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Comment by mimog | Hacker News Reader

$2.06M for eight employees seems very steep

250k per employee all-in (benefits, etc) doesn't seem that outrageous being in SF. Plus I'm guessing they're all high caliber employees given the scale of what they set out to do and what they've accomplished with a relatively small team.

"Being in SF" is a silly excuse. There is no reason for them to be in SF.

Except the people already were there, and they want to stay there. The imaginary high caliber people who can do this in a low cost of living place are exactly that: imaginary.

I fully endorse Let's Encrypt right to hire people solely from SF, but if you think high caliber people don't live in low cost of living places, you're either uneducated or purposely disingenuous.

EDIT: Source: I work on a fully remote team (>50 people) with teammates around the world who are high caliber people.

I think you can be more charitable in reading the GP's point; I certainly didn't interpret it the way you did or see it as a statement that high caliber people only live in SF or other high cost of living spaces.

It was a response to the claim that "there's no reason for them to be in SF" which is an odd assertion.

The point is that comparing an actual team with a purely hypothetical one is really just an exercise in imagination. These people exist, are competent, happen to live in San Francisco, and this organization has built a compelling product paying them what is likely lower than what they would earn at other employers in their region.

As I understand it nothing is preventing another service from emerging that competes with Let's Encrypt and has a better cost structure. It may also be reasonable to refrain from donating to / funding Let's Encrypt if you feel that they are poorly managing their finances, but even that to is more productive than simply stating "this team should not be in SF".

Exactly.

The reality is everyone is playing armchair quarterback/back seat driver/whatever and telling LE about that they COULD do. As if somehow LE was dedicated to overspending. As if they didn't scour the earth to find the people and save 25-50%.

Building a good team is hard. Building a good distributed team is harder. That they exist is just as much luck as anything else.

Pull open your brower's cert store and have a good look around. I suspect you'll discover that the majority of people who can run a certificate authority don't live in Silicon Valley.

It's hard work. It's challenging work. It's been screwed up a few times, yes. But it's not the sort of thing that's so hard that only five people in the world can do it correctly or something, though.

Approximately 100% salary overhead is pretty standard, so eight $125k employees plus infrastructure and office costs sounds reasonable.

8 x $125K would be $1M, not the $2M that is currently being spent on employees.

Edit: Missed the first part of that, I apologise. 100% overhead doesn't seem reasonable per employee to me though.

it's (8125k) 2 since there is 100% overhead

He said 100% overhead on top of salary

You missed the "100% salary overhead" part of the sentence. Consider taxes, benefits, insurance, other non-salary costs to employing people.

You missed the 100% overhead. Even 50% overhead at a slightly higher salary wouldn't be surprising.

Can you explain why there would be 100% salary overhead? This seems quite high as a non business owner/operator.

Taxes, health care, other insurance (disability, etc.), and other benefits (401k, etc.) are a significant fraction of the cost to employ someone. These things are not cheap.

The standard overhead is (I believe--correct me if I'm wrong!) anywhere from 25% to 100%, depending on your base salary and how competitive the benefits package is.

At our company the overhead is about 40% of the salary, and could easily reach 80-100% with bigger and better benefits packages.

Employer taxes, standard benefits (health, vision, dental, etc), extra benefits (like free food, budget for books, and other niceties), and office space.

Not really.

Overhead doesn't scale linearly with pay. Once you're into 6 figures, it's definitely not equal. I'm guessing much more like $150-200k per employee in compensation.

Is it really 100% in SF? That strikes me as high -- even in a lot of European countries it's not a full 100%.

Anyway: considering what they do and where they do it, I don't find these numbers high at all. I would be shocked if they didn't have at least a couple engineers making over $200K in actual cash compensation if they're working in the Bay Area.

That's for ten employees, not eight. Salary + benefits.

Could have been more clear in the post, but we have eight employees now and have budgeted for ten in 2017.

Assuming 100% overhead for benefits, etc., that's 100K per employee, which is quite low for Silicon Valley.

The 100% overhead only applies to the "average" job. Health benefit costs are typically the biggest piece of the benefits puzzle and don't scale with salary. In SV the overhead is more like 25%.

Its actually 2.06m for 10 employees: https://twitter.com/0xjosh/status/778283999609298944

Would the business perform any better if they were paying $2.05M for 20 employees? That's $100k per employee including overhead. Salaries would be significantly less than $100k. On paper it may sound better, but you end up with extra administrative overhead, and lower quality work. Could twice as many junior staff perform as well as that many senior staff? My guess would be no.

Their staffing cost probably is on the higher end, but I'm guessing thats by design.

They have to compete with the rest of Silicon Valley. That's about what it costs to get a good engineer around here, when you count benefits.

Why would they have to be in Silicon Valley?

They don't (and in fact I think they are mostly remote) but they still have to compete with it.

Correct. LF has a small office in the Presidio, with perhaps a half dozen people living in SF proper and another dozen in the greater Bay Area. The rest of us are scattered around the US, Canada, Japan, and Australia.

just because LE competes with Silicon Valley in recruiting doesn't mean the employees are, or need to be, in Silicon Valley.

Couldn't this be ran out of Nowhere, Idaho though? Remote workers, etc.

I assumed they were remote, otherwise I would have thought they would have premises costs stated. Rent, heating etc.

If you want something this critical done correctly, is it really that steep?

I'd like to see it broken down further by staff, it would be interesting to see the responsibilities of the "Executive Director" and weigh up the salary difference between that and the median salary of the rest of the team.

I know in addition to salary there are other "hidden" costs like health care etc, but even taking that into account their employees must be taking home a pretty significant wage.

My thoughts as well. Roughly 250k per employee?

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