So really, this seems to be a case of spending money to improve quality of life. The other benefits, such as for recruiting and PR are just a nice side effect.
#) Assuming 50 employees, over 5 years, the costs are roughly $4000 per employee per year. That's maybe 15% of their salary, probably less. Given the choice, I would probably give up 15% of my salary to work in a nice place with good food, a good view, good equipment, and so on.
You think that top software engineering graduates in New York City make $26k per year? Recalibrate! Recalibrate!
I think the number you're looking for is "less than 4%". Remember that the office-construction expenses can be massaged by accountants to reduce taxes on them, and that an employee's (e.g.) $80k salary costs the employer considerably more than $80k, thanks to the employer share of things like Social Security and health insurance. To say nothing of the costs of recruiting a single employee. Note that a headhunter will charge you a cool $30k to recruit an employee with a $100k salary:
http://www.asktheheadhunter.com/basics2.htm
...and who knows what kind of stiff that headhunter is going to try to foist off on you?
The chances that the $4k per employee per year is paying off for Fog Creek are much, much better than you think.
The specific upgrades we paid cash for will probably end up costing 1% of an employee's salary, averaged out over everything, over the lifetime of the lease.
Two points and a necessary footnote:
1) 30% is on the high end. 20%-25% is a normal fee (and in this environment, you can probably bargain your recruiter down to 20%).
2) That cost is what you pay for a recruiter, instead of paying your HR people to do the initial screening. Your recruiter might call up someone knowing that there are ten client companies that would interview someone who graduated in the top 10% of her class at one of the top 10% of schools -- but that only two or three of those interviewers would be a good cultural fit. It's worth it for your recruiter to chase the weird ones (if they're not right for XYZ Co., ABC Ltd. would still love to have them!); the equation is different for in-house HR.
Footnote: I'm a recruiter, who -- sadly -- does not get to work with awesome companies like Fog Creek. Working on it, though.
Oops, mental typo. Thanks for the correction.
Between ludicrous offices and the 37s "4 days a week" plan, I'd probably go with 37s.
Are you suggesting that investors keep startups from getting ludicrous office space? From my experience with well-funded dotcom startups, they all tend to spend staggering amounts on sexy office space. We're lightly funded, so we sure as hell didn't.
In any case, Joel isn't spending a shit ton-- he's spending ~4-6% of revenue, as he said. Decent investors would only involve themselves if you were spending an unreasonable amount of money. Joel could be up to his armpits in Series D financing and not have an investor blink at this expenditure.
(if it isn't obvious, I think it's a dumb expenditure for an unprofitable startup, and a fine expenditure for Joel)
(Although I'm unlikely to "let go" of the outside investor thing; I help run a bootstrapped company, and had a bad VC experience).
Or I was idly thinking once of a plan where you sprint for 3 weeks (still with weekends off) and then everyone has an entire week off.
Over and over, ~13 weeks of vacation a year.
I wonder if a refreshed, happy, and likely less compensated team like that could keep up with a full time one.
The key is to spend capital to get the best programmers to create profit. This idea isn't something Joel made up it's an idea by Phil Greenspun, "Building and keeping a good software engineering team" ~ http://philip.greenspun.com/ancient-history/managing-softwar...
So what's your idea?
The flip side is that spending a lot of money on something apparently unnecessary might incline you to spend more money on things that are actually unnecessary.
(I'm assuming "a good ROI" means 4% per year.)