Compensation as a Reflection of Values
oxide.computer
oxide.computer
Are the founders going to get the same pay as the new admin hire in year 4 when there's only 1 year's runway left?
Who's going to leave first - your junior sales hire on 170k, or the sales hire that has been with the company 4 years, has a book of business that generates 5x more revenue (that is now helping pay for this salary policy) and has only received 5k raises each year?
(I wrote this comment before you edited a few times, but I think it still works even with the extra you added)
To answer your question: I don't have a long list, though companies like Stripe certainly come to mind. I'm sure there are others out there. Perhaps others can point to companies that are models in this regard?
On that note, how involved will Oxide be in the rust foundation?
Is "commitment to excellence" not a value? If one were to join Oxide but was mediocre, they would surely get fired. But on flip side, if they use their unique combination of skills & discipline, potentially at the expense of some personal sacrifice to bring a ton of value to the company, while still being full of honesty, integrity and decency, then no upside? Or is variable equity refresh the answer to this scenario?
Otherwise "Measuring people impact is hard, so nobody gets paid more" seems a bit crab mentality.
As for potential upside: yes, everyone has an equity component; if we succeed together, there is more than enough upside for everyone.
Edit: grammar.
> This leads to a deeply intrinsically motivated team
If you managed to achieve that, then hats off!
> if we succeed together
Hope you all do! :)
And indeed, we had no intention of writing about this at all, but when asking for how we could improve our hiring process, one of the consistent pieces of feedback was that we didn't specify the pay -- and that we were unclear about our policies with respect to remote work. This was kind of a "well, should we tell 'em?" moment inside of Oxide -- and there was a broadly shared belief within the company that this was something we needed to be talking about. And here we are! ;)
Post Covid is going to be a huge gold rush for remote talent, as some big players start playing games with CoL and lose some of their core contributors over it.
Once you have an employee and a history of experiencing their work within the company you have the basis for deciding where pay diverges and what career ladder they wish to follow. The fundamental question you should always ask yourself regarding compensation for an existing employee is "what would it cost me to replace the value they deliver to the company?" That isn't based on title or prior work experience, it should be based on a real understanding of their work, initiative, and the other aspects of their involvement with the company that delivers value (along with a balance of possible deficiencies that reduce that value).
Does that tend to produce valuations for existing personnel that may be higher than possible new hires? Sure, but then bringing on a new hire has its own costs regarding training, accumulation of institutional knowledge, etc but those are real costs that must enter the compensation equation.
If an employee wishes to gain more compensation, their career ladder is to find ways to deliver more value. That isn't dependent on titles or checklists of certifications, it's based on what directly contributes to the success of the company.
Can’t say I disagree, if so!
My 2-cents, I think you should always pay well, but differentiation needs to occur somehow. Perhaps it’s more vacation (because good workers get their work done faster), a bonus at the end of the year, something.
I say this because it’s difficult to keep good workers. I work very hard, I work with people who work half as hard, and produce a fourth as much. While some are okay making the same wages, I personally only work places where I make significantly more.
It’s important to me to teach this to my children (harder work = more benefits). It’s important to provide more to my family. It’s important others understand they can also earn more by working harder.
I understand you may have a different philosophy and I am curious how it works out... but I suspect this will lead to (as through all history) resentment, anger, and eventually significant harm.
This suggests (a) rewards for better outcomes can lie in the space of the team asking that out-performer to take on more accountability, so the individual can be on a personal growth, leadership, responsibility path, while the rising tide of performance lifts all boats. And at the same time, that seems to need to be accompanied by (b) fairness, a recognition the team is not a charity and nobody can be slacking and remain part of the effort, such that intrinsic rewards are not undermined.
There’s an opt-in aspect to make this work — not everyone wants to be on the starship Enterprise exploring new worlds without getting paper tokens to count their score “against” peers by. Even if the crew agrees Picard should be captain and have the quarters closest to the bridge, for some folks that’s not enough, they need to “beat” other humans instead of enjoying making the Enterprise better.
FWIW, I categorically disagree on sales commissions. Sales commission culture seems generally toxic to founder values. I’ve never seen a commission structure that doesn’t get gamed in ways beneficial to sales people at either customers’ or the firm’s expense and to its cultural or mission detriment, once the commission plan begins to scale.
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All that said, if there are graduated pay scales, instead of a communal collective at utopian parity, it seems these should be less graduated by org chart level, and more by “toil vs. automation”. How to turn individual or collective labor into individual or collective annuity?
We (tech industry labor) haven’t really grappled with this yet, though you see it upstream of us, in valuations multiples differing between service where an hour of work is needed for a dollar of income versus “-as-a-service” where some code can be run as a utility.
This is what’s behind “do things that don’t scale”: figuring out how to scale these things, how to take the 1:1 toil part out of the equation, replace it with a multiplier or better zero it out.
The craftspeople able to figure these scaling problems out, automate them, are able to generate disproportionate future value per hour, and arguably should be compensated accordingly (think NPV), else in today’s typical system that value accrues to the company management where, frankly, most “management” is probably glorified toil.
I can tell you from a year of observing Oxide: team members inspire one another. Someone sees someone else demo'ing something exciting, and they are inspired to themselves drive to an exciting demo -- not to compete with them, but out of their own sense of teamwork and mission. And to the degree that we're seeking extrinsic rewards beyond satisfied customers, frankly nothing feels better than to hear a colleague say: "Wow, that's really neat!"
Sprinting to a coworker's desk (or chat thread in COVID times) and helping them out on whatever roadblocks they run into is pure fentanyl, straight to the jugular. Even if it's just providing moral support by looking over their shoulder, indeed nothing feels more rewarding than hearing a colleague say: "wow, thanks wonderingse!"
Oxide's mission, principles, and values mirror my own, almost comically so. It seems a bit early to ask but:
When will Oxide start hiring pre-sales solution engineers?
Love the podcast, by the way! Off-topic, but on the note of retrocomputing and Sun appreciation: Would you consider putting that copy of Spring you have on the Internet Archive? It would be a wonderful act of preserving the history of computing: there isn't a single copy on the Internet.
For the parts of Sun that we want to take after: the good bits, of course! ;) There were things that have influenced us with respect to mission, and then also with respect to hardware/software co-design (we are, contrary to the impression you might have, doing a lot of hardware[1]). Lest I sound too rosy about Sun, it had a lot of problems too[2] -- so we're trying not to recreate those! ;)
Thank you for the kind words on the podcast -- very much looking forward to getting back in the garage and recording some new episodes!
Finally, on Spring: yes, I need to find it (we just moved) and then find a CD-ROM drive (feels easier) and then I'll get it uploaded!
[0] https://www.youtube.com/watch?v=vvZA9n3e5pc
[1] https://twitter.com/bcantrill/status/1342294298692206593
I love Sun! You can never get rosy enough, unless you're talking about many of its executives in the last twenty years of its life...
I'm glad you guys are taking after Sun on the hardware part (and hopefully avoiding replicating its actions in driving SPARC to the ground with RISC-V)! It will be extremely welcome to have another contender in the hardware space!
Can't wait to listen to new podcast episodes!
And thank you so much on Spring! Any bit of computing history that can be preserved is a win for our field!
Does Oxide face a challenge of feeling the need to creatively compensate especially motivated team members, or do the company values and hiring process promote a general and widespread highly motivated and quality team, with maybe a more consistent level of contributions from each individual than a traditional org structure? Or a different alternative entirely?
Love to hear your thoughts on this as you said you hire people 'if we saw them contributing to the company as much as anyone else', but what if some people just don't contribute as clearly/observably?
Also are we going to get more On the Metal episodes?
Our hiring process more or less selects for intrinsic motivation at every stage -- that's very important to us. As for "judging" the output of folks: I would say Oxide is just a more extreme example of something that one sees in lots of places, where it is exceedingly difficult (and dangerous!) to make those kinds of comparisons. Not only because the work is highly varied (though certainly that) and not only because it is deeply technical (though that too!), but also because we rely so much on helping one another out. How does one evaluate that? And perhaps a blunter question: what would be the purpose of that evaluation?
When I talk about "seeing someone contribute to the company as much as anyone else", I very much mean in the future tense -- namely, during the hiring process. I think it's not an unfair characterization to say that we would much rather take the energy typically wasted on comp, and spend that energy on careful hiring.
As for more On the Metal, yes definitely: Steve, Jess, and I very much look forward to being vaccinated and back in the garage!
Please keep these blog posts coming. Really shows people Oxide stands for something and what your values look like in practice.
Makes up and coming engineers happy when they feel like some tech companies will actually care about them as a human.
I believe I’ll get more out of teams and individuals working in that model than I will from teams grinding out 60 hours a week of keyboard pounding with hands and foreheads.
My job as an engineering leader is not to get that 20 hours of focused work up to 30. It’s to get the busywork from 20 (or 30!) down to 12 so my teams can crush it while working only 32 hours per week.
This will work for literally anyone who doesn’t live in the Bay Area.
This might work for Bay Area people who retired early or without a mortgage responsibility.
But for folks who do have a mortgage or other big monetary responsibilities in the Bay, $175k cash without equities is simply too low. Especially considering how many unicorns are popping the last one year.
That said, it's not like the Bay comes up favorably when compared to...everywhere else in the world; given the choice of hiring in the Bay and...everywhere else, in the entire English-speaking world, I think most sensible people would choose the latter (especially when considering how many of the best and the brightest there are in places like the East Coast and Canada who $175k or $180k would seem fantastic to). I'm sure Oxide won't be hurting for talent, and I'm sure its employees won't be hurting for cash, either.
Plus, they are getting equity. Says so right in the blog post.
https://iwantmyname.com/blog/the-one-salary-experiment-ten-y... https://news.ycombinator.com/item?id=7713916
I think unless you are certain you want to maintain this forever (and it doesn't sound like Oxide does, they see this as probably changing eventually) then you may be playing with fire for when that day actually comes.
I'm really interested to see how that transition goes. The current state of things is just half of the story needed to draw any conclusions about it since the full consequences won't be understood until the company either commits to this being a permanent state of affairs, or successfully introduces variable salaries.
If it’s done from a position of strength and obvious need (“we’re growing so fast that we need to bring on a commissioned sales team!” or “we now have thousands of customers who need support but aren’t willing to pay their share of then-$200K to get basic support questions answered” or “we’re expanding into a new office compound where we have to have a security team patrolling to keep the campus safe and we’ve decided to make them employees and give them equity so that they can share in the upside of our company!”), then it will be totally fine.
If it’s done from weakness and spiraling downwards, well, it’s just one more bummer speedbump along that road, but it’s the road that sucks not that particular speedbump.
I haven't thought it through, but my initial gut feel is: possibly, if you did it from the start in an org.
My next question: if you're successful with creating that warm-fuzzy equitable utopia, but it can't be extended to the whole of society (due to scalability, entrenched interests, conventions, or whatever), then what's the moral and emotional situation around hiring going to be like?
For example, if hiring for a particular role would elevate dramatically the economic situation of a typical person with that skillset, how do you weigh that motivation to hire as many of those people as you can, against, say, better profitability?
For an emotion example related to that, let's say you can only hire one person, but there are multiple awesome candidates. This is not an unusual situation, and one normally feels a bit bad, but how much worse will you feel, if you're turning people down for a dream job that's "well above market" that they won't find anywhere else? (I'm not suggesting one shouldn't become a doctor because they'll feel bad when they can't heal all their patients, but the question seems worth considering. And maybe the question helps to better understand or articulate what it is everyone believes and wants to do, and what the scope it. Is it explicit that we think such-and-such is a good model for humanity, and we've decided can best tackle that within our little microcosm and whatever example (and market pressure) it sets, and so we're scoping it this-and-that?)
BTW, I'm not so worried about retaining the senior engineers, when the person with the (in some ways harder, some ways easier) job of custodian makes as much money as them. If the salary is good, and the work is good, I suspect there's plenty of highly-skilled engineers who'd want to work in a cultural environment like that. And who knows what all effects that might have, or what other crazy, appealing ideas might be pursued there.
Even if you had that laudable motivation, I’d argue that if the going rate for drives a golf-cart security is $25K/yr, you do way more good to hire 3 of them at $66K/yr than 1 of them at $200K. Maybe to the point that hiring 1 @ $200K is arguably less ethical than hiring 3 @ $66K.
But were that funds limit a bit fuzzy, and we had the option to pay each of those 3-times-the-people at the $200K we decided was the amount to live comfortably in that place, that'd be another option.
(Not to sound all college-frosh socialist. I just suppose I shouldn't get too comfortable with societal compromises, since, if something doesn't bother me, I'm less likely to try to improve it. I also shouldn't congratulate myself on being bothered, and confuse any comfort from that with having actually made any effort on the problem.)
Sign me up now! This is so refreshing I would happily take the pay cut to be rid of the toxic by-products of cutthroat review culture. I seriously hope this gains traction because it's about time we rethink the kind of work life we really want to have, one that is organized to serve the people who do the work.
- X type of employee is more valuable than Y type of employee, therefore they should be paid more.
- There is no mechanism or incentive for growth (a.k.a the career ladder argument).If a job or position is less valuable, why shouldn't that position be paid less?
The goal is to treat the salary as a necessary (evil?) for "what you need to feed your family, buy a house, etc..." and not as the primary motive for work.
An employee who makes a valuable impact does so because they want to see the company/product succeed.
With most companies, this is a comical assertion only applicable to 20-somethings who haven't realized that their employer will betray their trust one day. At least in the US.
Until companies start rewarding longevity and favoring employees over executive bonuses when budget crises occur, employees will also be mercenary and seek out better compensation if they have the opportunity. US companies, by and large, will slash staffing or employee bonuses before cutting management or executive positions and/or bonuses during difficult times, even when they have the capital to avoid those cuts if the so-called leaders would be willing to make a personal sacrifice.
Now in the case of the posted article, the compensation is already good. So that changes the calculus ($180k/year may not be the best SV salary out there, but it's very good across most of the US, even for developers). And by leveling the pay at an already good salary it can further change the motivation of employees. But try fixing the salaries at, say, the median household income of central GA (depending on which county somewhere between $30k and $45k). Sure, the boss can say, "I'm suffering with you." But the employee is still going to seek out better pay.
This seems shortsighted. Even after your immediate needs are covered, you can be a long way away from being comfortably able to feed your family next year, in ten years, in twenty years, even if things change.
An employee who demands as high a salary as they can get for the work they do may just be thinking more long-term.
In this case, you are being paid $15K per month to work to make that ticket pay off.
If not, then the differentiation in compensation just moved to whatever liquidity event.
Why should it be the same? If I join a year after you, I sure as hell hope you have more, all else being equal. If we join the same day and you are twice as critical to the success, I hope you have more, because your incentive pulls my outcomes higher.
However, amount of and terms around equity are part of the overall compensation package, and if the principles espoused in the document are relevant to salary, then they should also be relevant to the equity component of compensation as well, no?
For equity, earlier grants are at a riskier time (and where your contributions are more concentrated and influential). Earlier employees should get more (not just have more after 2 years compared to the new joiner, but for their first grant to be vesting more next year than today’s joiner’s first grant).
There’s are things that I personally wouldn’t like about the scheme, but I think it’s quite hard to make a “it’s too unfair” principles-based argument against it.
Because the valuation of an employee's contribution to an organization, as assessed by management, is usually bullshit.
If the product succeeds, all the employees benefit, and if the product fails, all employees suffer together.
Now, for a large organization, the ability for individual employees to influence revenue or profit at the organization level is negligible, so you need different strategies for compensating your employees. And the article concedes their approach won't scale past a certain company size.
My second thought was that this feels like a combo humble brag and first world whining. The organic raspberries bit is particularly grinding.
I hate to be negative, but I don't see much high-minded in this, much as the blog post would have me do so.
I want to point out that it's not that I oppose companies trying radical new things. Quite the opposite. It's just that, having tried it myself several times, I have experience with the practical side of it.
I wonder how this changes incentives for most people. In the valley of bottomless snacks and drinks, bottomless PTO, bottomless stock options, how does bottomless pay work on the mental?
What if I want to work a 3 day week?
This thesis could easily be correct in a VC funded company that relies upon the minds on the team, and aims to be a unicorn. It couldn’t work in a low-margin business that relies on employee body count.
It is intriguing to look at high-margin software businesses and look at revenue per employee (or profit per employee when they become mature businesses). Employee costs are often the biggest expense in tech companies (and tech startups: oxide = 23 employees at $180250 with 20MM VC invested).
Marginal profit growth of tech companies often requires little marginal increase in employee headcount/costs. The economic consequences of this are often under appreciated by many people.
> We are very supportive of remote work. About half of our team is outside of the San Francisco Bay Area; our only requirement is working hours with a significant overlap with Pacific Time.
I myself am in Austin, Texas.
Too many developers do not negotiate and simply accept lower compensation.
If your are a software engineer with a job offer, ALWAYS negotiate for higher salary. Most likely, you will get increase from first offer. If not, go find a company that will offer the higher increase.
For multiple reasons, it’s nicer to work at the second, but your algorithm ensures you’ll always choose the first type.
I think successfully arguing that any venture-capital backed enterprise is socialist is difficult, to be honest.
These folks are explicitly looking for mid to late career, highly skilled people. Those they don't hire they're not arguing need to be paid the same. I'm pretty sure they don't have a pool of receptionists and custodial staff making the same as the founders. Those positions, if they exist, are likely done by temps or contractors.
When they mention that the pay may not stay uniform, they might be talking about creating junior positions and operational positions like technical support at a lower rung, even if the ladder stays to very few rungs.
Socialism is a society level compact that cannot be unwound the same way if at all.
It may work in short term, when everyone is part of product and tech team, and building product and valuation.
It will become a problem when junior people are paid same as senior level people that’s delivering more impact. And, when the company grows and have to hire support staff. Will they pay same salary to the receptionist?
Like literally anyone can start a team of few people that are all paid the same. It's not really that hard, nor does it require that much attention. You only need to write about it, if it successfully stays that way for a long period of time or if it scales when parameters change.
The formatting is weird on mobile and it rambled on for a long time with saying anything before my hand got tired.
What's the point of the article?
Bryan Cantrill is an amazingly accomplished technical person, so I don't understand how he could written this piece.