What frustrates me the most as an entrepreneur
joshliu.co
joshliu.co
I've had situations where extremely intelligent and productive fellow employees left the company because they found out someone else of the same level was making a lot more than they were. And by the time they offer a raise, the employee has already emotionally moved onto other pastures.
I'll admit that when I found out someone else was making a lot more despite putting in less hours, my motivation within the company dropped dramatically and I put in my notice a few days later. It's not that my only motivation was money but I lost a lot of respect for mgmt.
I do think the argument is funny sometimes. I'm not saying that the author believes this, but I've seen other owners come across like, "we're not trying to be greedy... we really don't have much money." Okay, so then why not tell me what everyone is earning and owns so that I know where I fit in? Oh right... you want to get away with the minimal amount you can get paying me.
Looking at Spolsky's other posts on stock options, it isn't a complete picture I think.
(Spolsky's particular federal-type pay scale. Not public salaries at all).
If you knew you didn't have the money to fairly pay for this designer's services, why ask? To the more cynical among us, this post may seem like a manipulative way to indirectly guilt-trip this guy into working for you far below his asking rate.
Look, you know how to get press and upvotes on HN. You obviously know how to influence people. But maybe now isn't the time to be speaking about this hiring issue while it's still unresolved.
By this equation, a startup without a lot of VC money wouldn't have a shot at hiring anyone great - and yet a startup needs great people. Put simply, if you want to make a lot of money at minimal risk, run far away from startups. Go work at a big tech company who's a money making machine, become employee 29751, and enjoy your biweekly paycheck which will come whether you work hard or not.
The equation at a startup is different. You have to love what you do, first and foremost. That's not measured in dollars, but not hating the place where you spend most of your non-sleeping hours is worth a lot. Secondly, you really have to believe in the company, and your impact on it. Without that, you'll value your equity at $0, and the financial side of things will wear on you (you will believe you're being paid unfairly).
Part of attracting great people is making sure they believe in you, and making sure you can provide a great work environment for them. The people who are strictly motivated by salary are probably not going to work out. There are still a lot of great people willing to take on some risk so long as it's something they believe in.
Remember, not being an investor if your business doesn't pan out it's much harder on him than a guy who has a portfolio to fall back on.
He'll also likely resent you. This resentment can come back to affect his work when crunch-time comes. Employees that want more money, deserve more money, but took low pay on the hope of success tend slowly develop resentment towards the business. Especially the longer they wait for the promised success.
We had experience getting a young graduate, and it turned out that it took a lot of time to teach him some basic things. It did not work out at out at the end.
You need branding and some design work done for your business needs and your application: hire an agency or a self-contained talented designer. They're out there, they may be expensive in the short-term, but if they create a well-documented, solid style guide, it will pay off in the future. After the contract is up and the work has been delivered, part ways and maybe continue to employ them sparingly as needed, but there's no reason to keep them on. What are they going to do when you run out of tasks for them? They'll leave.
The person you do need to hire is young, energetic developer who can build UX and is eager to learn. That means they can take a PS comp and a style guide and build the apps you need in HTML, CSS and Javascript with extensible production-level code. Want to know who to hire? Have them submit their github, stackexchange and rss feeds. Measure progress and ability levels and set their salary expectations accordingly. Most developers who are eager to learn will jump at the opportunity to work on a project that may teach them new skills. Just keep the work interesting enough and they'll be good to go.
Your UX prospect has design talent and can code? Then your screwed. There's so much work out there right now that if it comes down to salary, they can walk out at any minute.
I never take the offer of equity as a con. I see it for what it is: a high-risk investment because the founder does not have enough capital to pay. The main point here is that when the time comes should really be if the time comes.
If you are a founder in this situation, realize what you are asking for is a hybrid worker/investor. And you shouldn't be surprised when this narrows the pool of available workers interested in the opportunity.
It would not be fair to ask a late thirty person to take the same risk as a early twenty person. People have different financial concerns in different stage of lives.
I think a good founder need to consider that. It is just not right to ask everyone takes the same risk as the founders do.
In Austria there is luckily an employee compensation fund for insolvencies that pays out 3 months wages as long as employees claim the money in time. If you don't have that you will (might) be in for an even tougher decision.
Disclaimer: I don't claim your startup will fail with certainty but statistically that is what you are in for, so better think about what you want to do ex ante.
You should see if he would be willing to contract with you, while allowing him to work another job and possibly give him equity incentives along with pay.
I totally agreed that it would not be fair to ask other people to take as much risk as founders. It is all about structure it and get the balance.
Yes, we are not getting him full time. He is going to have another job in parallel. Hopefully, we could work with him 1-2 days a week to start with, and compensate his highly discounted rate the other way.
So embrace that constraint.
I'm kind of surprised that you're looking for a UX guy full time, Is that really necessary in your estimation? Don't you think you'd do better with a freelancer billing out hourly?
Does this mean employees get stock options, or are they promised to get stock options?
You will have tonnes of "experts" who buy in. There's always a supply of people who want money.
You could provide a way I can type "how do I do X", and any experts interested can give a free 30 second answer. You might want to get credit details first (to keep time-wasters away).
That is something we definitely want to work out. I understand that it could actually get time-wasters if you do not put the payment at the front. But, on the other hand, if you put a payment right at the beginning, it causes friction.
We are just experiment to find the best approach for both experts and clients.
I do like your "how do I do X" + 30sec answer idea. Thanks a lot
His rate is fairly high to us, but I know he is happy to discount the rate for us. I really appreciate it. A lot of people discount their rate working for us as well. I just feel a lot of appreciation of that, and hope I could pay them the rate they deserve (or other type of compensation) very very soon.
Shouldn't that be "You disrespect me"?
The real issue, I think, is that your job forces you to motivate people to take risks on your behalf and it feels like you're over-promising. A lot of success in business relies on motivating people (employees, clients, users) to help you succeed by promising what you'll be able to deliver if everything goes right... selling a vision, in other words. But your workers buy into that vision: they're willing to take mediocre (or even abysmal) compensation in return for the opportunity to be part of something great.
You shouldn't feel bad about paying them poorly. If they wanted high-paying jobs, they'd take them. You should feel bad if you downgrade or abuse their loyalty, if you intentionally break your implicit promises to them (if you bust your ass and do the right thing and still fail, that's not an intentional breach). But you seem considerate enough that I don't see you doing that.
As for investors and the low salaries they expect employees to take, that's a gnarly issue. It's a completely fucked system when the people who are risking more (their careers and opportunity cost) and putting more on the line (their time and work) are second-class citizens compared to the investors, who are just putting up money (that might not even be theirs, in the case of institutional agents). The real investors in any company are the founders and early employees who are doing the actual work. The money given by financial investors ought to be respected (it's a loan, not a gift) and they should certainly have enough say to ensure this, but it shouldn't give them the clout it does.
It's one of those decrepit old systems whereby favor has more value than labor. It's not worth taking personally, and your employees don't resent you for being on the losing end of it.
Also, as for what keeps that system in place, I think there's a bit of unacknowledged resentment of entrepreneurs by VCs. The VCs have the well-paid, cushy, powerful and easy jobs and are pretty much guaranteed by their path-of-low-resistance career track to be rich... but their jobs are a bit boring from a day-to-day perspective... lots of meetings and reviewing prospectuses (prospectii?) and shit like that. The entrepreneurs, as they see it, deserve less respect because they have the fun jobs.
Then why doesn't everyone and their mom become a VC?
Hint: Because it's nowhere near as easy as you think it is.
It is plausible that the barrier to entry is high, but the job is easy.
what i see, people don't even know that it's hard so you have to enlighten them. i see people think there are some other barriers, like connections, friends of parents, university, money, etc
There are companies setup like this. It's fairly common for companies founded by people who have already made their money (as finance people, executives, previous entrepreneurs or early startup employees) to be self-funded. The problem is that if you require everyone to work for stock, you're cutting yourself off from a big portion of the talent pool, basically everyone who requires an income to live.
Investors get a share of the company in exchange for providing salaries for the people who can't live without them. If you don't need those salaries, you don't need the investors. But it seems like it's better to have the option to take that investment and pay people than it is to require that everyone work for no pay to get the startup off the ground.
I have met a lot of talents in this situation. That is why I wish I could retain them better. It is important to give the team member a peace of mind, right? Otherwise, they need to worry about money all the time, and it probably is not good for the productivity.
I'm sure that raises a host of complications vis-a-vis the cap table etc., but it nonetheless seems an intriguing possibility.
yes, that is definitely an issue. In many cases,I think some people need to worry about their rent, monthly expense, or mortgage (personal burn-rate) to worry about. If you are in your early twenty, your personal burn-rate would be much lower than in your late thirty.
Shares/options are great for motivating the team. They are bonus. But, we all need to at least cover our personal bur-rate to live.
I feel, as a founder, at least I should not let my devoting team members worry about that.
I will definitely stay in the game for sure. :) I know it is important to motivate people. But, to the people who work so hard for your vision, I think founders need to take care of those hard-working employees. I feel frustrated because I wish I could offer what they deserve.
I think, start-ups need strong team with good talents. We are fighting with big companies and well paid jobs. If we just wanna take people who are willing to take high risk to join the start-ups, we are gonna miss out a lot of great talents.
Start-ups are fun, and we can attract great talent. But, we all need to pay rent and survive. I am just hoping that we could find a balance, pay the talents a fair salary, and enjoy the fun start-up ride together.
Josh :)
Second, again you probably don't need an UX guy now. Dig into your heart, whats not working for Minutebox? User adoption or just the plain old people are just not finding it. If that's is the problem, then you won't turn it around by hiring a great UX guy. You only need the UX guy when you get tons of users and you need someone to make the experience of using minutebox better for them.
Yes, we are planning to work with him on a contract basis. It would be the best for both of us.
We have learned a lot from our users, and know what problems we need to solve now. We are working on the most important bit of the conversion funnel maximisation, and we think some UX input could help us to do that better, quicker, and more efficient.