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I absolutely agree with you on the CEO pay issue -- the (founder) CEO should be paid somewhat less than the lowest "real" engineer (not an intern or trainee), a

by rdl 13y ago

I absolutely agree with you on the CEO pay issue -- the (founder) CEO should be paid somewhat less than the lowest "real" engineer (not an intern or trainee), at least until Series B or later. Generally on the order of $100k in SFBA, vs. $120-150k for IC engineers. At a seed/pre-A/A, maybe $40-60k vs. $80-100k. A non-founder CEO is probably a sign that you're fucked until B, anyway, but would require a much higher cash comp. Founders should have their upside primarily in equity. In a VC funded startup. In a self-funded small business, founders tend to be substantially below market for a year or two, then approximately market, and then start taking money (if they can) at market or above around year 3 or 4. The problem with non-VC-funded startups is it is much less likely for employees that the company will be sold, so their equity (if any) is less likely to be meaningful, so they demand much higher cash or bonus compensation (i.e. the normal in consultancies). This raises costs for the company, and makes certain kind of people non-hireable. Paying everyone the same is actually quite common at startups. Or, paying the same job roughly the same (i.e. paying all eng/design one thing, and maybe paying sales people on a totally different structure). I've seen companies up to 50 employees do this, with essentially $100k and $150k for two types of employee. There was some variation in equity, both by date of hire and responsibility. There are huge organizations (USG, military, union shops, etc.) which have standardized pay, too. It seems to work well for them. The basic principle is separating cash salary from other motivation. That works in some places, doesn't work in others. It would probably be a horrible idea to pay a sales team which had variable levels of work output the same fixed salary with no variable compensation.

robomartin 13y ago
There's nothing wrong with paying everyone under a specific job classification the same. Say, your shipping clerks. Nothing whatsoever wrong with that. What is insane is having them vote on it. That makes no sense. The only exception to this might be a very small group of reasonably well educated (in business as well as their craft) individuals. They could objectively look at the business and just as objectively make decisions. At that point you, effectively, have a quasi de-facto multi-CEO situation, which could be cool if the business is not going anywhere past that point. Impossible to scale.
- rdl 13y ago
  It's different when it's a 5-15 person startup, or a consultancy or other essentially partnership organization like that, vs. a more hierarchical organization. I'm a big fan of being transparent with financials and other metrics in early-stage tech companies (absolutely in the seed range, and in A; it becomes more debatable in a 50-150 person organization.) Mainly because it is good for people to know what numbers actually matter -- if a company is cashflow-constrained, it does make sense to burn time on building vs. buying certain products, or looking for sales which are lower revenue but paid up-front. If a company has a specific milestone, it might be making otherwise non-optimal decisions (like selling something at negative margin). Management probably should be highlighting these issues, but sometimes it is better to have the raw data. In Silicon Valley hiring now, particularly for dev/design/devops/product, you actually are competing for people who could start a business on their own, and who are likely to do so in the future, so they value having access to this information and learning about how decisions are made. One of the key things is accepting that you probably will not retain people for 10 years, and maybe not even for 4, but if you can get great work for 1-2 years, that's better than 0 (or mediocre work for 5).

by rdl 13y ago

robomartin 13y ago

There's nothing wrong with paying everyone under a specific job classification the same. Say, your shipping clerks. Nothing whatsoever wrong with that. What is insane is having them vote on it. That makes no sense. The only exception to this might be a very small group of reasonably well educated (in business as well as their craft) individuals. They could objectively look at the business and just as objectively make decisions. At that point you, effectively, have a quasi de-facto multi-CEO situation, which could be cool if the business is not going anywhere past that point. Impossible to scale.

rdl 13y ago
It's different when it's a 5-15 person startup, or a consultancy or other essentially partnership organization like that, vs. a more hierarchical organization. I'm a big fan of being transparent with financials and other metrics in early-stage tech companies (absolutely in the seed range, and in A; it becomes more debatable in a 50-150 person organization.) Mainly because it is good for people to know what numbers actually matter -- if a company is cashflow-constrained, it does make sense to burn time on building vs. buying certain products, or looking for sales which are lower revenue but paid up-front. If a company has a specific milestone, it might be making otherwise non-optimal decisions (like selling something at negative margin). Management probably should be highlighting these issues, but sometimes it is better to have the raw data. In Silicon Valley hiring now, particularly for dev/design/devops/product, you actually are competing for people who could start a business on their own, and who are likely to do so in the future, so they value having access to this information and learning about how decisions are made. One of the key things is accepting that you probably will not retain people for 10 years, and maybe not even for 4, but if you can get great work for 1-2 years, that's better than 0 (or mediocre work for 5).