Comment by mallyvai | Hacker News Reader

Comment by mallyvai | Hacker News Reader

I'm the lead engineer and founder of http://OfferLetter.io - We guide engineers (and designers and PMs) by helping them navigate the "last-mile" - that is, the offer selection/negotiation process - in exchange for a fee from the candidates. (We got brief shoutout in the article along with Dave and our friends at HackMatch)

I want to specifically address 1) Sam Altman and 2) Chris Fry's respective points about the problems with regards to models that align with the candidate more directly (like ours):

1) Much respect for Sam, but he's dead wrong with respect to the 'negative selection' problem - yes, good people have no problem finding work, but the key problem is that the opportunity cost remains phenomenally high for suboptimal decision making. We have actually worked with outstanding engineers who are at YC portfolio companies, simply because they wouldn't have known how to get what they're worth otherwise and push for more. And Sam is missing the point entirely with regards to worth - people in the industry are not getting paid based on their merit - not at all. The gender wage gap is perhaps the most stark example of this, but we see it, starkly, along many other demographic slices as well.

2) With respect to Chris Fry's comments - I was actually in Twitter's eng org when Chris raised the internal engineering referral bonus from 2.5k to 10k because the company wasn't getting the volume of quality people it wanted. Chris is a really great guy, but I find his point about "[at] Twitter, you get the best résumés on your desk already [via recruiting department, referrals, etc]" somewhat misleading - there's no way he would have raised the referral bonus as sharply as he did if he really felt that. In fact, there wouldn't have to be an referral bonus structure at all. Twitter is wonderful, and I loved my time there, but even there we weren't getting all the high-quality people we wanted.

[#plug: check out http://OfferLetter.io - we all deserve to get what we're worth]

I'm one of the developers Mr. Altman is talking about and have recently rejected an offer from 10x. I have to agree with Mr. Altman's point of view: I'm making 1.5 - 2.0 times the average developer's salary already. Speaking with 10x, they told me that their average project was just 1 - 2 months long and that I should treat their service as a supplement to my income rather than relying on them to keep me booked.

The problem is they charge 15% of ALL of my income for that privilege and don't make any guarantees. Why should I pay them over $2k a month for them to possibly make me new sales when I'm already capable of keeping myself booked the majority of the time?

The whole thing reeked of predation to me. If they're really able to provide more value than they take from me, then they should only be charging me a commission on the sales they bring in.

Wait, did you just say 10x wants a 15% slice of your gross revenue regardless of whether they source it or you do?

That took me by surprise as well...

Precisely.

What was the logic they gave for this (crazy-seeming) ask?

Because that's how it's done in the entertainment industry, apparently.

It is how it's done in the entertainment industry (for 10%), but finding the work is only part of what an entertainment agent does. They also negotiate the deals, help resolve conflicts, help build the team for the project if necessary, etc. Plus in many cases, the agent (or their agency) is better known in the business than the client, and just mentioning the agency opens doors even if they don't make the contact.

That all seems unlikely in the case of 10x.

Supposedly they handle all of that as well, but the tradeoff didn't make sense in my case.

The other key difference from the entertainment industry is that in-demand artists can potentially derive a large percentage of their income from royalties and "image rights", so it's a good thing for them to retain an agent who's incentivised to find that unpaid TV slot in New York that'll help them "break America" but advise of the pitfalls of an apparently lucrative advertising gig they've been offered. Agents for successful entertainers, in other words, are supposed to boost a wide variety of income streams related to entertainer's image, including pre-existing ones.

Contract programmers on the other hand, generally receive their compensation for a project in cold, hard cash, without any lucrative sidelines in selling T-shirts with pictures of their face to manage, or concerns over whether taking on a project for Yahoo will dilute their brand equity or boost their autobiography sales. It's difficult to see where 10X adds the value in cases where they're not finding the work. Interview coaching and advice on upping your rate is not hard to find; any recruiter that does have a position will offer it without wanting a piece of your existing income.

... and that is the kind of shit that leads to the "negative selection" that Altman spoke about.

Asking for a 15% draw against all income is ridiculous.

10X doesn't ask for nor take 15% of gross income from their clients. That statement is not accurate. All of my projects through 10X have been considerably longer than 2 months.

I'll clarify: 15% of all contract programming revenue. As I'm a contract programmer, that's all of my revenue. But they did say they won't take a fee on your day job if you have one. They told me their average project is 1 - 2 months. That's from them, not me. Maybe you've been lucky. But if you're not giving them 15% of your contract development revenue then you may want to review your contract: you either got a special deal or you're in breach of contract. They even take their fee on any equity you're awarded.

I don't want to get into details of my contract with 10X. I'm not in breach, I certainly wouldn't be posting about it here if I was. I negotiated the terms of my contract with 10X when I signed up. All contracts are negotiable. I've worked through other consultancies and placement firms that have similar contractual terms. I've had full-time job agreements that included strict non-compete clauses and claims of ownership of any inventions or work I did while employed there, and sometimes extended one or two years after employment terminates, subject to applicable state law.

If what you're saying is true, that's a bit disappointing, but it may also target a different segment of the market than folks like you.

FWIW over at http://OfferLetter.io, we spent a lot of time figuring out the right pricing model - We let the candidate choose either %-contingency-on-increase, or flat-fee. This seemed to be the best route for incentive alignment. If you have any other ideas for pricing models that work well, do let me know! mallyvai-at-offerletter.io

[We discarded the %-of-net-compensation model - it felt too extreme, and it wasn't clear we could add sufficient value in every case.]

Who are your "Advisors" ? Just other engineers?

Right now, a pretty diverse mix of other engineers, managers, PMs, founders. Depends on who is asking - PMs are better at helping PMs, for example.

Oh, no actual recruiters or talent leaders? No way would I pay essentially a peer for something like this. That's what friends advise us for. You need inside info, and engineers and PMs just don't have it.

I think you'd be surprised - we are informed by certain awesome recruiters, but we've found that people generally feel most comfortable when talking to their peers about this stuff. There's a broad mistrust around recruiters.

One thing we could do is work with more recruiters more aggressively for data and guidance - ping them every conversation for example, instead of for larger industry trends. But we'll have to see if that could truly add value.

From my experience in the entertainment industry I always wish I could hire a manager to represent myself in negotiations with employers/bosses/etc - even if this would mean having to pay a 15-20% management fee on my salary. But I just can't convince my boss to negotiate with my agent...

You can train and optimize your negotiation skills all you want, but in my opinion it is extremely valuable to separate the "talent" from the "money". Top performers, no matter in what industry, are usually extremely passionated about their craft and undervalue the monetary value they can bring to the table.

Having a third party represent them puts a "neutral" monetary evaluation on them. Good management allows a much more strategic long-term development that focuses on value building and not just opportunity hopping.

> From my experience in the entertainment industry

Well, from experience in the music industry, it seems that the person doing the hard work (the artist) most often is on the bad end of the deal, while all the middle-men are laughing their way to the bank.

I'm just saying that analogies are not always to be relied upon.

(Also, a 15-20% management fee is totally not reasonable, except if it is time-limited.)

I would expect to see a per-negotiation fee structure along the lines of MAX(30% of the outcome in excess of expectation, 3% expected salary) - but obviously where the actual percentages are properly reasoned.

My experience with self-managed artists is quite negative - but this is entertainment industry related. Just the fact that there is somebody you can call during the day and get a definitive answer on a request, and who makes sure the talent is showing up and delivering on the negotiated the deal, is securing them deals they otherwise would never get. This is most certainly not something that one would classify as "hard work" but it is super valuable when "talent" meets "corporate".

> Well, from experience in the music industry, it seems that the person doing the hard work (the artist) most often is on the bad end of the deal, while all the middle-men are laughing their way to the bank.

No, the person assuming the most risk, the label pushing large sums of money in promotion in a high risk investment, gets the most money.

1337biz - Our core claim is that an an advisory/coaching model is a better fit for the tech industry. It's why we brand ourselves as "Advisors", and not "Agents". In addition to compensation advice, we provide meaningful career coaching advice as part of the process - this helps you figure out which place is actually a better fit along non-monetary dimensions.

Also, our fee structure is much more reasonable than an agent's - we're charging 20-30% of the cash increase, or a $2k flat fee, whichever folks feel is more reasonable. Incentive alignment is important, but there are also cases where candidate may get a huge bump in equity they can't can't necessarily pay us out of.

It'd be interesting to consider derivatives-based model in the future to align incentives better by capturing the value of the equity increase, but that's a long ways off, and not terribly important to us at the moment.

It'd be interesting to consider derivatives-based model in the future to align incentives better by capturing the value of the equity increase, but that's a long ways off, and not terribly important to us at the moment.

I wrote about this, and I think it's a useful idea, although it has some ethical issues (around whether one can trust the consultant to deliver) that need to be nailed down: http://michaelochurch.wordpress.com/2013/05/07/fixing-employ...

A portion of these jobs that are very left out are the security world jobs. Yes twitter is a great company and has many interesting challenges. Yes it will garner a subset of 10xish people. Yes, they have a lot of great resumes.

But the DoE, CIA, and NSA will always pay better, have greater challenges, and have a much wider net to cast than twitter, The Zuck, or Google ever will. Why? Capitalism doesn't work at the end of tank barrels.

It not google that twitter is really competing with, its the Air Force and DoD.

Also, thank you very much for pointing out the gender wage gaps here. It is an obvious and clear example of sexism distorting market capitalism.

I hope you guys are working with recruiters to find out compensation ranges. I had a friend who once responded to a recruiter "hey, how about you come work for me". It's a lot easier to ask for more salary, stock, or benefits when you have inside information on what each company is willing to offer for each position!

We have a range of methods for gathering compensation range information. The more interesting question is: How can you actually execute on a good negotiation plan?

There is an enormous psychological component to this, and just knowing market rates and ranges for various companies is enormously important, but is only part of the problem (otherwise WealthFront and Glassdoor would have solved this problem already). Getting the right counteroffers and navigating the personal psychology here are enormously important too. That's where we differentiate ourselves with our expertise and guidance :-)

While I don't disagree with you, I did want to point out you've given some bad information. [In the tech industry there is no clear case for a gender wage gap when we're talking about merit based salary.](http://www.forbes.com/sites/susanadams/2013/03/20/women-are-...)

The difference in starting salaries received by relatively inexperienced women coming out of Hackbright ($80k/yr) vs inexperienced graduates of the coed but mostly male AppAcademy/HackReactor/etc ($100k+) seems to suggest gender discrimination in tech salaries is definitely a thing.

There are problems with that survey.

First, it was conducted by Dice, which is a "career hub" that is going to have some sort of subset of overall users. It wasn't a group that was carefully selected to represent the overall market. It's not a scientific survey.

Second, these are for "tech positions", not engineer positions. No technical job is even on the list for women!

Third, this survey only counts employed people. What about all the women who can't find work in their field? Given the fact that engineering is not a top-five "tech job" for women, I'd wager that many female engineers have trouble finding pure engineering jobs and must find something that people believe they're qualified for.

On a semi-related note, I strongly recommend that everyone on HN listen to this: http://www.npr.org/blogs/money/2014/10/21/357629765/when-wom...

I would think that people hiring would like potential hires to be unrepresented. An un-represented developer is going to be cheaper.

Well, yes, for the immediate set of transactions, it's entirely the case that companies are incentivized to dissuade candidates from reaching out to us. This doesn't mean the statements come from a bad place, just a particular viewpoint - it's why I wanted to point them out specifically. :-)

requireing fee from the candidates isn't that ilegal?

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