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Comment by silicon2401 | Hacker News Reader

This type of practice is what makes me not even consider FAANG jobs. I've (tactfully) told their recruiters I'm not interested; you'd have to pay me 500k minimum to even consider having to live on the west coast, dealing with their terrible work life balance, and having to worry about firing on top of everything else. Per this article, you could unknowingly have an expiration date on your employment. From personal contacts at Facebook, they specifically want you to get "needs improvement" on performance reviews to show that you're really pushing yourself; if you're doing well, you're not being pushed hard enough. I'm definitely not masochistic or interested in money/tech enough to work at a place like that.

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Well for one, they can probably get you pretty close to if not over 500k if you’re senior. I also think Amazon and FB stand out for that kind of mean spirited meat grinder vibe. Netflix doesn’t screw around with any of it and lets you go without the fuss, but my understanding is that you get a lot of signals from your manager and they aren’t about doing weird psychological tricks to push you harder. It’s just a matter of meeting a reasonable productivity bar. Google is very far from this and a nice relaxed place to work.

> Google is very far from this and a nice relaxed place to work.

Google seems like possibly the worst place to work. They have major, thoroughly discussed issues with their review process. They were some of the initiators of ultra grueling interviews, elitist hiring practices…

Google is well known for killing products and you often hear that is a by-product of their review process.

Google offices are infantalized (just like FB) and often filthy (worse than FB).

That’s on top of their well known issues with internal political fighting, sexual harassment from execs and unethical business model.

the good news is, 500k is indeed a floor for a lot of FAANG roles (when you factor in equity comp)

No sane person (or nobody with more than three years in the industry) counts equity comp in with base compensation.

For a pre-ipo company, sure. For a company like Amazon or Facebook, you are way over generalizing.

i'm surprised to run across so many purported tech professionals who still don't know the difference between options and RSUs, and how the latter are as good as cash

I'm not. Our industry is filled with people who have bought hook, line and sinker into the "I'm passionate about what I do and that's all I need" cult, especially in the Bay Area/startup world. They assume they're well compensated (a few are--maybe a higher fraction than in other industries, even--but most of them aren't) and don't pay attention to that sort of thing much.

At a public company, equity comp is a stock grant. This has a greater likelihood of being valuable than equity in a private company, though of course the value could still go down.

At an early stage startup, no sane person counts equity comp. But at a company that’s been public for 15+ years, why wouldn’t you?

... especially since hire-to-fire means that a lot of people will never actually receive that equity compensation.

At Amazon in particular they pay you the cash value of your stock for the first two years until it vests and you can start actually cashing it out. They have to since they have a maximum wage of ~$170K (varies a little depending on city).

Isn't Amazon famous for clawing back starting bonuses if you don't stay for 4 years or something like that?

I don't think so, because I think the most common tenure is just over 2 years. I know a lot of people who leave right after their second year cliff (the vesting isn't even and most of it comes at the end).

No, the sign-on bonus is prorated monthly and you don’t pay back what you got.

However, you might need to pay back part of relocation money, if you leave before two years mark.

At a FAANG? Why not? If the company is public you can immediately sell it for cash upon vesting, and I pretty much always do.

Consider the story that we're discussing. If you're hired by someone whose incentive is to fire you to meet a metric, then you're never going to get that equity payment. And they have every incentive to load your offer up with as much equity as they can.

And even if they don't, there are lots of ways to find yourself in a toxic workplace. If you're depending on that vesting schedule, your life can suck as you're trying to wait out an arbitrary deadline.

If you treat vesting as a nice optional bonus that you don't plan on, neither situation will feel bad to you.

A few companies under the FAANG umbrella do monthly/quarterly vesting.

Lots do monthly/quarterly vesting. But all have 1 year cliffs. With the idea that you get nothing if you don't last.

I had the wonderful experience of being hired at Google many years ago, and pulled into an SRE role. I was in the roughly half that they do that with that don't work out. And I didn't work out for exactly the reason that I initially expressed doubts about. (I don't task switch that fast - not a problem in a SWE but a major problem for an SRE.) I was let go 5 days before my 1 year cliff.

That is one of the reasons why I, personally, discount equity compensation.

> But all have 1 year cliffs.

Google and Facebook don't anymore. You start vesting right away.

Ehh... equity comp at a public company is just cash on your vesting schedule (if you chose to sell each vest).

Why not, assuming the company is public? If you can convert to cash as soon as your shares vest (which occurs monthly in most instances) it's as good as cash (with some discounting factor for the uncertainty of the first year pre-vesting).

That's not true. It makes sense to discount pre-ipo equity at 100%, but post-ipo equity is much more predictable.

I personally discount equity at 40%. So you can offer me $300,000 cash or you can offer me $150,000 cash and $250,000 RSUs and I'd consider those equal offers.

For public companies you should value stock grants above their face value, because of the optionality: If the price goes down you can quit and get another job, if it goes up you get a raise. And stocks tend to go up, so 4-year grants have raises baked in, and most companies don't consider these raises (IIRC Amazon and Stripe do), so they still give regular raises and refresher grants.

The discount is to account for risk. Imagine an offer that is 100% stock. If they stock goes down, your comp goes down with it. That is what is being accounted for.

> And stocks tend to go up

Only lately. Stock compensation sucked around 2001 and 2008.

Risk (well, "variance") increases the value of optionality.

Assume that there is a job market with lots of jobs. Each will hire you for your market-rate total compensation, no stock cliffs, no job-seeking costs. Spherical cow. Say also that you can tell the variance on stock compensation, but you can't guess at future performance.

One strategy might be to go to an all-cash job and make your market rate forever. That's a lower-bound on the best expected future earnings. But a better strategy is,

- Join a high-variance company,

- If/when your pay drops below the market, find another high-variance company.

With this strategy your expected earnings are higher than your market rate, even if the expected earnings at every job is the same. And the outperformance scales up with the variance.

Yes, mathematically in a perfect spherical cow world, you are correct.

But I live in the real world. And in the real world, you can't switch jobs instantaneously back and forth, like you can trade stocks. In the real world there may not be a job available at the market rate. In the real world it takes months to find a new job even if there is one, and then it's even harder to actually get market rate.

So in the real world it make more sense to discount stock compensation compared to cash compensation to account for all of these things and the risk you take on by accepting stock based compensation.

A 40% discount on RSUs at a public company is perfectly reasonable: you will have to sell to cover the taxes as soon as they vest, meaning for every 10 shares in your grant, 3-4 will be liquidated before you even see them just to cover the taxes on the vesting. Add a modest discount for the fact that you might leave prior to the next vesting date, and 40% might even be a bit optimistic.

True enough, provided you also apply a 40% discount to marginal salary increases.

Unless your contract specifies guaranteed salary increases why would you count it at all? Salary increases aren't like RSUs.

I meant increases in offered/negotiated salary. A marginal dollar of salary gets taxed the same way as a marginal dollar of vesting shares, so discounting one in the offer because of taxes makes sense if you discount the other in the same way.

You shouldn't trade away a dollar's worth of shares for 60 cents more salary just because of taxes.

Equity is public company is as good as cash. You should absolutely count it as part of base compensation. Vesting is every 4 months and risk is minimal. If you want you can even fully deriskify by buying put options (or come up with something synthetic that mirror put options while not breaking your employment agreement).

On the other hand Equity is startup is completely different thing and should be heavily discounted.

> Vesting is every 4 months and risk is minimal.

That's not the way Amazon vests your stock, unless things have drastically changed recently. They vest in single lump sums for the year, and they have a slowly ramping up vesting schedule.

First year, nothing (but they give you straight money bonus) Second year, barely anything, but they give you some cash to "offset". Third year, good bunch of the stock, but still less than half. Fourth year, all the rest of the stock vests.

Within each year you should get some stock offering, on the same ramping up basis so the idea is after the fourth year, you have consistent RSUs vesting, and they'll probably be split over the year based on whenever Amazon gave you the stock offering.

The sign up bonus over the first two years is pro-rated and paid every month and it makes up for the lack of stock vesting during that time.

Until the public stock shits the bed, like GE for example

It's not as good as cash because the value can vary, especially the further out you look. It might go up, but it might go down. Cash is far more stable than that.

But it still should be modeled far above zero, and far closer to cash than pre-ipo options.

> Vesting is every 4 months and risk is minimal.

For very few companies. Most companies - even tech companies have annual vesting (so 25% every year). And Amazon has 5% vesting after the first year.

You are wrong. Companies like Facebook and Google allow you to vest shares almost immediately (I think they vest quarterly). Unless you think their shares are going to drop precipitously, it’s absolutely okay to count equity these days.

“A lot” is still a tiny percentage even of the engineering roles.

I don't think it explicitly said it in the article, but I'm pretty sure the hiring-to-fire is happening in warehouses, not dev offices.

IIRC Amazon has a fairly high PIP rate, it's something like 10%. Although what this article is talking about is probably separate from this.

https://www.viamaven.com/blog/amazon-pip-what-is-it-what-to-...

How interesting that a 10% PIP rate aligns so closely with the bottom distribution of stack-ranking: https://lattice.com/library/what-is-stack-ranking-and-why-is...

Is 10% actually fairly high?

I read that as "if you hire two teams of 5 people, on average one person on one of them ends up not performing and getting PIP'd.

That seems... not crazy to me?

Having it happen once isn't toxic. The part that creates the terrible culture is that it happens every year.

Imagine trying to build a team and good culture when someone on your team is put into a performance plan/fired every year.

Now add in unreasonable demands from management on delivery dates, churn from people trying to work at a company that doesn't fire one of their coworkers every year, and a lack of new hire support because if you don't bring your new hires up to speed very fast, they're more likely to get fired than you/your friends are. Also, those new hires get paid more than you do if they were brought in at the same level because they're "bar raising" and you aren't.

From the article GP provided:

"About 10% of Amazonians receive a PIP.

This is fairly high; at other companies, 0.5 to 3 percent of employees receive a PIP."

Seems to be 3 - 20x the average. That's high.

10% is quite high. It's more like 3% in my company.

And using invalid assumptions, if the probability that you will get PIP'd every year is 10%, assuming it's just a random dart shot, that means the likelihood you'll get PIP'd at some point in the first 4 years is 35%.

It's absolutely happening in software roles.

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