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Comment by jd | Hacker News Reader

I doubt it has a good ROI via recruiting, etc. Joel mentioned he spent more than a million on improving the interior design. No recruiting is going to make up for that, any time soon#. And in a few years Fog Creek will move to a different location again - at which point they'll have to build a new high end office.

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.

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the costs are roughly $4000 per employee per year. That's maybe 15% of their salary, probably less.

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.

By the time we left the old office, it was costing us 2% of revenue. The new office is not full yet and is somewhat more expensive, but I expect that in the long run our real estate costs will be around 4%-6% of revenue, which is the norm for office-based workforces.

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.

Just curious, how come your profile is written in 3rd person? Is this really Joel Spolsky, or a representative?

spolsky gives way too many interesting comments to be just a representative.

wait a minute, are you spolsky?

Joel hang out here on a pretty regular basis.

copy paste

It's not written in the 3rd person! That would be more like "Joel thinks that the savings blah blah".

> You think that top software engineering graduates in New York City make $26k per year? Recalibrate! Recalibrate!

Oops, mental typo. Thanks for the correction.

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:

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.

I agree, but then of course, spending a shit ton of money just to make yourself feel better is one of the luxuries of not being beholden to outside investors.

Between ludicrous offices and the 37s "4 days a week" plan, I'd probably go with 37s.

Heh, you just won't let go of that "beholden to outside investor" thing, will you?

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)

Hm. You're right. I'm wrong.

(Although I'm unlikely to "let go" of the outside investor thing; I help run a bootstrapped company, and had a bad VC experience).

Between ludicrous offices and the 37s "4 days a week" plan, I'd probably go with 37s.

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.

"... I doubt it has a good ROI via recruiting, etc. Joel mentioned he spent more than a million on improving the interior design. No recruiting is going to make up for that, any time soon# ..."

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?

That's like 3-5% of their salary or at least I hope so. Just how little do you think they earn?

To have "a good ROI via recruiting," never mind the etc., he just has to improve his profits by more than 40k per year, by making better products than he would have otherwise, by hiring better people than he would have otherwise --- or by having to pay 40k less per year in salary, although that seems less likely. Although the chain of causality here has a lot of randomness attached to it, if he has a few million dollars in revenue per year, such an improvement hardly seems implausible.

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.)

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