How on earth I became an entrepreneur
deepsouthventures.com
deepsouthventures.com
See, he routinely made several times that annually for the company in retained customers and won contracts. If they'd had any sense, any idea of how profit and loss worked, they'd have snapped him up in a minute. But they let him go.
Of course later the office closed entirely, not making enough money. What a surprise.
Seen similar discussions of: "Well you have the skills of 4 people but we don't want to pay you 1.5x of what most people here make so we're not going to hire you."
I always wonder if this is just a poor understanding of the value individuals bring or just short shortsightedness on the part of management/the finance team.
Since that is common knowledge shared by all the administrative personal, it's impossible to justify somebody paying 1.5x your salary range. Even if you personally realize some specific person doesn't look replaceable (who am I kidding? You don't. You don't stay in management on places like those and keep that ability, you either move or change), you can't communicate that fact.
What is circular reasoning?
It's a cult-dwelling means of solving cognitive dissonance. If you look, you will see it in more contexts than this. The first statement is just an unshakeable premise, and needs no justification.
That's the key behind that reasoning : If your so skillful, go right ahead and create your own business. Otherwise, it's your place in the hierarchy which dictates your salary.
But then again: very few corporate NPCs can think outside their bureaucratic box. If they could, they wouldn't be NPCs.
Which is expensive and doesn’t scale very well, as it requires you also keep a positive company culture, hire+train and keep good managers, etc.
The reason why corp goes that way eventually is because defining specific slots and requiring people to fulfill the requirements of those slots ‘or else’, and paying them as expected for those slots scales better (for certain definitions of better anyway), requires far less skill to identify if someone is or is not fulfilling those requirements, and allows central negotiation and better leverage for compensation which scales better for the company too.
It tends to not work great for creative areas, but it does work pretty well for boots on the ground crank turning. Since it’s relatively easy to quantify how hard and much the crank was turned, and often to what quality measure.
Which sucks for humans, but works.
At some point, that stops working too, and at that point the blatant ‘cog’ thinking has also made everyone jaded and shitty.
Depending on the level of market capture for the company /organization and competitive pressure then defines if it will implode, or be the next ‘DMV’ or worse ‘Comcast’, where it is somehow ‘functioning’ despite itself.
The US has a ton of these industries right now, but due to various still working market capture elements, we’re still putting up with them. Everything from Banks, Telcos, major ISPs, etc.
Frankly it seems to be to the backbone of the US economy right now.
One big disadvantage those orgs tend to have is they often suck at being adaptable. Most of the org is just fighting internal inertia, and the moment the direction needs to change it can fall apart and become actively counter-productive to itself or delivering value.
And considering how many consolidations and buyouts have been going on with cheap money, it’s about time for the stack of cards to implode a bit. Which would result in mass unemployment unfortunately, as 36% of Americans work for megacorps now, and a great many smaller companies depend on their business.
Which is great for startups and companies that keep a useful workable culture with decent management through this mess. I don’t know of any off the top of my head right now though.
On the bottom of the hierarchy the lowest managers do not not want to hire special cases. If you are that good then the manager will really have no power over you and can't even replace you if it becomes needed.
So you only have 2 options if you are significantly above average. Fight your way up for big money or stay at the bottom and work very little to compensate for the small salary. You should be able do get an average work load done in no time if you really are good.
Maybe it’s not a bad thing to employ two or three people at 2x cost. Or we’d end up with unemployment or underemployment.
Being able to do the work of 2-3 people is over-qualification. They are better utilized in smaller or failing companies that need the advantage of the boost.
Altho it is unlikely that most people will be willing to give up the bargaining power to convert experience to currency. So what do we do?
Who would want to go to a job if you have to struggle and make less than a YouTube influencer. It’s already happening to the youngest adult generation. The struggle is real.
... And why would they do that? Smaller companies often can't pay the same and failing companies are mental health events waiting to happen. Most people leverage their experience and effectiveness into a better bargaining position.
Also why are you thinking that labor is zero-sum? Most developed countries these days have lots of jobs that are zero-sum, but software is definitely not one of them. There's a voracious demand for software developers all across the skill spectrum.
I am not saying labour is zero sum. Higher demand doesn’t necessarily translate to higher pays. Low level coding is an easier skill. But it can also be automated.
At higher levels of employment, there isn’t that much demand. The higher up the hierarchy, the number of years of experience and skill and education matter.
By siphoning labour to low level skill jobs, when high level skill ages out, there won’t be proper succession for knowledge transfer.
There will be a lot of casualties and smaller companies will die. So will successful companies that don’t know how to scale. Or don’t have enough money/capital to facilitate scaling.
What is important is stability for any company that has a long term vision. Eventually smaller companies will have to hire more people and if doing that means they can’t meet margins, the company is in trouble.
The only reason to reduce workers after reaching steady state is if the company automates essential key processes.
https://research.stlouisfed.org/publications/page1-econ/2020....
I'm thoroughly of the jaded opinion that when it's not a power play (no one's lizard brain wants to admit there's someone smarter than them), it can actually be a sort-of-rational decision: don't be beholden to someone hard to replace. Hence why you see tons of PHP jobs, but few in languages like the Lisps or Haskell.
I don't doubt that he generated that value - it just sounds like he may have overshot just a bit.
Did he explain that to them in a friendly professional manner? Or did he expect them to recognize his greatness right off the bat?
You provide literally nothing of value to the customer, burden the customer-focused employees with unnecessary bullshit and use all of your political capital to advocate for the hiring of more deadweight employees? 100k per year.
You advocate for, build and maintain a product worth $10m/year to the business? Wow, you're pretty special. You can have 150k!
If we a good idea, would we be able to work on it? Probably not, the "innovation team", which was his team, would be the ones to build the prototype.
If we had a successful good idea, would we receive any compensation? No, and that's very selfish. He insinuated that we should rethink priorities or place of work if compensation was important.
He also talked about how he only wanted ideas that had the potential to make billions.
Felt a lot like: "Give us your best ideas, then GTFO of the room so we can implement your cool brainchild - with no credit to you!"
There's practically zero reward for the folks with good ideas in that model, yet it's sort of the table stakes innovation model.
A couple years later an engineering manager at the same level gave another presentation about how innovation and ideas have been lacking. He placed the blame on software engineers not trying hard enough.
I think there's a certain type of person who thinks that the only type of success is one where all of the profit/credit goes to them. Sadly, they seem to be the leaders of many organizations.
We're talking about things that used to take 1-2 weeks, being done by Tuesday, if it was assigned on a Monday morning. It was nuts.
My immediate manager, didn't understand it.
His manager sat down with me and read through the code, and was ecstatic.
He brought the CEO in (it was a small shop, that was the next level), and explained out the implications.
AND..... that was the last I ever heard of it. They bought me some pizza.
On their own they decided that if they repackaged the library itself, they could sell it as a b2b tool (which was a pretty good idea).
And they assigned devs and PMs from other teams to build it.
And those devs and PMs never took a look at my code. I'm guessing they were never told about it. They did, however, build their design the exact same way they had built everything else before my library. Which meant, it made all the same mistakes they had always made. Their final product didn't really move the needle. It did not really save anyone much time. And it did not successfully sell to other businesses.
Except by then, it was the new "company initiative". And the % of resources the company had put into its development was substantial. So when it failed completely to materialize real results, it was devastating for the company.
They ended up laying off some ~20% of the company to recover losses in the months after I quit.
So yeah: "Give me your best ideas so we can implement them with out you" doesn't work. If you could have implemented the idea, you would have had it already.
If that's not a glaring neon sign telling you to quit, and quit now, I don't know what is.
It probably sounds worse on paper and due to my phrasing. I'd say he was stating the reality and being a doofus (he's the excitable and friendly type). It wasn't so sinister.
Honestly, the line "had me question everything, including my self-worth, my identity, and purpose" resonated with me so deeply, not just the first time I was laid off, but even now 20 years later and having left by choice.
On the flipside, to get CYA-managery, but any time someone in management says anything approaching "you should quit" that can be a bit worrisome. They might be doing you a favor, but the org is more than likely to be hurt by you leaving.
Suppose it’s $500k a year.
Well, what if someone says they could do it for $200k a year? Or even less? Why keep the $500k employee???
That is how they arrive at $150k. It maximizes profit and keeps costs to a minimum. Good business.
By your logic having someone 2x as sucessful at sales is risky and you should let that person go.
Builds good will, makes people happy, and secures your ownership of a product that has added tremendous value to your company. That's a win all around.
I think you grossly underestimate how hard it is to find one person, much less two or three people, who can and will actually do this task diligently.
Your best hope is that the PM gets bored and wants to move on, and you let them hand pick their successor(s).
I’m going to paste from another reply I made in this thread:
“Knowledge documentation and transfer in reality is hard. Very few people read docs, even when they are told to and those docs are critical to their job and the business as a whole. If you do it face-to-face, it’s almost always the case that the person learning politely listens and is already making a mental list of changes (often catastrophic) that they are going to make.”
I will add that hiring competent people is hard if the company is focused on keeping compensation relatively low (as in this example) rather than rewarding their champions.
I realize that as an org gets larger, pay bands have to be a thing because mediocre-but-functional people (i.e., most “good” employees) get butthurt when a champion makes more than they do. That said, I think that many SMBs can have substantial salary variation within the employees, have those variations be reasonable, and frame it in a way that makes sense to everyone involved. That said, many chose not to do so.
You may not be able to guarantee that the new person can do it. This isn't a given, otherwise we would have all figured out how to hire the right devs for any given product and team.
There's a ramp up time to learning the product (and codebase, if it's software). If an emergency happens, only the new person will be fixing it and they will lack a lot of knowledge to fix it quickly or effectively.
Did the maintainer have any customer relations like customer feedback, including what works and doesn't in the product and what features they would like to see? Those have just been forfeited as well. Same for intra-company relationships.
The person you just fired could also go help make a competing product (legally or not), since they're the best person to do so. Chasing this down would require legal resources, which requires further expenses.
Sounds like a whole lot of extra potential complications for a measly +$300k.
In reality, if you are depending on one employee to make your business that is a huge risk.
That employee needs to document and transfer his knowledge and relationships out to the company at large. You must raise the bus factor.
Firing/antagonizing them makes no sense.
This is extremely common in many/most SMBs.
> That employee needs to document and transfer his knowledge and relationships out to the company at large.
Most employees who are rainmakers/linchpins like this are also aware that they are rainmakers/linchpins.
First, knowledge documentation and transfer in reality is hard. Very few people read docs, even when they are told to and those docs are critical to their job and the business as a whole. If you do it face-to-face, it’s almost always the case that the person learning politely listens and is already making a mental list of changes (often catastrophic) that they are going to make.
Second, relationships are extremely valuable, and anyone who has them pretty much knows this. Why would they give this up freely? Oh, you will fire them? I guess the company’s competitor would love to have your rainmaker and all of his/her contacts.
In all of the sustainable and stable businesses I have seen, these rainmakers/linchpins get paid outsized amounts of money due to the processes and connections that they have and have made. Imho, they deserve it.
The company has to have a BATNA in the event that the employee demands something outrageous, but usually the best course of action is to reward them generously for sustained profitable performance. If you are lucky and skilled as an executive/manager, some of these superstars will be happy with a slightly smaller (but still relatively large) income in order to work in what is hopefully a healthy work environment.
(HN discussion: https://news.ycombinator.com/item?id=19728132)
I know a lot of people say quit and try freelance consulting but I'm not sure if it'd be sustainable. Would love to know your thoughts!
1. Buy domain names
2. ???
3. Profit
1. royalties for reusable code (you no longer receive this if you leave, incentivizing people to stay as your royalties stack up). Any time code you've worked on is reused you get % x (equivalent hourly wage when you wrote it) x (# of hours it took to write the first time around). Possibility of backfiring if people ramp up hours spent producing high value stuff to maximize that royalty. This also only works in a job that allows you to build a lot of tooling for the team or something like that.
2. royalties/bonuses per team every time that teams work is used. This only works in highly profitable businesses maybe like google - i.e. anytime your code that served an ad is used the team gets a portion of that money to distribute evenly to the team. This doesn't really incentivize anything except getting onto productive teams.
3. in a fair and just workplace some sort of bonus based on democratic vote/ranking system on who is the most valuable to the entire team instead of one single person deciding (the boss) haha! that would never work.
4. bounty on features or something like that?
I don't know, I wish there was a way though.
oh, brother
I understand it's a Tepenyaki place which are expensive places to go to. Though the novelty wears off. Is it considered tacky in the states?
Does it get traffic, and if so can I convert that traffic to $
This is an example of understanding and recognizing an opportunity earlier than the big guys.
Nowadays it looks like simple paid ads - but that can still add up to a lot.
Dude ranchers are, for the most part, not a very technically savvy group, and that's an opportunity he's pursued pretty heavily. (This is reading from his own tweets and writing, plus a bit of my own experience growing up in Montana.) Peter's main gig these days is running RanchWork.com, which is a job board for dude ranchers. He's been writing and tweeting about how he paid like $3k for a print ad in a ranching magazine and nearly tripled his posting revenue the following month. ($3k posting per month before the print ad, $8k after.)
Most dude ranches are mom and pop shops out west. They're not owned by Hilton or Mariott; there's no software engineering staff helping them build SEO platforms and booking systems.
All true, but on the one hand even commodity tools, the ones moms and pops most likely set up on their Wix page or whatever, now have SEO optimizations like open graph tags and the like.
And on the other hand they are very likely using AirBnb, Booking.com and related platforms.
So I maintain the best time to develop a market among these vendors was ten+ years ago, when you were giving them a true leg up.
To assume that they know about Wix, or Squarespace, or even AirBnB, vastly overestimates their level of technical capability.
That's the gap you can fill. Find Luddite industries, and serve them. There is far more opportunity there than I think anyone realizes.
I say this as someone building a job board around a decidedly non-Luddite industry (www.rtljobs.com). If a really tech savvy industry segment can use the help, imagine what the Luddites need!
Luddite industries do exist, but many of them are well-served by tools and marketplaces that abstract away all the technology and just bring them business.
Value is what you do with it not what the name is.