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"Let’s say that you want to hire a top software engineer and are competing with equity grant offers from Facebook and Google where the value of the grant is $1m

"Let’s say that you want to hire a top software engineer and are competing with equity grant offers from Facebook and Google where the value of the grant is $1mm. If you have a current valuation on your company of $10mm, then you have to offer 10% of the company to compete for that engineer. I am not saying the engineer isn’t worth it." I totally disagree here. I don't think you compete with Facebook on comp in this manner. Facebook stock is as good as cash. Stock at a ~A/post A company isn't. Even if you say you'll give this employee $1mil worth of stock, there is a high likelihood that stock isn't going to be worth it. Don't go after Facebook's top engineers trying to compete with comp until you have the resources to get them, take the money ball approach and find talented people who aren't having the world thrown at them yet, and lure those people away.

potatolicious 13y ago
Or... find people worth less than $1mm. It's strange that people even talk about recruiting top (and I mean top) engineers when I can count on one hand the number of startups I've ever seen that'd justify that kind of talent (think John Carmack level). The vast majority of startups are business process improvements (think AirBnb, think Uber) where there's no freaking way you'd really need a Carmack on your team. I disagree with the point about finding talented but under-recognized people. I've seen companies do this, and in this market they will get discovered, it's only a matter of time - and the switching cost of jobs right now is nearly zero. If you're going to lure ridiculously undervalued people away, only to continue to undervalue them (just not as badly), you're going to get a lot of attrition.
- balls187 13y ago
  > I disagree with the point about finding talented but under-recognized people....If you're going to lure ridiculously undervalued people away, only to continue to undervalue them I agree with this point, though I don't think that not-offering them 10% of your company is undervaluing them. I'd like to believe that most people who are undervalued at BigCo's are because they either lack the self-promoting skills, or haven't yet found the right environment to be successful.
  - potatolicious 13y ago
    > "though I don't think that not-offering them 10% of your company is undervaluing them." I didn't say anything about 10% ;) This may or may not be what you're suggesting, but I've seen this time and time again in NYC - find someone with talent making $45K in the Midwest and dazzle them with visions of the Big City and... $80K. I've heard of the same things happening in SF as well. These guys never stay put, once they're in your local talent pool the recruiters will set upon them like sharks. It'll be a few months at most before someone comes in with a price adjustment on your engineer's services. In this market, with a supply this short, any arbitrage opportunity is going to be highly temporary.
    - balls187 13y ago
      And I didn't say companies should recruit and under-value ;) But to your point, yes bringing someone over, only to under pay them is only going to hurt you, as you said--the switching cost is nearly zero, and these days having stints on your resume that are 1-2 year at most, isn't a big deal.
    - hapless 13y ago
      The big problem with recruiting out of the Midwest is that nearly anyone with a marketable skill in the Midwest has stayed there by choice. It's not as if Midwestern engineers are unaware that working on the coast is an option. It is almost certainly an option considered and rejected. .
ryandrake 13y ago
Today I Learned: Google and Facebook offer employees $1MM in stock. (…off to update my resume…)
- null_ptr 13y ago
  That $1MM in stock is probably spread out over many (many) years of staying with the company. Golden handcuffs can be quite dangerous in sabotaging brilliant people's careers and making them settle for mediocrity.
  - balls187 13y ago
    I don't think being well comped Google, Facebook or Twitter (a friend of mine recv'd $640k in RSU's) is settling for mediocrity. Generally RSU terms are 1 year cliff, 4 year vest, so that's an EV of $250k per-year. More if the stock price increases. I'd imagine that stock grants come as both performance bonus grants and RSU's, and that they come on an annual-semi annual basis. But yes, golden handcuffs can lead to institutionalization, though that isn't necessarily a bad thing.
    - null_ptr 13y ago
      > I don't think being well comped Google, Facebook or Twitter (a friend of mine recv'd $640k in RSU's) is settling for mediocrity. I didn't mean the compensation is mediocre, but the work you're doing. I'm sure a lot of brilliant people choose to stick it out for "just 5 more years" over and over again to get more of that $1MM, rather than go off independently and realize their ideas, or join a modest company that works on fresh things.
      - JoachimSchipper 13y ago
        Some of that is true, but making a huge company like Google a tiny bit better adds quite a lot to the world. There is a reason why they pay better than startups...
    - malandrew 13y ago
throwaway543453 13y ago
Is it typical for companies to grant $1mm in equity? I understand that it's vested over 4 years, but that sounds quite high.
- balls187 13y ago
  Typical, no. But it's not unusual for engineers with leverage to negotiate higher equity grants.

potatolicious 13y ago

Or... find people worth less than $1mm. It's strange that people even talk about recruiting top (and I mean top) engineers when I can count on one hand the number of startups I've ever seen that'd justify that kind of talent (think John Carmack level). The vast majority of startups are business process improvements (think AirBnb, think Uber) where there's no freaking way you'd really need a Carmack on your team. I disagree with the point about finding talented but under-recognized people. I've seen companies do this, and in this market they will get discovered, it's only a matter of time - and the switching cost of jobs right now is nearly zero. If you're going to lure ridiculously undervalued people away, only to continue to undervalue them (just not as badly), you're going to get a lot of attrition.

balls187 13y ago
> I disagree with the point about finding talented but under-recognized people....If you're going to lure ridiculously undervalued people away, only to continue to undervalue them I agree with this point, though I don't think that not-offering them 10% of your company is undervaluing them. I'd like to believe that most people who are undervalued at BigCo's are because they either lack the self-promoting skills, or haven't yet found the right environment to be successful.
- potatolicious 13y ago
  > "though I don't think that not-offering them 10% of your company is undervaluing them." I didn't say anything about 10% ;) This may or may not be what you're suggesting, but I've seen this time and time again in NYC - find someone with talent making $45K in the Midwest and dazzle them with visions of the Big City and... $80K. I've heard of the same things happening in SF as well. These guys never stay put, once they're in your local talent pool the recruiters will set upon them like sharks. It'll be a few months at most before someone comes in with a price adjustment on your engineer's services. In this market, with a supply this short, any arbitrage opportunity is going to be highly temporary.
  - balls187 13y ago
    And I didn't say companies should recruit and under-value ;) But to your point, yes bringing someone over, only to under pay them is only going to hurt you, as you said--the switching cost is nearly zero, and these days having stints on your resume that are 1-2 year at most, isn't a big deal.
  - hapless 13y ago
    The big problem with recruiting out of the Midwest is that nearly anyone with a marketable skill in the Midwest has stayed there by choice. It's not as if Midwestern engineers are unaware that working on the coast is an option. It is almost certainly an option considered and rejected. .

ryandrake 13y ago

Today I Learned: Google and Facebook offer employees $1MM in stock. (…off to update my resume…)

null_ptr 13y ago
That $1MM in stock is probably spread out over many (many) years of staying with the company. Golden handcuffs can be quite dangerous in sabotaging brilliant people's careers and making them settle for mediocrity.
- balls187 13y ago
  I don't think being well comped Google, Facebook or Twitter (a friend of mine recv'd $640k in RSU's) is settling for mediocrity. Generally RSU terms are 1 year cliff, 4 year vest, so that's an EV of $250k per-year. More if the stock price increases. I'd imagine that stock grants come as both performance bonus grants and RSU's, and that they come on an annual-semi annual basis. But yes, golden handcuffs can lead to institutionalization, though that isn't necessarily a bad thing.
  - null_ptr 13y ago
    > I don't think being well comped Google, Facebook or Twitter (a friend of mine recv'd $640k in RSU's) is settling for mediocrity. I didn't mean the compensation is mediocre, but the work you're doing. I'm sure a lot of brilliant people choose to stick it out for "just 5 more years" over and over again to get more of that $1MM, rather than go off independently and realize their ideas, or join a modest company that works on fresh things.
    - JoachimSchipper 13y ago
      Some of that is true, but making a huge company like Google a tiny bit better adds quite a lot to the world. There is a reason why they pay better than startups...
  - malandrew 13y ago

throwaway543453 13y ago

Is it typical for companies to grant $1mm in equity? I understand that it's vested over 4 years, but that sounds quite high.

balls187 13y ago
Typical, no. But it's not unusual for engineers with leverage to negotiate higher equity grants.