18y ago
      wait a minute, are you spolsky?

njharman 18y ago

That's like 3-5% of their salary or at least I hope so. Just how little do you think they earn?

bootload 18y ago

"... I doubt it has a good ROI via recruiting, etc. Joel mentioned he spent more than a million on improving the interior design. No recruiting is going to make up for that, any time soon# ..." The key is to spend capital to get the best programmers to create profit. This idea isn't something Joel made up it's an idea by Phil Greenspun, "Building and keeping a good software engineering team" ~ http://philip.greenspun.com/ancient-history/managing-software-engineers http://philip.greenspun.com/ancient-history/managing-softwar... So what's your idea?

kragen 18y ago

To have "a good ROI via recruiting," never mind the etc., he just has to improve his profits by more than 40k per year, by making better products than he would have otherwise, by hiring better people than he would have otherwise --- or by having to pay 40k less per year in salary, although that seems less likely. Although the chain of causality here has a lot of randomness attached to it, if he has a few million dollars in revenue per year, such an improvement hardly seems implausible. The flip side is that spending a lot of money on something apparently unnecessary might incline you to spend more money on things that are actually unnecessary. (I'm assuming "a good ROI" means 4% per year.)