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"Charlie didn't make $20M for cooking, he made $20M for taking the risk that the company he was joining would fail and that he could end up five years older, un

"Charlie didn't make $20M for cooking, he made $20M for taking the risk that the company he was joining would fail and that he could end up five years older, unemployed, and with nothing to show for his trouble." Precisely--and the article should have ended there. It's all about the risk. Arguing for the raw amount of contribution a chef can have is a distraction from the core point and detracts from it.

Argorak 13y ago
I don't think so. If it stopped there, he would only be a lucky gambler.
- mehrdada 13y ago
  I'd characterize it as an investment, rather than gambling.
  - moron4hire 13y ago
    Do you think the mean outcome for this /(gambling|investing)/ behavior over time for all people is a net positive or a net negative one? If we looked at all of the startup ecosystem employees in all of the startups over the years, would you say they have earned more or less, on average, than if they had stuck to enterprise industry? Granted, that the outcomes have a much higher standard deviation in startups is probably a no-brainer. But if the mean is less, then it's by-definition gambling. I guess the question centers on, do the winners outweigh the losers. In Las Vegas, they do not. That's why they advertise the winners so much, to make it look like winning happens all the time. They don't advertise the churn. Given how much SV "advertises" its big exits, to me it feels more like Las Vegas than a career.
  - Argorak 13y ago
    You might be closer to my point that you imagine, I just wanted to say that his role was not only that of a risk taker, but also that of a valuable employee.
  - ryandrake 13y ago
    I do not understand the difference between investing and gambling.
    - canvia 13y ago
      The level of confidence you have in the expected value.
- carbocation 13y ago
  Only to the same degree that all early employees could be seen as such.
  - Argorak 13y ago
    Sure, but the statement this article was written as a reply to was hinting that the chef did "unimportant" work and should not have his share of luck as everyone else. So explaining the impact makes sense.
- dspillett 13y ago
  That is how taking a new job works. You assess the risks of each option available to you (including the option of staying put if you are already employed, or including waiting for something better if not) against the potential benefits (salary and other conditions, future movement). It is a gamble and you use all the information and experience available to you in order to make sure the risk/reward balance is where you are comfortable. He could easily have made nothing if Google had gone down the pan, then he'd have had a low paid job for a few years and nothing to show for it aside from the experience. How you assess the benefits/risks is a gamble every time, and some people play it safer (favouring stability) than others. How is the cook taking shares as part of his employment package (perhaps in lieu of a chunk of salary he might get elsewhere) any different to a national manager taking shares as part of his package? Of course it could just have been the first half decent job that came along while he was out of work and he took it without much consideration, in that case he was just lucky rather than a lucky gambler. But there is nothing wrong with that either.
ThomPete 13y ago
It's not about the risk at all. Anyone who takes a job takes the described risk. The cleaning personal does too. How would the place look like if it wasn't clean. I don't mind him getting 20m. What i do mind is this naive idea of why people make the money they sometimes do. He took no risk any other person going to work everyday didn't.
- epi8 13y ago
  That's a little unfair. I work at an 30-year-old engineering company with the most market share in our field. If my company goes down, that's probably because someone did something illegal, or entire economies of multiple countries have just bellied-up. I take very minimum risks in that regard. A new start-up, though? Much higher risk of failure.
  - ThomPete 13y ago
    It's not unfair at all. Running a restaurant is like running a startup only you don't get to a point where it just runs itself. And with low margins it's most often not even a good business either. In fact the better quality the lower margin. Talk about taking a risk. I have no problem with the chef getting 20mio, what I have a problem with is the claim of risk as if he is risking anything anyone else isn't.
  - Iftheshoefits 13y ago
    Your risk isn't that the company goes belly up, it's that internal politics churns in such a way that you find yourself the next victim of a witch hunt, that your unit's contribution is identified as having become obsolete or lacking to the point where it's time to cut, etc. Your risks aren't minimum; they're different.
- michaelochurch 13y ago
  He took no risk any other person going to work everyday didn't. He obviously took enough risk that Google was willing to give him stock options. Google didn't make that offer to be nice. It was a business decision. I'm siding with Google (and the chef) here. Because it didn't have the money at the time to pay him enough to fully offset the negatives (which may have been opportunity cost or long hours, not necessarily company-wide risk) it offered him stock. It wasn't being nice. That paid off handsomely for him. You'd be right to argue that most working people are undercompensated for the suffering and the risk that they take on in their jobs. That, however, goes far beyond the Google chef. It's a systemic problem. As a society, we've failed to find anything within even a factor of 5 of a fair balance between capital and labor.
vacri 13y ago
Or how about "So this one guy effectively won a lottery, and is unusual enough that it's a story in itself. Let's move on to the next thing in life". It's not like there's a torrent of support roles walking away with golden handshakes.
- techsupporter 13y ago
  That doesn't happen because most start-ups don't think most support roles are worth it until one of two things happens: Management gets tired of losing people to 24-hour on-call rotations or the company gets big enough that "the devs who wrote this stuff should be able to get some sleep" becomes a valid consideration. Almost every aux position is considered "needless" until, well, it isn't. Granted, I say this from being in the Operations and Support worlds for years since I get to see the other side of not having a functioning Ops model before making it big.
  - mahyarm 13y ago
    I think by support it's more the office manager, cooks, call-center style customer support, etc. Ops is pretty core to any software company that has servers.
asharpe 13y ago
I don't agree it's a distraction - it's a valid point. Say he was the Mail Boy ... would they quote the Google Mail Boy syndrome then? Is this another of those: if he/she is not a dev, he/she is not truly valuable to the company. In his own way he probably added value (keeping 50 people an extra 30 minutes at their desks for two nights is like employing another staff member).
davidw 13y ago
> taking the risk that the company he was joining would fail and that he could end up five years older, unemployed, and with nothing to show for his trouble. Isn't that what happens at most restaurants? My brother works as a chef, and that seems like a pretty common pattern. 20 million dollar payouts are not, from what I gather. I think the guy got lucky and they were generous/kind with him. Good for them as human beings, but I am not sure you can justify things in strictly "homo-economicus" terms. Hard to say without knowing if or how much of a pay cut he took to join them, though.
- Fuxy 13y ago
  So if chefs take risks all the time it's not worth as much as if a developer would take the same risk? Is that what your saying?
  - davidw 13y ago
    > So if chefs take risks all the time it's not worth as much as if a developer would take the same risk? If you compare salaries across jobs, no, it generally isn't, in economic terms, from what I know. That's not to knock chefs or say they aren't "worth" as much, because that's something of a loaded term with more than economic significance. Of course, neither you nor I actually know the details of this guy, the market for his skills in that area at that time, or what his deal was with Google, so there's a lot of guessing.
  - icebraining 13y ago
    Davidw said nothing about worth, he was talking about pay. In a market, something can be worth more and cost less.
- walshemj 13y ago
  For a high end restaurant a senior chef can pull down £120k pa not many developer's/engineers in the UK get that sort of cash.
yeukhon 13y ago
I don't even think risk is necessary to consider. I am going to say anyone who help growing a company is valuable. Even a receptionist is critical. If you have a clumsy or rude receptionist, I will have a bad impression of your new startup.
Fuxy 13y ago
Exactly where's the incentive for early employees to take a risk on your startup if once the company makes it their just going to "renegotiate" their deal. Early employees deserve their extra stock regardless of what they do.
ryandrake 13y ago
Does it make sense to reward risk, for its own sake, so much? It's gotten to the point where picking a startup is like picking lottery numbers. I pick the company that ends up taking off like a rocket and selling for gobs of money, and you pick the company that ends up running out of cash in 2 years. Our contributions to the businesses being equal, why do I deserve $5M in vested stock and you deserve to be unemployed? Is this optimal? Is this the best way we've come up with to allocate wealth from entrepreneurship?
- humanrebar 13y ago
  I don't know about optimal, but just like any other market, the job market is symmetrical. Why shouldn't employees who can pick successful companies out of a crowd make more money? Investors do.
  - mathattack 13y ago
    They're not being rewarded for picking a company out of a crowd, they're being rewarded for taking less cash. When a startup gives equity, they are doing it so they don't have to pay as much cash, since the cash is more valuable at the time. (Otherwise they would just issue more equity to pay the employees in cash) As such, the chef is being given a lottery ticket in return for accepting a pay cut.
    - karlmdavis 13y ago
      Isn't that almost exactly what investors are doing, but on a smaller scale? Both are giving up cash-in-hand for that lottery ticket.
      - mathattack 13y ago
        Yes - exactly.
    - ryandrake 13y ago
      We're talking about huge, outsized rewards, orders of magnitude greater than salaries. Taking less cash may or may not be part of their employment agreement, but as long as they have equity, the amount of salary they take is irrelevant. The people with equity who picked the right company are rewarded, and the ones who did not pick the right company are not rewarded.
humanrebar 13y ago
I'm actually fine with the guy making it big. If for no other reason, if that's the deal he negotiated, he deserved it. But to play devil's advocate (since I don't see many people arguing to the contrary), companies should factor in how easy it is to replace someone when they offer these sorts of deals. I think it's a valid argument to say that it is easier to replace a chef than to replace someone who can fix that bug before the demo next week. Regardless of who works harder, the gear-up time for an engineer is typically longer and the built-up institutional and domain knowledge are very valuable. In other words, what is the best alternative to the negotiated agreement for the startup when it comes time to make an offer or negotiate a raise?
- warfangle 13y ago
  You've never replaced the head chef at a restaurant, have you? ;) Edit: A rash decision when replacing this person leads to almost immediate drop in revenue. I'd argue that it's more difficult (and stressful) to replace a head chef than it is a SWE. While replacing the head chef of the company cafeteria doesn't directly reflect revenue like it does at a tip-top restaurant (for which Charlie is obviously qualified), it can have numerous side effects, many difficult to ascertain ahead of time (will the new one remember that a majority of people on staff have an aversion to yellow squash, for a brash and hyperbolic example?)
  - humanrebar 13y ago
    Again, I have no problem with paying an employee $20M if he was worth it. The actual occupation is a distraction, though. Replace chef with the guy that handing out fliers on the street. He's 100% replaceable. Does he deserve a million-dollar payout? Maybe. But I think it's fair to take that into consideration when evaluating compensation. A company could be wrong that the chef is replaceable, but that's an empirical question. As a matter of evaluation, considering the value of the best alternative is 100% fair.
    - stephencanon 13y ago
      He wasn’t paid $20M. He was paid a salary plus options which had a good chance of being worth nothing at all, a good chance of being worth a nice european vacation, and a small chance of hitting the jackpot. You don’t get to renegotiate the terms afterwards once you know where on the payout scale your company happened to fall (maybe you can legally, but then you’re an asshole). “The guy who fixes the bug” isn’t worth $20M either. There are plenty of extremely competent engineers who you could hire for $300K that could also “fix the bug”. But you’re not paying him $20M; you’re paying him a smaller salary, plus a small percentage chance of the jackpot.
sophacles 13y ago
I disagree that the rest is a distraction. It makes the article have a different point, but it is not an invalid one - there is a certain amount of elitism or classism (depending on your personal analytical bent) in statements about "Google chef syndrome". The fact that people find it acceptable to minimize a person's contribution based on job title or perceived place in workplace and social hierarchy, rather than actual contribution, is silly. The fact about rewarding the risk is a good supporting argument to the elitism point, and could be an essay of it's own sure, but again - a discussion about elitist attitudes isn't bad. One thing I find weird about all of this (tangential tho) - When this article first made the rounds, many people defending the derisive attitude of towards the chef ("he's just a cook, he doesn't deserve it" type arguments) also make the opposite argument in opposition to unions ("why base pay and benefits on seniority rules rather than on actual skill and hard work"). It's a cognitive dissonance I feel would be interesting to explore.

Argorak 13y ago

I don't think so. If it stopped there, he would only be a lucky gambler.

mehrdada 13y ago
I'd characterize it as an investment, rather than gambling.
- moron4hire 13y ago
  Do you think the mean outcome for this /(gambling|investing)/ behavior over time for all people is a net positive or a net negative one? If we looked at all of the startup ecosystem employees in all of the startups over the years, would you say they have earned more or less, on average, than if they had stuck to enterprise industry? Granted, that the outcomes have a much higher standard deviation in startups is probably a no-brainer. But if the mean is less, then it's by-definition gambling. I guess the question centers on, do the winners outweigh the losers. In Las Vegas, they do not. That's why they advertise the winners so much, to make it look like winning happens all the time. They don't advertise the churn. Given how much SV "advertises" its big exits, to me it feels more like Las Vegas than a career.
- Argorak 13y ago
  You might be closer to my point that you imagine, I just wanted to say that his role was not only that of a risk taker, but also that of a valuable employee.
- ryandrake 13y ago
  I do not understand the difference between investing and gambling.
  - canvia 13y ago
    The level of confidence you have in the expected value.
carbocation 13y ago
Only to the same degree that all early employees could be seen as such.
- Argorak 13y ago
  Sure, but the statement this article was written as a reply to was hinting that the chef did "unimportant" work and should not have his share of luck as everyone else. So explaining the impact makes sense.
dspillett 13y ago
That is how taking a new job works. You assess the risks of each option available to you (including the option of staying put if you are already employed, or including waiting for something better if not) against the potential benefits (salary and other conditions, future movement). It is a gamble and you use all the information and experience available to you in order to make sure the risk/reward balance is where you are comfortable. He could easily have made nothing if Google had gone down the pan, then he'd have had a low paid job for a few years and nothing to show for it aside from the experience. How you assess the benefits/risks is a gamble every time, and some people play it safer (favouring stability) than others. How is the cook taking shares as part of his employment package (perhaps in lieu of a chunk of salary he might get elsewhere) any different to a national manager taking shares as part of his package? Of course it could just have been the first half decent job that came along while he was out of work and he took it without much consideration, in that case he was just lucky rather than a lucky gambler. But there is nothing wrong with that either.

ThomPete 13y ago

It's not about the risk at all. Anyone who takes a job takes the described risk. The cleaning personal does too. How would the place look like if it wasn't clean. I don't mind him getting 20m. What i do mind is this naive idea of why people make the money they sometimes do. He took no risk any other person going to work everyday didn't.

epi8 13y ago
That's a little unfair. I work at an 30-year-old engineering company with the most market share in our field. If my company goes down, that's probably because someone did something illegal, or entire economies of multiple countries have just bellied-up. I take very minimum risks in that regard. A new start-up, though? Much higher risk of failure.
- ThomPete 13y ago
  It's not unfair at all. Running a restaurant is like running a startup only you don't get to a point where it just runs itself. And with low margins it's most often not even a good business either. In fact the better quality the lower margin. Talk about taking a risk. I have no problem with the chef getting 20mio, what I have a problem with is the claim of risk as if he is risking anything anyone else isn't.
- Iftheshoefits 13y ago
  Your risk isn't that the company goes belly up, it's that internal politics churns in such a way that you find yourself the next victim of a witch hunt, that your unit's contribution is identified as having become obsolete or lacking to the point where it's time to cut, etc. Your risks aren't minimum; they're different.
michaelochurch 13y ago
He took no risk any other person going to work everyday didn't. He obviously took enough risk that Google was willing to give him stock options. Google didn't make that offer to be nice. It was a business decision. I'm siding with Google (and the chef) here. Because it didn't have the money at the time to pay him enough to fully offset the negatives (which may have been opportunity cost or long hours, not necessarily company-wide risk) it offered him stock. It wasn't being nice. That paid off handsomely for him. You'd be right to argue that most working people are undercompensated for the suffering and the risk that they take on in their jobs. That, however, goes far beyond the Google chef. It's a systemic problem. As a society, we've failed to find anything within even a factor of 5 of a fair balance between capital and labor.

vacri 13y ago

Or how about "So this one guy effectively won a lottery, and is unusual enough that it's a story in itself. Let's move on to the next thing in life". It's not like there's a torrent of support roles walking away with golden handshakes.

techsupporter 13y ago
That doesn't happen because most start-ups don't think most support roles are worth it until one of two things happens: Management gets tired of losing people to 24-hour on-call rotations or the company gets big enough that "the devs who wrote this stuff should be able to get some sleep" becomes a valid consideration. Almost every aux position is considered "needless" until, well, it isn't. Granted, I say this from being in the Operations and Support worlds for years since I get to see the other side of not having a functioning Ops model before making it big.
- mahyarm 13y ago
  I think by support it's more the office manager, cooks, call-center style customer support, etc. Ops is pretty core to any software company that has servers.

asharpe 13y ago

I don't agree it's a distraction - it's a valid point. Say he was the Mail Boy ... would they quote the Google Mail Boy syndrome then? Is this another of those: if he/she is not a dev, he/she is not truly valuable to the company. In his own way he probably added value (keeping 50 people an extra 30 minutes at their desks for two nights is like employing another staff member).

davidw 13y ago

> taking the risk that the company he was joining would fail and that he could end up five years older, unemployed, and with nothing to show for his trouble. Isn't that what happens at most restaurants? My brother works as a chef, and that seems like a pretty common pattern. 20 million dollar payouts are not, from what I gather. I think the guy got lucky and they were generous/kind with him. Good for them as human beings, but I am not sure you can justify things in strictly "homo-economicus" terms. Hard to say without knowing if or how much of a pay cut he took to join them, though.

Fuxy 13y ago
So if chefs take risks all the time it's not worth as much as if a developer would take the same risk? Is that what your saying?
- davidw 13y ago
  > So if chefs take risks all the time it's not worth as much as if a developer would take the same risk? If you compare salaries across jobs, no, it generally isn't, in economic terms, from what I know. That's not to knock chefs or say they aren't "worth" as much, because that's something of a loaded term with more than economic significance. Of course, neither you nor I actually know the details of this guy, the market for his skills in that area at that time, or what his deal was with Google, so there's a lot of guessing.
- icebraining 13y ago
  Davidw said nothing about worth, he was talking about pay. In a market, something can be worth more and cost less.
walshemj 13y ago
For a high end restaurant a senior chef can pull down £120k pa not many developer's/engineers in the UK get that sort of cash.

yeukhon 13y ago

I don't even think risk is necessary to consider. I am going to say anyone who help growing a company is valuable. Even a receptionist is critical. If you have a clumsy or rude receptionist, I will have a bad impression of your new startup.

Fuxy 13y ago

Exactly where's the incentive for early employees to take a risk on your startup if once the company makes it their just going to "renegotiate" their deal. Early employees deserve their extra stock regardless of what they do.

ryandrake 13y ago

Does it make sense to reward risk, for its own sake, so much? It's gotten to the point where picking a startup is like picking lottery numbers. I pick the company that ends up taking off like a rocket and selling for gobs of money, and you pick the company that ends up running out of cash in 2 years. Our contributions to the businesses being equal, why do I deserve $5M in vested stock and you deserve to be unemployed? Is this optimal? Is this the best way we've come up with to allocate wealth from entrepreneurship?

humanrebar 13y ago
I don't know about optimal, but just like any other market, the job market is symmetrical. Why shouldn't employees who can pick successful companies out of a crowd make more money? Investors do.
- mathattack 13y ago
  They're not being rewarded for picking a company out of a crowd, they're being rewarded for taking less cash. When a startup gives equity, they are doing it so they don't have to pay as much cash, since the cash is more valuable at the time. (Otherwise they would just issue more equity to pay the employees in cash) As such, the chef is being given a lottery ticket in return for accepting a pay cut.
  - karlmdavis 13y ago
    Isn't that almost exactly what investors are doing, but on a smaller scale? Both are giving up cash-in-hand for that lottery ticket.
    - mathattack 13y ago
      Yes - exactly.
  - ryandrake 13y ago
    We're talking about huge, outsized rewards, orders of magnitude greater than salaries. Taking less cash may or may not be part of their employment agreement, but as long as they have equity, the amount of salary they take is irrelevant. The people with equity who picked the right company are rewarded, and the ones who did not pick the right company are not rewarded.

humanrebar 13y ago

I'm actually fine with the guy making it big. If for no other reason, if that's the deal he negotiated, he deserved it. But to play devil's advocate (since I don't see many people arguing to the contrary), companies should factor in how easy it is to replace someone when they offer these sorts of deals. I think it's a valid argument to say that it is easier to replace a chef than to replace someone who can fix that bug before the demo next week. Regardless of who works harder, the gear-up time for an engineer is typically longer and the built-up institutional and domain knowledge are very valuable. In other words, what is the best alternative to the negotiated agreement for the startup when it comes time to make an offer or negotiate a raise?

warfangle 13y ago
You've never replaced the head chef at a restaurant, have you? ;) Edit: A rash decision when replacing this person leads to almost immediate drop in revenue. I'd argue that it's more difficult (and stressful) to replace a head chef than it is a SWE. While replacing the head chef of the company cafeteria doesn't directly reflect revenue like it does at a tip-top restaurant (for which Charlie is obviously qualified), it can have numerous side effects, many difficult to ascertain ahead of time (will the new one remember that a majority of people on staff have an aversion to yellow squash, for a brash and hyperbolic example?)
- humanrebar 13y ago
  Again, I have no problem with paying an employee $20M if he was worth it. The actual occupation is a distraction, though. Replace chef with the guy that handing out fliers on the street. He's 100% replaceable. Does he deserve a million-dollar payout? Maybe. But I think it's fair to take that into consideration when evaluating compensation. A company could be wrong that the chef is replaceable, but that's an empirical question. As a matter of evaluation, considering the value of the best alternative is 100% fair.
  - stephencanon 13y ago
    He wasn’t paid $20M. He was paid a salary plus options which had a good chance of being worth nothing at all, a good chance of being worth a nice european vacation, and a small chance of hitting the jackpot. You don’t get to renegotiate the terms afterwards once you know where on the payout scale your company happened to fall (maybe you can legally, but then you’re an asshole). “The guy who fixes the bug” isn’t worth $20M either. There are plenty of extremely competent engineers who you could hire for $300K that could also “fix the bug”. But you’re not paying him $20M; you’re paying him a smaller salary, plus a small percentage chance of the jackpot.

sophacles 13y ago

I disagree that the rest is a distraction. It makes the article have a different point, but it is not an invalid one - there is a certain amount of elitism or classism (depending on your personal analytical bent) in statements about "Google chef syndrome". The fact that people find it acceptable to minimize a person's contribution based on job title or perceived place in workplace and social hierarchy, rather than actual contribution, is silly. The fact about rewarding the risk is a good supporting argument to the elitism point, and could be an essay of it's own sure, but again - a discussion about elitist attitudes isn't bad. One thing I find weird about all of this (tangential tho) - When this article first made the rounds, many people defending the derisive attitude of towards the chef ("he's just a cook, he doesn't deserve it" type arguments) also make the opposite argument in opposition to unions ("why base pay and benefits on seniority rules rather than on actual skill and hard work"). It's a cognitive dissonance I feel would be interesting to explore.