5 ms·

I wonder why not just make it an employee-owned cooperative at that point? I understand there are funding considerations, and founders won't get the lion share

I wonder why not just make it an employee-owned cooperative at that point? I understand there are funding considerations, and founders won't get the lion share, but it fits the stated values better.

setheron 1y ago
Good point. The other aspect that I didn't buy too much was the original blog entry claims the salary is enough since the founders themselves have kids and are living in San Francisco. They are coming from a point of economic safety from prior successful ventures and maybe are on multiple boards with other income streams. Anyways. I like the intent so I won't be too critical.
- deleted 1y ago
  [deleted]
- steveklabnik 1y ago
  The Bay Area is expensive, but I assure you that many families with kids live on less than $207,264. That said, everyone has their own personal requirements, and startups aren't for everyone. Around a quarter of the company, last I checked, lives in the Bay area, so while we obviously miss out on some good people who want more money, we haven't had an issue with finding enough people who are happy with the compensation. (I myself took a pay cut to join Oxide, but I live in Austin, which isn't cheap but also isn't as expensive.)
  - setheron 1y ago
    I disagree based on my own personal experience of raising kids in California but they are all young and I'm paying quite a lot for preschool :P I'm also carrying a mortgage as I'm younger which is ~30-40% of my take home pay. Total tangent: 2024 Jujutsu was my favorite tool to learn and your posts helped me learn it. Thank you.
    - steveklabnik 1y ago
      https://www.sfchronicle.com/california/article/how-much-money-to-be-considered-rich-bay-area-19420480.php https://www.sfchronicle.com/california/article/how-much-mone... > the [SF metro] area’s median household income [was] roughly $120,000 [in 2022] That, being the median, includes a lot of folks who make less. > Total tangent: Awesome, so glad to hear it! You're welcome. I wish I could find more time to continue writing V2...
- parrit 1y ago
  Yeah $175k plus 30% say stake in high growth company plus already owns home plus parents help woth kids and they own home nearby is different to $175k none of above.
  - steveklabnik 1y ago
    That $175k was pre-pandemic, as the post says, it's $207,264 now. I'd also say that you're presuming a lot about the lifestyle of some strangers on the internet.
    - ahl 1y ago
      Which is $167,202 in pre-pandemic, inflation-adjusted dollars.
    - parrit 1y ago
      That's the point. "$175k is good enough for me" doesn't mean much, especially as they also have a large stake in the company (not an assumption) as well as possibly other advantages (or not, they dont divulge). Don't get me wrong. Rethinking comp is great and they are paying well. But you can't make the argument that X is enough for founders (plus let's forget equity!!) and so X is generous for everyone.
      - steveklabnik 1y ago
        We all receive equity.
        mrcwinn 1y ago
        All the same equity, I assume?
        steveklabnik 1y ago
        No, it’s variable. This is covered in this thread and in the original article.
TZubiri 1y ago
But compensation is the opposite of ownership? And there's no mention of equity here. In fact equity compensation is very common in SF startups.
- ahl 1y ago
  Equity is mentioned in the previous post: > Some will say that we should be talking about equity, not cash compensation. While it’s true that startup equity is important, it’s also true that startup equity doesn’t pay the orthodontist’s bill or get the basement repainted. We believe that every employee should have equity to give them a stake in the company’s future (and that an outsized return for investors should also be an outsized return for employees), but we also believe that the presence of equity can’t be used as an excuse for unsustainably low cash compensation. As for how equity is determined, it really deserves its own in-depth treatment, but in short, equity compensates for risk – and in a startup, risk reduces over time: the first employee takes much more risk than the hundredth.
  - TZubiri 1y ago
    Yeah, but equity is very standard in SF startups, Oxide actually goes in the opposite direction, by reducing weight from equity and placing it on salary.
    - ahl 1y ago
      What makes you say that? We talk about salary compensation, yes, but there's also equity compensation.
      - TZubiri 1y ago
        Oh I didn't notice I was talking to a primary source. Below I have tried to make clear what the original statement was (root comment), the implicit presumption in it that I adressed (that flat salaries make a company more co-op) instead of addressing the actual now invalidated question (why not 'make it this other thing), why I think it's wrong and what I think is the case (the opposite). None of this is necessarily worthy of such deep elucidation, mind you, but I quite enjoy the nerdy depth-first nitpickiness that only internet threads can afford. So here goes nothing: The root comment asks "why not make it an employee owned co-op at this point." implying that Oxide's salary policy difference, (diff between the Oxide fork and the SF Startup base) brings it too close to employee-owned status. What I say is, au contraire mon amie, the delta that Oxide's bylaws/RFP apply on top of the base Corp Structure refer to the fixed compensation, where equity/ownership remains largely unchanged (unchanged from the base, not inexistent or unchanged compared to the base of the base, the commodity non-sf Corp.). So to the extent that it is employee-owned, it is a property of the immediate base and not of the fork. One could even argue that since total compensation a limited resource, an increase in fixed compensation means a decrease in equity compensation and viceversa (more salary less profits, less salary more profits), therefore the flat salary difference of Oxide pulls them AWAY from employee-ownership (albeit only slightly admittedly), by making fixed compensation a stronger component of compensation than equity, (at least compensation-wise, as there are non comp. properties of ownership) If I may mathematically summarize in oversimplified 1D political terms. Consider the Political Alignment 'PA' of company structures as reals [-1;+1], where right = (0;1], left = [-1;0) and center = [-ε;+ε]. Then: PA(Co-op) < PA(SF Corp) < PA(Oxide) < PA(WY/DW Corp) And not: PA(Co-op) ≈ PA(Oxide) < PA(SF Corp) As root comment would suggest. I guess what I'm saying big picture is that Oxide is a political-center Company and OS. It was born treading the needle between Linux and Oracle, which are already quite centered Orgs/OS when compared to the extremes like GNU and Apple. Thank you for coming to my TED talk and yes, before someone asks, I have kissed a girl before.
tptacek 1y ago
Presumably because it would be untenable to fund a hardware startup that needs to carry inventory as an employee-owned co-op.
- jszymborski 1y ago
  Funding for co-ops is usually a sore spot for sure, and like you pointed out, they're a hardware startup, which often require more funding than most. That said, I wonder how far traditional bank loans + loans for the founders themselves could have gotten them. Clearly not as straightforward as just keeping it a private corp and trading funding for equity.
  - steveklabnik 1y ago
    > I wonder how far traditional bank loans + loans for the founders themselves could have gotten them. There's a reason startups generally don't get traditional bank loans: they're far too risky of a loan for the bank to be interested!
  - sunshowers 1y ago
    Without going into specifics, both debt and equity financing have their place.
jasode 1y ago
>I wonder why not just make it an employee-owned cooperative at that point? I understand there are funding considerations, The ~75 employees probably don't have enough personal money to buy out the previous investors to convert it into a true workers co-op. Reportedly ~$78 million total raised (over 3 rounds) and last round was $44 million: https://www.google.com/search?q=0xide+raised+funding https://www.google.com/search?q=0xide+raised+funding https://www.crunchbase.com/organization/oxide/company_financials https://www.crunchbase.com/organization/oxide/company_financ... The alternative of turning it into a hybrid/partially employee-owned company where the VC investors still own their % shares is still too expensive for employees to "buy" because you're supposed to value the shares at the same present price as the investors' shares. (We're not talking backdating stock options at an artificially lower price here.) I guess one could create loans where company let's employees pay for their ownership over time. The current investors probably won't agree to that.

I wonder why not just make it an employee-owned cooperative at that point? I understand there are funding considerations, and founders won't get the lion share, but it fits the stated values better.

setheron 1y ago

Good point. The other aspect that I didn't buy too much was the original blog entry claims the salary is enough since the founders themselves have kids and are living in San Francisco. They are coming from a point of economic safety from prior successful ventures and maybe are on multiple boards with other income streams. Anyways. I like the intent so I won't be too critical.

deleted 1y ago
[deleted]
steveklabnik 1y ago
The Bay Area is expensive, but I assure you that many families with kids live on less than $207,264. That said, everyone has their own personal requirements, and startups aren't for everyone. Around a quarter of the company, last I checked, lives in the Bay area, so while we obviously miss out on some good people who want more money, we haven't had an issue with finding enough people who are happy with the compensation. (I myself took a pay cut to join Oxide, but I live in Austin, which isn't cheap but also isn't as expensive.)
- setheron 1y ago
  I disagree based on my own personal experience of raising kids in California but they are all young and I'm paying quite a lot for preschool :P I'm also carrying a mortgage as I'm younger which is ~30-40% of my take home pay. Total tangent: 2024 Jujutsu was my favorite tool to learn and your posts helped me learn it. Thank you.
  - steveklabnik 1y ago
    https://www.sfchronicle.com/california/article/how-much-money-to-be-considered-rich-bay-area-19420480.php https://www.sfchronicle.com/california/article/how-much-mone... > the [SF metro] area’s median household income [was] roughly $120,000 [in 2022] That, being the median, includes a lot of folks who make less. > Total tangent: Awesome, so glad to hear it! You're welcome. I wish I could find more time to continue writing V2...
parrit 1y ago
Yeah $175k plus 30% say stake in high growth company plus already owns home plus parents help woth kids and they own home nearby is different to $175k none of above.
- steveklabnik 1y ago
  That $175k was pre-pandemic, as the post says, it's $207,264 now. I'd also say that you're presuming a lot about the lifestyle of some strangers on the internet.
  - ahl 1y ago
    Which is $167,202 in pre-pandemic, inflation-adjusted dollars.
  - parrit 1y ago
    That's the point. "$175k is good enough for me" doesn't mean much, especially as they also have a large stake in the company (not an assumption) as well as possibly other advantages (or not, they dont divulge). Don't get me wrong. Rethinking comp is great and they are paying well. But you can't make the argument that X is enough for founders (plus let's forget equity!!) and so X is generous for everyone.
    - steveklabnik 1y ago
      We all receive equity.
      - mrcwinn 1y ago
        All the same equity, I assume?
        steveklabnik 1y ago
        No, it’s variable. This is covered in this thread and in the original article.

TZubiri 1y ago

But compensation is the opposite of ownership? And there's no mention of equity here. In fact equity compensation is very common in SF startups.

ahl 1y ago
Equity is mentioned in the previous post: > Some will say that we should be talking about equity, not cash compensation. While it’s true that startup equity is important, it’s also true that startup equity doesn’t pay the orthodontist’s bill or get the basement repainted. We believe that every employee should have equity to give them a stake in the company’s future (and that an outsized return for investors should also be an outsized return for employees), but we also believe that the presence of equity can’t be used as an excuse for unsustainably low cash compensation. As for how equity is determined, it really deserves its own in-depth treatment, but in short, equity compensates for risk – and in a startup, risk reduces over time: the first employee takes much more risk than the hundredth.
- TZubiri 1y ago
  Yeah, but equity is very standard in SF startups, Oxide actually goes in the opposite direction, by reducing weight from equity and placing it on salary.
  - ahl 1y ago
    What makes you say that? We talk about salary compensation, yes, but there's also equity compensation.
    - TZubiri 1y ago
      Oh I didn't notice I was talking to a primary source. Below I have tried to make clear what the original statement was (root comment), the implicit presumption in it that I adressed (that flat salaries make a company more co-op) instead of addressing the actual now invalidated question (why not 'make it this other thing), why I think it's wrong and what I think is the case (the opposite). None of this is necessarily worthy of such deep elucidation, mind you, but I quite enjoy the nerdy depth-first nitpickiness that only internet threads can afford. So here goes nothing: The root comment asks "why not make it an employee owned co-op at this point." implying that Oxide's salary policy difference, (diff between the Oxide fork and the SF Startup base) brings it too close to employee-owned status. What I say is, au contraire mon amie, the delta that Oxide's bylaws/RFP apply on top of the base Corp Structure refer to the fixed compensation, where equity/ownership remains largely unchanged (unchanged from the base, not inexistent or unchanged compared to the base of the base, the commodity non-sf Corp.). So to the extent that it is employee-owned, it is a property of the immediate base and not of the fork. One could even argue that since total compensation a limited resource, an increase in fixed compensation means a decrease in equity compensation and viceversa (more salary less profits, less salary more profits), therefore the flat salary difference of Oxide pulls them AWAY from employee-ownership (albeit only slightly admittedly), by making fixed compensation a stronger component of compensation than equity, (at least compensation-wise, as there are non comp. properties of ownership) If I may mathematically summarize in oversimplified 1D political terms. Consider the Political Alignment 'PA' of company structures as reals [-1;+1], where right = (0;1], left = [-1;0) and center = [-ε;+ε]. Then: PA(Co-op) < PA(SF Corp) < PA(Oxide) < PA(WY/DW Corp) And not: PA(Co-op) ≈ PA(Oxide) < PA(SF Corp) As root comment would suggest. I guess what I'm saying big picture is that Oxide is a political-center Company and OS. It was born treading the needle between Linux and Oracle, which are already quite centered Orgs/OS when compared to the extremes like GNU and Apple. Thank you for coming to my TED talk and yes, before someone asks, I have kissed a girl before.

tptacek 1y ago

Presumably because it would be untenable to fund a hardware startup that needs to carry inventory as an employee-owned co-op.

jszymborski 1y ago
Funding for co-ops is usually a sore spot for sure, and like you pointed out, they're a hardware startup, which often require more funding than most. That said, I wonder how far traditional bank loans + loans for the founders themselves could have gotten them. Clearly not as straightforward as just keeping it a private corp and trading funding for equity.
- steveklabnik 1y ago
  > I wonder how far traditional bank loans + loans for the founders themselves could have gotten them. There's a reason startups generally don't get traditional bank loans: they're far too risky of a loan for the bank to be interested!
- sunshowers 1y ago
  Without going into specifics, both debt and equity financing have their place.

jasode 1y ago

>I wonder why not just make it an employee-owned cooperative at that point? I understand there are funding considerations, The ~75 employees probably don't have enough personal money to buy out the previous investors to convert it into a true workers co-op. Reportedly ~$78 million total raised (over 3 rounds) and last round was $44 million: https://www.google.com/search?q=0xide+raised+funding https://www.google.com/search?q=0xide+raised+funding https://www.crunchbase.com/organization/oxide/company_financials https://www.crunchbase.com/organization/oxide/company_financ... The alternative of turning it into a hybrid/partially employee-owned company where the VC investors still own their % shares is still too expensive for employees to "buy" because you're supposed to value the shares at the same present price as the investors' shares. (We're not talking backdating stock options at an artificially lower price here.) I guess one could create loans where company let's employees pay for their ownership over time. The current investors probably won't agree to that.