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Startup Transparency (Founder Salary) - An Interview with Buffer Founder

22 points by chrisacky 13y ago

mijustin 13y ago
This is the most transparent salary calculation I've seen. It would be interesting to hear from Buffer's employees on how it's affected company culture. How comfortable would you be with having your co-workers know your salary?
- __alexs 13y ago
  I am more comfortable knowing the salary of people around me. I often run into people who are massively underpaid and having good people leave because they feel like the company simply doesn't pay enough is awful. (I've also met some not particularly spectacular people who were paid lots more than I'd expect, good for them I suppose!) Salary transparency also makes it easier as an employee to chart your progression and means you have less reason to worry about receiving a fair rate in the market. If you know your entire team has accepted a particular rate you have more confidence that the value is reasonable.
- addaddadd 13y ago
  Just from reading their formula, I would be uncomfortable knowing (assuming engineer here) that founders have both a higher salary and orders of magnitude more equity than me. I thought founders would take less salary in exchange for significant ownership. Or is that only the cAse in pre-seed/seriesA startups?
  - noir_lord 13y ago
    Interesting how differently we view things. I'd find it irrelevant what the founder was getting paid as long as I was getting paid the "right amount" for the work I was doing against market rates and I found it an enjoyable place to work. The only time I would care about what the founders where paying themselves was if I was taking a reduced salary for some reason (and to be honest with the programmer job market the way that it is it would have to be a damn good reason). The reality is that if you are paid like an employee that is because you are an employee and the owners/founders will get paid more or as my grandfather used to put it "No-one gets rich working for someone else". I like the idea of a completely transparent company and will be interesting to watch them grow (hopefully).
  - rdl 13y ago
    It's a little unfair to ask younger founders (who probably don't have real savings, and may have student debt) to take really low salaries on a long-term basis. I think Peter Thiel thinks around $100-150k is the right amount. I do think it should be less than most senior employees, and on the order of a straight-from-Stanford hire (so probably a 1.1x factor on their chart?). But, taking no salary for a while while starting up, and a $20-30k/yr salary for a while, really gets old, so it's totally reasonable for founders to be in the $50-150k range. What you absolutely don't want is for founders (or any employee) to be unproductive at work due to stressing over money or problems easily solved with money at home.
jtemplin 13y ago
The embedded SlideShare is well worth reading. Here's a direct link to it: http://slidesha.re/15f1GHO http://slidesha.re/15f1GHO
rdl 13y ago
Paying founders more than anyone else is a bad choice. Generally, the best compensated (cash) person should be commissioned sales (if that exists); otherwise, probably a head of engineering, in the current market, at least up to a reasonable size (25-50 people). An exception is if you have to hire a "professional CEO" or something, but that means you've fucked up somehow too. I see they say +20k for "non-founder, C-level", but really, it should be more like founders, $40k in their formula. Then add the multipliers on top of that. I do like the idea of transparency with salaries in general, but there is the concept of "don't try to innovate on anything non-critical" in a startup. OTOH, outside of startups, salaries are fairly well known in many sectors, so I don't think transparency is without precedent.
- leowidrich 13y ago
  Great point and actually, I totally agree. The funny thing is that founders aren't the highest paid people at Buffer - and it's actually just like you say with engineering being on the higher side.
mynegation 13y ago
Hmm, may be I am missing something in the sample calculation. However I put brackets in 80+22 * 1.2, I do not get 118. Edit: Oh, I got it (article got it wrong). It should actually be 80*1.2+22 = 118
- noir_lord 13y ago
  Challenge Accepted. (80 * 1.2) + 22 = 118. They apply the weighting factor to base salary not extras.
deleted 13y ago
[deleted]
sthatipamala 13y ago
At what point did the Buffer founders start taking market rate salaries? I can't find any news of how much they raised besides their $400K seed round, but I'm guessing they must have a lot more VC money now.
- joelgascoigne 13y ago
  Great question. We have actually only ever raised the $450k seed. Our revenues are helping with our ability to grow the team and have salaries where people can feel that money is not a factor, and we can focus on the great opportunities we have. For example, our April revenue was $115k and we're essentially cash-flow positive (we're hiring aggressively and aren't aiming for profit right now). To answer your initial question, we didn't take any salary for the first year, then we took $60k for a number of months before gradually increasing further. We increased to the $118k figure just a few couple months ago, which was over 2 years after we had started.
sdoowpilihp 13y ago
Maybe I am off base, or my calculations are wrong, but 110k (60*1.3+22+10) for a "Master" level engineer in San Fransisco seems amazingly below market, especially when a "junior" level engineer is making 92k.
agrona 13y ago
This reminds me of Fog Creek's compensation transparency. http://www.joelonsoftware.com/articles/fog0000000038.html http://www.joelonsoftware.com/articles/fog0000000038.html and http://joelonsoftware.com/articles/ladder.html http://joelonsoftware.com/articles/ladder.html

22 points by chrisacky 13y ago

This is the most transparent salary calculation I've seen. It would be interesting to hear from Buffer's employees on how it's affected company culture. How comfortable would you be with having your co-workers know your salary?

__alexs 13y ago
I am more comfortable knowing the salary of people around me. I often run into people who are massively underpaid and having good people leave because they feel like the company simply doesn't pay enough is awful. (I've also met some not particularly spectacular people who were paid lots more than I'd expect, good for them I suppose!) Salary transparency also makes it easier as an employee to chart your progression and means you have less reason to worry about receiving a fair rate in the market. If you know your entire team has accepted a particular rate you have more confidence that the value is reasonable.
addaddadd 13y ago
Just from reading their formula, I would be uncomfortable knowing (assuming engineer here) that founders have both a higher salary and orders of magnitude more equity than me. I thought founders would take less salary in exchange for significant ownership. Or is that only the cAse in pre-seed/seriesA startups?
- noir_lord 13y ago
  Interesting how differently we view things. I'd find it irrelevant what the founder was getting paid as long as I was getting paid the "right amount" for the work I was doing against market rates and I found it an enjoyable place to work. The only time I would care about what the founders where paying themselves was if I was taking a reduced salary for some reason (and to be honest with the programmer job market the way that it is it would have to be a damn good reason). The reality is that if you are paid like an employee that is because you are an employee and the owners/founders will get paid more or as my grandfather used to put it "No-one gets rich working for someone else". I like the idea of a completely transparent company and will be interesting to watch them grow (hopefully).
- rdl 13y ago
  It's a little unfair to ask younger founders (who probably don't have real savings, and may have student debt) to take really low salaries on a long-term basis. I think Peter Thiel thinks around $100-150k is the right amount. I do think it should be less than most senior employees, and on the order of a straight-from-Stanford hire (so probably a 1.1x factor on their chart?). But, taking no salary for a while while starting up, and a $20-30k/yr salary for a while, really gets old, so it's totally reasonable for founders to be in the $50-150k range. What you absolutely don't want is for founders (or any employee) to be unproductive at work due to stressing over money or problems easily solved with money at home.

jtemplin 13y ago

The embedded SlideShare is well worth reading. Here's a direct link to it: http://slidesha.re/15f1GHO http://slidesha.re/15f1GHO

rdl 13y ago

Paying founders more than anyone else is a bad choice. Generally, the best compensated (cash) person should be commissioned sales (if that exists); otherwise, probably a head of engineering, in the current market, at least up to a reasonable size (25-50 people). An exception is if you have to hire a "professional CEO" or something, but that means you've fucked up somehow too. I see they say +20k for "non-founder, C-level", but really, it should be more like founders, $40k in their formula. Then add the multipliers on top of that. I do like the idea of transparency with salaries in general, but there is the concept of "don't try to innovate on anything non-critical" in a startup. OTOH, outside of startups, salaries are fairly well known in many sectors, so I don't think transparency is without precedent.

leowidrich 13y ago
Great point and actually, I totally agree. The funny thing is that founders aren't the highest paid people at Buffer - and it's actually just like you say with engineering being on the higher side.

mynegation 13y ago

Hmm, may be I am missing something in the sample calculation. However I put brackets in 80+22 * 1.2, I do not get 118. Edit: Oh, I got it (article got it wrong). It should actually be 80*1.2+22 = 118

noir_lord 13y ago
Challenge Accepted. (80 * 1.2) + 22 = 118. They apply the weighting factor to base salary not extras.

deleted 13y ago

[deleted]

sthatipamala 13y ago

At what point did the Buffer founders start taking market rate salaries? I can't find any news of how much they raised besides their $400K seed round, but I'm guessing they must have a lot more VC money now.

joelgascoigne 13y ago
Great question. We have actually only ever raised the $450k seed. Our revenues are helping with our ability to grow the team and have salaries where people can feel that money is not a factor, and we can focus on the great opportunities we have. For example, our April revenue was $115k and we're essentially cash-flow positive (we're hiring aggressively and aren't aiming for profit right now). To answer your initial question, we didn't take any salary for the first year, then we took $60k for a number of months before gradually increasing further. We increased to the $118k figure just a few couple months ago, which was over 2 years after we had started.

sdoowpilihp 13y ago

Maybe I am off base, or my calculations are wrong, but 110k (60*1.3+22+10) for a "Master" level engineer in San Fransisco seems amazingly below market, especially when a "junior" level engineer is making 92k.

agrona 13y ago

This reminds me of Fog Creek's compensation transparency. http://www.joelonsoftware.com/articles/fog0000000038.html http://www.joelonsoftware.com/articles/fog0000000038.html and http://joelonsoftware.com/articles/ladder.html http://joelonsoftware.com/articles/ladder.html