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Comment by itsmemattchung | Hacker News Reader

> Levandowski was able to collect more than $120 million in incentive pay from Google, the complaint says, “all while he was breaching his obligations to Google and building a company that would compete with Google.”

Uh.... that's a ridiculous amount of money to try and incentivize someone.

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Those were presumably earn-outs from the companies Google acquired from Levandowski, not employee incentives.

http://spectrum.ieee.org/robotics/artificial-intelligence/th...

May be google or any other company should treat these new initiatives as a separate startup company to begin with, with seed money as the input. Engineers hired should have salaries/options just like founders/co-founders. If the company achieves its objectives, Google or any other company should buy them back at a certain price or let the highest bidder buy (like uber or any other company).No body loses. Giving 100 million dollars upfront without any sense of ownership/accountability to drive a startup like effort, looks silly to me.

That's essentially what incentive pay is: payments tied to achieving particular objectives.

Yeah Google has done this in the past. It's what they did with Google Wave. But Lazlo Bock has reflected that this caused the a lot of departures when the project failed. Not sure if they do that anymore.

They got the leading self driving car out of it. It's a lot to pay if it failed, it's a great investment of it suceeded

Leading a few years back.

We haven't heard anything else apart from a Waymo rebranding in multiple years.

My guess: The top people left, and the project lost momentum. I expect to see it grind on for a few years before being canned.

This seems like a troll, since in no way would this be true to anyone who is even remotely paid attention to the space.

There is some truth to this. People outside the Bay Area might not be aware of the slow and careful progress google has been making in creating a safe self-driving car. Compared to the Uber approach of just YOLOing the prototypes onto the streets of San Francisco it has gotten very little press.

I remember reading that this is a huge problem for companies in the "self-driving" space.

There's a lot of competition for this skillset, so you have to keep on giving more to the engineers... but then they have a bunch of money and they have less lock-in for the job. When you have $20 million in a bank account, why are you going to go make a powerpoint for your manager?

But if you give them "options" that might be worth nothing... well why not just go to Uber with their millions of Actual Real Cash(TM)? Or why accept "founder" salaries instead of real salaries?

Not that there's anything wrong with this, but the classic employer/employee relationship starts falling apart when the employees end up being this value.

Cisco did this with some success (by some measures at least!): http://www.businessinsider.com/why-cisco-showered-three-men-...

Basically, funded the company of their star engineer(s), and had a put/call (for Cisco and funded co) option based on certain milestones being met.

Deal summaries:

Andiamo (2001): cisco funded 180m, paid 750m to buy.

Nuova (2006): funded 70m, paid 678m.

Insieme (2012): funded 135m, paid 863m.

All founded by the same three engineers. This practice fell out of favor under chambers CEO-ship. Other employees (and execs, most importantly probably ha) didn't like for understandable reasons, but interesting to see similar dynamics play out here, with similar reactions.

Apparently not enough to incentivize him to not steal.

Greed knows no boundaries. This is a person that always wanted to be part of the three comma club.

He's probably hoping now he won't end up stuck with the doors that only slide back and forth made of bars.

Truthfully he might not even be scared of jail. He probably has the most power in uber right now in terms of negotiation and can probably get immunity for a full confession.

There are two measurements of money, none and not enough.

At the kind of scale Google operates on it's not crazy for one person (especially an executive) to drive $100m in value.

Is it? It's understandable why they'd want to claim that, and why a culture might exist of mutually rewarding "brilliant leadership" with "competitive packages", but... come on. What do you think the ratio of people who are actually, individually responsible for $100m in value, to the people receiving compensation as though they were, might really be?

I think there are very, very few people who are worth $100m, but I absolutely believe that there are those people, especially within a company like Google.

This isn't the first time Google tried to keep an exec by paying them $50m+ (nor is it the second)

http://www.businessinsider.com/neal-mohan-googles-100-millio...

http://fortune.com/2016/03/29/googles-pichai-received-100-mi...

I hear you, but I still wonder what kind of evidence I'd want to see laid out in front of me before parting with a cool $100 mil, and I somehow doubt that's how these things work.

I think the calculation is probably different when you are making "big bets" with other people's money.

> I think there are very, very few people who are worth $100m,

I'm not saying you're wrong, but I'm highly skeptical that one person would be worth, say, $99m more than a very-well-paid engineer, or $50m more than someone too rich to care about money other than as a way of keeping score, in just a few years. Rockstar executives get crazy money even when they run companies into the ground (see Meyer, Marissa) or merely keep them afloat (Tillerson, Rex). I suspect rockstar engineers are getting a bit of the same treatment, which has little to do with differences in performance among those making more than a small multiple of average pay.

The mistake you're making is in thinking there is some objective definition of "value" - as in, there is some all-seeing entity which knows everything and knows exactly what a person "should" be paid.

I would argue that that's a fundamentally incorrect way of looking at it. You're "worth" whatever you can negotiate for (making baseline assumptions about not defrauding people).

If you can convince someone to pay you 10 million dollars to mow his lawn, I think you deserve every penny.

After thinking about it a while, I think part of the numbers come from a time-based valuation.

Apple's chief council is likely not the only lawyer who could 'do his job' for that price. But I need someone to do his job this afternoon, no, now. Who has all the relevant information in their head so they can give me an informed opinion based on the entire company's operations and positions about a $10B decision that must be made by the end of the day. Go find me that person. How much would you pay to have that person here and now today rather than tomorrow to guide whether the price should be $21B or $18B for the deal.

I think you may be missing the point with examples of execs who got paid a ton of money even for mediocre or poor performance. The reason they got paid so much is that decisions at that level are absolutely "billion dollar decisions", in that the performance of the executive, and the executive alone, can be the difference between a super successful company and a failure. That is one reason why execs are paid so much - going in to the deal boards are betting that their execs will be one of the successful ones, not one of the failing ones.

The same is true for "rock star" engineers. I absolutely believe there are a few engineers who can make the difference between being wildly successful or being an also ran. To use a well known related example, consider Jony Ive. I believe that his unique design talents have been responsible for billions of dollars in value to Apple shareholders.

Price is what you pay, value is what you get.

The price may very well exceed the average engineer. However, the value to Google in incentivizing such leaders to drive product development with 100~1000% ROI is that much higher and it's crazy that they have so much cash to do be able to do this.

So if I pay you $100 million to make a product and I have a very high likelihood of flipping it for $10 billion for a 100x return, it makes sense why a market for such talent exists at Google.

If you think about how large Google is and the amount of innovation that the market expects from them along with the pressure from Microsoft, Amazon, Facebook etc, $50~200 million is a premium they will gladly pay because this in turn would put pressure on other competitors.

Lyft simply would not be able to match Google's offer of $100 million. This is how Google and Microsoft wins most of the time. Cash.

Amen, brother. I guarantee you if some brilliant guy thinks he's worth $100MM and you refuse to pay it and he walks there will be a very long line of equally brilliant folks who will settle for $10MM.

Google cannot afford to lose time. It's in a technology race. I'm not saying this guy was worth it, but it's not impossible to imagine how they make decisions like that. Time is much more valuable to them than money.

I'm not saying it applies here, but it's the core of many cons that you apply time pressure on the mark. "You can make all of this money, but only if you act NOW! Everyone else is doing it, they're smart and successful and YOU want to be smart and successful! I'm not asking for more than you can afford to spend, and I'm offering so much more in return! BUT ONLY IF YOU ACT NOW!"

What race are they losing? Google search/ads is a monopoly or duopoly. You don't need to pay execs $100MM to maintain this--just need to keep the DOJ off your back. The rest (self-driving cars, et al) is money losing window dressing.

When you pay people $100million for the grand accomplishment of sweet-talking the CEO, you get... Google+.

at the kind of scale, one engineer can drive that much value. Google's ads business is huge, and 1% improvement you can do (which happens all the time) could have outsized impact. It doesn't really have to be that complex of an improvement, either.

PS: google employee

I don't doubt it. I can think of several small tweaks at companies I've worked at that have swung things $10m one way or another, and we're a tiny fraction of the size of Google.

When you have millions (or billions) of customers, small changes mean a lot.

yup - that's unfortunately also a reason why comp is not a linear function of impact.

I'd like to think that the fact that companies just want to keep the money, and the supply of other engineers, is why the comp is not a linear function.

Please see https://qbix.com/blog

Why doesn't Google do this?

That relies on having a product that is already generating revenue, how do you apply that to R&D like autonomous cars where that revenue isn't currently present?

Ok but you mentioned someone making a 1% improvement in existing revenue. For THAT.

that could create imbalance - everyone moving into ads.

So why not do this for all projects that need it?

also on a second thought, once things become incremental, chances of someone doing the same increment as another one (who generates that 100M) is high, hence the lower pay.

> at the kind of scale, one engineer can drive that much value

For Google in 2007, I don't doubt that. In 2017, I'd have to see it.

What do you mean?

I can understand that when Google was on a technology growth curve in 2007 that a single engineer could hit a home run. I think that is much much harder today. So I would have to see it. I'm not saying it's impossible but I'd have to see it.

My favorite Google engineer idea was how much autocorrect improved search results and efficiency. Awesome idea but I doubt it contributed $100M in revenue. MapReduce, good idea but I doubt it contributed $100M in revenue.

One engineer, $100M is easy to say. It's really hard to do.

Google's quarterly revenue is roughly $20B[1] - that's $80B per year. I think that it is perfectly plausible that an engineer could achieve a 0.125% increase in yearly revenue. Now, disentangling that from other possible contributing factors, getting the right visibility from management, etc. is distinct from that.

I have no problem believing that MapReduce contributed $XB to Google's revenue over the course of the past 20 years.

[1] https://www.sec.gov/Archives/edgar/data/1652044/000165204416...

MapReduce was published in 2004. The paper was two people; the implementation was probably a lot more. Even then, it was just a re-engineering of an earlier code base (read that as multiple available cat skinning technologies). By 2014, it was no longer used, so that's 10 years. Lastly, it wasn't exactly novel.

https://en.wikipedia.org/wiki/MapReduce#Lack_of_novelty

FWIW, it appears they're giving away the TensorFlow stuff because they lost the mindshare battle between MapReduce+Hadoop and don't want that to happen again.

Again, the $100M figure is an easy (heroic) claim to make but hard to substantiate. Shit's hard. Big shit is really hard.

> By 2014, it was no longer used

[Citation needed]

http://www.datacenterknowledge.com/archives/2014/06/25/googl...

You basically don't know what you're talking about, factually speaking, along a wide range of fact dimensions.

Good to know that. I was worried.

(also @google)

Scale makes it easy to have an outsized impact.

Consider that a single CPU core costs ~10$/yr in electricity, and that google has a really big computer[1]. The questions are then "how many CPUs does google have", "what percentage of those can any given change affect", and "how many such changes can one engineer make in a year?"

And that's just one type of potential change.

[1]: http://www.clickhole.com/article/future-now-google-has-confi...

I think my point on complexity probably stands. At early days, people were creating products from ground up. Now it's more incremental. At early days 100M might have meant doubling the revenue, but now, it's a mere fraction.

You can shave off latency and 1% improvement could result in 0.1% revenue gain (made up numbers).

You can improve relevancy of the ads by 1% and contribute to revenue similar amounts.

It's not really super hard.

My very first project at Google [1] drove over $100M in revenue. Team of 3, wasn't intended to be revenue-facing at all, but it turns out that when you give a tool to the AdSales folks that shows the customers all the other queries they could be advertising on, they buy a whole lot of additional ads.

It's very easy to underestimate how small changes can add up at scale. Like another commenter said, Google makes about $80B in revenue. It's not hard to make a change to UI or ranking that impacts conversion rates by 0.125%. One of the changes I did for a later project would've lost a billion dollars for Google had it not been caught by A/B testing. Heck, a non-visible change I made (moving the results above the ads in DOM order, without changing styling, so that blind people didn't need to sit through ads before getting their results) was blamed for $50M in lost revenue before we ran an experiment and confirmed there was no effect. Marissa Mayer had done the exact same experiment 8ish years before and measured a $50M loss; the difference was that everyone was on dialup in 2002 but broadband in 2010, and so what was an unacceptable latency penalty that caused everyone to not click on ads had become an unnoticeable change.

[1] http://searchengineland.com/google-wonder-wheel-17093

Not to say that individual engineers can make large impacts at that scale, cause hell a million for a do change seems large. That being said, you were on a team of 3 that drove 100 million in revenue, so you didn't have that large an impact as a single engineer, and your other example was something that was assumed based on 8 year old data, and the impact didn't exist when actual measurements were taken.

I'm still having a hard time believing that a single person created 100 million in value for Google for a product that isn't currently being sold. It seems more like a result of a price war for self driving car talent as companies are scrambling to try and take the whole self driving car market before anyone else

These things are related. You don't get a price war over someone that results in paying them $100m if you don't believe that person will create over $100m in value.

And since this person went off, started their own company, and sold it a couple years later for $1 Billion, it seems whoever was offering that paycheck was right to do so.

That's the thought process behind investing, but just because the investment risk was taken doesn't mean they actually created that value. Also with strategic investments sometimes it isn't that your investment generates that much revenue for you, but ithe does deny your competition access to that resource

Well, keep in mind that we also don't know the timescale this was over. If it was $120mm in a year, then that's perhaps crazy, but 120 million over 5 or ten years?

With 80 billion in revenue and ~75K employees according to a google search, that means that there's an expectation that an average hire will drive $1 million in revenue per year. To be paid 120M/year you'd need to drive significantly more than that, but to be paid 20M/year, that's now someone who is 50x the average employee, not 200x the average employee, and that's reasonable. I think we all know an engineer or two who is extraordinary.

I know engineers that did that.

so:

when you're earning $1 it's not hard to double your money when you're earning $1 billion it's hard to double your money but when you're earning $1 billion it's a lot easier to earn an extra million or two.

Spoken like an executive!

I wish

This sort of reasoning ignores the law of supply and demand.

The assumption here is that the person at hand has other offers (or other things they'd want to do). In the case in question, that's clearly true, so it doesn't ignore the law of supply and demand at all.

Indeed, which is I was criticizing the justification given by parent. The guy received a high salary because his skill set was scarce and in demand. It had little to do with "value driven" (e.g. see anecdotes in this thread of other Google engineers who drove millions in revenue and probably didn't make millions a year).

I find that sentiment laughable, to be honest.

Would anyone blink an eye at a CEO earning that much or having that much in incentive pay over perhaps a number of years? Of course not. But the only reason to have such differing opinions is a classist attitude.

Indeed, look how bizarre a world we live in has come to be. Nobody today would think it too ridiculous for an actor or entertainment figure to be paid so much. And yet a single engineer could easily have a much larger impact on the day to day life of millions of people or on the development of technologies spawning multibillion dollar industries.

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