3 ms·

When I was in big corps, I understood but really disliked the idea that people would do work in order to get a promotion. That's the only incentive structure th

by dsr_ 1y ago

When I was in big corps, I understood but really disliked the idea that people would do work in order to get a promotion. That's the only incentive structure they've set up, so that's what you do. What I like about well-run small companies is that there is essentially no chance of a promotion: all we can do is do our work better, improve processes and make our customers (internal and external) happier. If you hook monetary rewards to title and responsibility treadmills, you lose all that. Hypergrowth is a trap.

wahnfrieden 1y ago
It’s because owners hoard the equity so workers have minimal stake in outcomes (usually the chance of the company tanking resulting in job loss is not a primary motivator or perceived risk either). Small companies that aren’t worker-owned and without promotion ladders aren’t immune to this. They get workers who strive toward promotion via job switching. You can debate the fairness of equity hoarding by those who invest money into the business but it doesn’t change the worker dynamics
- sokoloff 1y ago
  Employees are often not in a position (financially or sometimes legally) to take a reduction in cash in order to take an increased proportion of their value in equity.
  - wahnfrieden 1y ago
    Who decides that tradeoff? You are only reinforcing why workers have no stake in outcomes. Worker-owned organizations afford both
    - alemanek 1y ago
      That is an interesting point. Co-ops seem like they should out perform from a worker incentive point of view. But, why are co-ops basically non-existent in Big Tech. WinCo, groceries, and REI, expensive outdoor stuff, in the US are both big co-ops but are retailers. Maybe VC money warps the economics so that every company needs to be winner takes all lotto tickets for the investors. Having it be worker owned gets rid of the extreme ROÍ VCs expect. If you know any papers on the subject I would be interested though.
      - wahnfrieden 1y ago
        REI is not worker-owned FYI. It's a consumer-owned co-op. Different beast VCs are not interested in worker-owned coops. Economic climate works against the concept at scale. Workers are also divided on it and are not organized around enabling it. Employers are highly coordinated on maintaining current employer-worker relations. edit: here is some related reading you might find interesting: - Sociocracy - consent-based decision-making organizations (as opposed to dreadful unanimous decision-making which doesn't work and is a common criticism of non-hierarchical organizations) https://www.sociocracyforall.org/sociocracy/ https://www.sociocracyforall.org/sociocracy/ // https://sociocracy30.org https://sociocracy30.org - a UK tech co-op network: https://www.coops.tech https://www.coops.tech but it seems a lot of these are more tech services than product companies
        alemanek 1y ago
        Thank you for the links and the correction on REI. I wasn’t aware that consumer co-ops were even a thing. I have some reading to do. Too late to edit my parent post unfortunately.
        ghaff 1y ago
        There are a lot of retail consumer co-ops, especially in the grocery area. REI is a relatively large example although it's not huge by retail and certainly tech standards.
      - dragonwriter 1y ago
        > Co-ops seem like they should out perform from a worker incentive point of view. , why are co-ops basically non-existent in Big Tech. WinCo, groceries, and REI, expensive outdoor stuff, in the US are both big co-ops but are retailers. REI is a consumer coop, not a labor co-op (and WinCo, while employee-owned through an ESOP, is not a co-op at all.) Cooperative Home Care Associates, a home health care agency HQ’d in the Bronx, appears to be the largest US labor cooperatives (and labor intensive service industries are probably the most common places to find labor coops in the US.) > Maybe VC money warps the economics so that every company needs to be winner takes all lotto tickets for the investors. Having it be worker owned gets rid of the extreme ROÍ VCs expect. Right. VC goals and labor coop goals are almost never aligned, and instead are almost diametrically opposed. Labor coops tend to favor conservative expansion and risk mitigation and stability. VC’s want to swing for the fences on scale—a succesful steady-state business that will pay its founding employees good pay forever but not expand much is a massive failure for VCs, but a win for a labor coop.
    - sokoloff 1y ago
      I believe that employees and employers both make choices that they think are in their best interests. Employees might want to receive the most cash they can right now (and therefore prefer 100 units of cash over 90 units of cash and 10 of equity compensation). We shouldn't force them to accept a different mix of compensation, particularly one which forces them to invest in their employer via such a tradeoff. They might choose to work at business X instead of worker-owned cooperative Y for any number of reasons. Employers think about the value proposition they offer to attract and retain employees and if there are 100 units of compensation available to be paid and they have reason to think that employees prefer cash over equity, they are likely to offer all 100 units of comp in cash rather than 90 units of cash and 10 units of equity. There's no sense tying up 10 units of equity that an employee only values as being equivalent to 5 units of cash. In the case of workers working for public companies, they have a straightforward way to invest in their company if they want: take some of the cash and buy shares in the company. That's barred in most cases for private companies by practicality and accredited investor rules.
      - wahnfrieden 1y ago
        Worker-owned co-ops are also free to offer cash vs equity options. The difference is that they don't have a hierarchy of ownership hoarding whatever the market will bear.
        sokoloff 1y ago
        Great/agreed that they could offer choice. I wish them and the employees who choose to work at them well.
        wahnfrieden 1y ago
        There's no choice to be had, it doesn't substantially exist in tech. It takes organizing and coordinating various resources to make a new reality, not passively evaluating current options at hand. So it's not productive to evaluate their viability based on what currently exists as if it's already a choice unorganized workers have evaluated and made. But it is an idea that is appealing even to some founders (there are upsides to working alongside people with a stake in outcomes) and some are working toward making this possible for workers to choose. https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#range:1989.3,2025.1;quarter:142;series:Assets;demographic:networth;population:1,9;units:levels https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...
lmeyerov 1y ago
I like growth-oriented startups in that it is more of a team sport here. The promotion is pretty directly tied to: * Doing your part to make the revenue grow. For management, going from say $1M annual revenue in seed to $3M in A means the company can support 3X the staff. Joining a startup is basically a bet that you can outperform when unleashed. * Surf that wave. Show it makes sense to put new hires below you vs above, or give you increasingly big responsibilities, etc, bc you managed the past ones well. Startups run to their limit so can feel like pressure cookers, and they're relatively small, so your demonstrated ability should be pretty apparent to hands-on leadership. * Compensation comes out of that. Stock becomes worth more, you get bigger refreshers, more experience, new title, etc
glitchc 1y ago
Capitalism works because the worker feels they deserve better and will go to the open market to get it. Some workers may choose to become their own bosses. The free market makes it possible. Hypergrowth is an extreme, but so is a communist mentality where everyone is happy where they are and does not see any incentive to improve. There is a moderate middle ground that is best for economic mobility.

by dsr_ 1y ago

wahnfrieden 1y ago

It’s because owners hoard the equity so workers have minimal stake in outcomes (usually the chance of the company tanking resulting in job loss is not a primary motivator or perceived risk either). Small companies that aren’t worker-owned and without promotion ladders aren’t immune to this. They get workers who strive toward promotion via job switching. You can debate the fairness of equity hoarding by those who invest money into the business but it doesn’t change the worker dynamics

sokoloff 1y ago
Employees are often not in a position (financially or sometimes legally) to take a reduction in cash in order to take an increased proportion of their value in equity.
- wahnfrieden 1y ago
  Who decides that tradeoff? You are only reinforcing why workers have no stake in outcomes. Worker-owned organizations afford both
  - alemanek 1y ago
    That is an interesting point. Co-ops seem like they should out perform from a worker incentive point of view. But, why are co-ops basically non-existent in Big Tech. WinCo, groceries, and REI, expensive outdoor stuff, in the US are both big co-ops but are retailers. Maybe VC money warps the economics so that every company needs to be winner takes all lotto tickets for the investors. Having it be worker owned gets rid of the extreme ROÍ VCs expect. If you know any papers on the subject I would be interested though.
    - wahnfrieden 1y ago
      REI is not worker-owned FYI. It's a consumer-owned co-op. Different beast VCs are not interested in worker-owned coops. Economic climate works against the concept at scale. Workers are also divided on it and are not organized around enabling it. Employers are highly coordinated on maintaining current employer-worker relations. edit: here is some related reading you might find interesting: - Sociocracy - consent-based decision-making organizations (as opposed to dreadful unanimous decision-making which doesn't work and is a common criticism of non-hierarchical organizations) https://www.sociocracyforall.org/sociocracy/ https://www.sociocracyforall.org/sociocracy/ // https://sociocracy30.org https://sociocracy30.org - a UK tech co-op network: https://www.coops.tech https://www.coops.tech but it seems a lot of these are more tech services than product companies
      - alemanek 1y ago
        Thank you for the links and the correction on REI. I wasn’t aware that consumer co-ops were even a thing. I have some reading to do. Too late to edit my parent post unfortunately.
        ghaff 1y ago
        There are a lot of retail consumer co-ops, especially in the grocery area. REI is a relatively large example although it's not huge by retail and certainly tech standards.
    - dragonwriter 1y ago
      > Co-ops seem like they should out perform from a worker incentive point of view. , why are co-ops basically non-existent in Big Tech. WinCo, groceries, and REI, expensive outdoor stuff, in the US are both big co-ops but are retailers. REI is a consumer coop, not a labor co-op (and WinCo, while employee-owned through an ESOP, is not a co-op at all.) Cooperative Home Care Associates, a home health care agency HQ’d in the Bronx, appears to be the largest US labor cooperatives (and labor intensive service industries are probably the most common places to find labor coops in the US.) > Maybe VC money warps the economics so that every company needs to be winner takes all lotto tickets for the investors. Having it be worker owned gets rid of the extreme ROÍ VCs expect. Right. VC goals and labor coop goals are almost never aligned, and instead are almost diametrically opposed. Labor coops tend to favor conservative expansion and risk mitigation and stability. VC’s want to swing for the fences on scale—a succesful steady-state business that will pay its founding employees good pay forever but not expand much is a massive failure for VCs, but a win for a labor coop.
  - sokoloff 1y ago
    I believe that employees and employers both make choices that they think are in their best interests. Employees might want to receive the most cash they can right now (and therefore prefer 100 units of cash over 90 units of cash and 10 of equity compensation). We shouldn't force them to accept a different mix of compensation, particularly one which forces them to invest in their employer via such a tradeoff. They might choose to work at business X instead of worker-owned cooperative Y for any number of reasons. Employers think about the value proposition they offer to attract and retain employees and if there are 100 units of compensation available to be paid and they have reason to think that employees prefer cash over equity, they are likely to offer all 100 units of comp in cash rather than 90 units of cash and 10 units of equity. There's no sense tying up 10 units of equity that an employee only values as being equivalent to 5 units of cash. In the case of workers working for public companies, they have a straightforward way to invest in their company if they want: take some of the cash and buy shares in the company. That's barred in most cases for private companies by practicality and accredited investor rules.
    - wahnfrieden 1y ago
      Worker-owned co-ops are also free to offer cash vs equity options. The difference is that they don't have a hierarchy of ownership hoarding whatever the market will bear.
      - sokoloff 1y ago
        Great/agreed that they could offer choice. I wish them and the employees who choose to work at them well.
        wahnfrieden 1y ago
        There's no choice to be had, it doesn't substantially exist in tech. It takes organizing and coordinating various resources to make a new reality, not passively evaluating current options at hand. So it's not productive to evaluate their viability based on what currently exists as if it's already a choice unorganized workers have evaluated and made. But it is an idea that is appealing even to some founders (there are upsides to working alongside people with a stake in outcomes) and some are working toward making this possible for workers to choose. https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#range:1989.3,2025.1;quarter:142;series:Assets;demographic:networth;population:1,9;units:levels https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...

lmeyerov 1y ago

I like growth-oriented startups in that it is more of a team sport here. The promotion is pretty directly tied to: * Doing your part to make the revenue grow. For management, going from say $1M annual revenue in seed to $3M in A means the company can support 3X the staff. Joining a startup is basically a bet that you can outperform when unleashed. * Surf that wave. Show it makes sense to put new hires below you vs above, or give you increasingly big responsibilities, etc, bc you managed the past ones well. Startups run to their limit so can feel like pressure cookers, and they're relatively small, so your demonstrated ability should be pretty apparent to hands-on leadership. * Compensation comes out of that. Stock becomes worth more, you get bigger refreshers, more experience, new title, etc

glitchc 1y ago

Capitalism works because the worker feels they deserve better and will go to the open market to get it. Some workers may choose to become their own bosses. The free market makes it possible. Hypergrowth is an extreme, but so is a communist mentality where everyone is happy where they are and does not see any incentive to improve. There is a moderate middle ground that is best for economic mobility.