
Paying top employees the highest salaries in the market - lnguyen
https://www.bloomberg.com/news/articles/2017-09-24/in-battle-for-talent-one-startup-founder-tries-unlimited-pay
======
ryankupyn
The thing that surprises me is that, after paying these engineers seven
figures, they're still sticking them in open plan offices (as far as I can
tell from the photos). Though I do know some people who can work effectively
in that environment, it would be interesting to compare ever-so-slightly-
cheaper engineers + a less-distracted work environment.

~~~
SwellJoe
I worked as a contractor for a while at a company that was pretty much
entirely great developers, but they had one guy who had more experience than
nearly everybody else put together (he was in his 50s, and had worked on all
sorts of cool things in his career), who was also more productive than anyone
else. The founders of the company knew he was their top producer, and so they
gave him whatever he wanted (within the bounds of budget, etc.).

What he wanted most was a private office, and he got it, despite no one else
in the company having one (it was kind of smallish and closet like, but he had
a door that closed, and that made him happy). I always suspected that was a
big part of why he was so productive compared to everyone else; though the
huge amount of experience and his seeming disinterest in anything but churning
out code (all of his hobbies also involved code to some degree, and he was
always way out front on various trends in software development) were also big
contributors. It's also worth nothing that he didn't put in long hours. When
it was crunch time in the office, he wouldn't be one of the people there on
the weekend. Paradoxically, I think that's another contributing factor to his
high productivity.

So, yeah, I've often wondered whether Google/Microsoft/Facebook/etc. has
internal metrics about this. Google is infamously an open plan office,
Microsoft has offices, facebook is mixed (I think?). Surely, these companies
who keep gigabytes of data about everybody on the planet has some idea about
the relative productivity of offices vs. open plans.

~~~
unkown-unknowns
> [...] were also bug contributors. It's also worth nothing [...]

I think you have a couple of typos here. Probably you meant to say "big
contributors" and "worth noting".

~~~
SwellJoe
Typos happen. I fixed /bug/big/ (I guess at the same time you responded), but
didn't see "nothing" until after my edit link went away. You are correct in
your interpretation.

------
wmeredith
Top talent... selling advertising... for a news aggregator. Sigh.

~~~
AndrewKemendo
Nobody will ever be happy. If someone says hey I can't pay top of market but
we're doing something groundbreaking, they are talked about like they are a
bunch of scammers. If someone is paying top salary but doing something
mundane, it's "sigh."

~~~
TeMPOraL
Because in a better world, the "top salary" would go to those doing "something
groudbreaking". As it is, the pay structures in society are totally inverted
compared to social value they provide. In particular, the system is set up to
give highest rewards to those who work on scamming other people.

------
HeavenFox
On the one hand, as an engineer, it feels good to be paid top salary. On the
other hand, I feel kinda sad Toutiao is the company that's doing it. They have
a pretty bad rep for stealing content without compensating the content owner,
sometimes even without attribution. Heck, they have stolen my post before
without me seeing a single dime of that two billion dollars…

~~~
therealdrag0
Yeah that's disgusting.

------
nathan_f77
There's a lot of talk about work-life balance on HN, and I usually lean way
towards the "life" end of the spectrum. For the last few years I've only been
doing a couple of hours of paid work per day.

But yeah, I'd be happy to work 70 hour weeks for $3M per year.

~~~
npsimons
> But yeah, I'd be happy to work 70 hour weeks for $3M per year.

I think I _might_ compromise to work 70 hour weeks for $3m _for one year_. The
trick is, you don't get to pick when that year happens, and there's actually a
lot of build up to get to where you're _worth_ $3m a year. There's a couple of
Paul Graham essays with this as one of their themes:

[http://paulgraham.com/wealth.html](http://paulgraham.com/wealth.html)

[http://paulgraham.com/start.html](http://paulgraham.com/start.html)

I love the idea, but I don't think I'm good enough to pull it off, and I don't
like the odds.

------
sologoub
These revenue numbers strike me as a bit odd, even for US market with it’s
relatively high CPMs:

$2.5 billion / 365 days / 120 mil daily users * 20 ad impressions (assumption
on my part) * 1000 impressions (to account for CPM pricing) = $2.85 CPM

That’s not bad avg. CPM even for US/EU market assuming mostly display/native
display ad units and the relatively lower value of mobile dominant audiences.
However, average of 20 ad impressions per user is fairly high.

If they somehow have a lot of video ads, it changes the calculations somewhat,
but still seems oddly high. Does anyone have any insight into how believable
that $2.5 billion number is?

~~~
geocar
The way the app works is that as you scroll you see more ads interspersed
between headlines/topics. You click on one and you can comment and then go
back to scrolling. Or maybe you're done with that topic group and you switch
to another. More scrolling.

20 sounds fine to me.

If it helps, think of the way people sit on hacker news or reddit waiting for
the next story to come out, navigating down to comment, and then back to the
next story. There are a lot of people who only do 1-2 impressions and a lot of
people to do 100.

And if you're still unconvinced: 10 ads only double your CPM estimate; A
popular four-lettered sports site charges between $1-3 CPM for "un-targeted"
display advertising, and $3-5 CPM for demo/interest targeted.

~~~
sologoub
But is that popular four-letter sports site in US or China?

Typically, ad CPMs follow income levels/disposable incomes in the country/area
the user is from. The quality of data the advertiser has about the specific
user is also important. For example, since a lot of the tracking is illegal in
Germany, even though incomes are similar to US, the CPMs are lower because US
has more highly cookied/tracked users with higher CPMs.

I’m not familiar with the Chinese ad market, so asking if anyone has concrete
experience there and thinks such CPMs are plausible.

~~~
csa
Generally speaking, you should assume that there is a portion of the Chinese
economy that is approximately the same size as the US with about the same
amount of disposable income.

This is very much an apples to oranges comparison, but a large part of China
is effectively "rich" by international standards.

Note that there is also a very much not-rich part of China that brings down
the avergages. The averages don't matter so much when analyzing a polarized
population.

~~~
sologoub
You can make that statement about any country - some people are wealthy, while
others are not.

Chinese consumer economy is not the same size as US in nominal terms, so the
ad spending can't be the same either. Which led me to question the revenue
numbers in the first place.

I suspect that some combination of real revenues and inflationary/artificial
cash flows from investments being poured in their customers are the underlying
reason. Similar to the feeding frenzy with bike share companies that were
profiled in the news a few weeks ago.

------
jnordwick
This is fairly coming financial technology except less base and more bonus.
I've seen plenty of $500-800k base with 4x bonus (and more especially if you
are close to the money or on the front desk).

I think it is very healthy. It creates tiers in the profession because some
developers are that much better. Being good glueing together frameworks isn't
going to command that salary.

~~~
soVeryTired
Sorry, where?

In the UK at least, you're talking about the top couple of dozen in any of the
major investment banks. Only a couple of hundred in any given bank make more
than a million total comp.

[https://news.efinancialcareers.com/uk-
en/159654/everything-y...](https://news.efinancialcareers.com/uk-
en/159654/everything-you-need-to-know-about-the-structure-and-level-of-
salaries-and-bonuses-at-goldman-sachs-jpmorgan-citigroup-and-merrill-lynch-
international/)

~~~
jnordwick
NYC and Chicago mostly.

I'm talking about those who are exceptional producers and director level and
above and including all forms of compensation including guaranteed bonus
minimum and a percentage of pnl at a trading firm.

------
alkonaut
I'm not sure I'd want that kind of money... I mean I would but I wonder what
kind of expectations you could put on someone who makes $1M at a "normal" desk
job?

Would it be expected that I had a wife that didn't work so I wouldn't have to
take care of sick kids all the time? Would it be ok to work 9-5?

I'd be happy to take the money but it feels a bit like there are hidden
assumptions about what you are actually compensated for, once you get into
these obscene levels of compensation.

~~~
MagnumOpus
> Would it be expected that I had a wife that didn't work so I wouldn't have
> to take care of sick kids all the time?

In China, having a nanny is normal and pretty much expected even at six-digit
salaries, let alone seven. (And it won't cost much more than $10k a year
either, so it is a no-brainer and might be even a perk paid by the company
here - just like the company car with chauffeur or free meals.)

> Would it be ok to work 9-5?

Also no (unless you are just THAT good and have THAT much leverage to
negotiate, which is unlikely). Even a normal skilled job will have the
expectation of 50-70 hours of facetime, let alone this sort of high-profile
position.

~~~
alkonaut
> In China, having a nanny is normal and pretty much expected even at six-
> digit salaries, let alone seven. (And it won't cost much more than $10k a
> year either, so it is a no-brainer and might be even a perk paid by the
> company here - just like the company car with chauffeur or free meals.)

Having a nanny helps, but it only helps with the chore (e.g. dropping off a
kid), you can't substitute your own face time with the kids.

> Even a normal skilled job will have the expectation of 50-70 hours of
> facetime, let alone this sort of high-profile position.

How can companies assume that paying $1M will get them the best talent, while
at the same time assuming that requesting 50-70h work weeks doesn't rob them
of a lot more talent?

I mean if given a choice between $1M comp and 50-70h workweek, and .5M comp
and a sane 40h work week - there has to be tons of people who choose (or had
to) take the lower comp?

~~~
sulam
My understanding is that all Chinese tech jobs are crazy hours. ~No one works
9-5.

------
Abishek_Muthian
The thing with excessive remuneration with startup’s are, it’s highly unlikely
one could switch to a better paying job when the need arises.

Update : To people who ask why would someone need another job?

There are multitude of reasons, a well funded startup which could pay several
times the industry standard - when fails; puts excessively paid employees to
compete in the same standarised job market. If you live in the part of the
world where the HR asks about your previous pay to assess your eligibility for
current job, you will soon end up settling for a sub-par(quality) job with
standard pay i.e after giving up the ego. Also if the high paying job didn't
provide you with necessary foundation to consistently improve your skill set,
the moment you are out to compete in open job market; you'll be facing tough
competition from better skilled people with standard pay whom the companies
would likely prefer. Again, my arguments are based on the fact that you live
in part of the world where your previous pay matters for current job
interview.

~~~
ceejayoz
Sure, but at $3M a year, sock $2.5M away, live extremely comfortably, and have
one hell of a rainy day fund.

~~~
AFNobody
If 80-90% of it is in stock / options with vesting (as I'd suspect it is based
on that article) it is likely only true after the targets / target dates are
hit.

~~~
pooper
> If 80-90% of it is in stock / options with vesting (as I'd suspect it is
> based on that article) it is likely only true after the targets / target
> dates are hit.

My initial reaction was:

Does anyone actually do this? If someone says "salary" package, I'd assume all
of it is cash.

but then I took a peek.

> Top performers can make $1 million in salary and bonus a year, plus options,
> according to people familiar with its hiring. Total compensation can exceed
> $3 million. Zhang declined to comment on specific figures, saying most
> employees prefer stock over cash.

So it is $1M in salary/bonus and up to $2M+ in stock grants bla bla (paper
that I can't spend).

> Zhang isn’t backing off his aggressive plans, despite the controversies over
> pay and business practices. Asked about one competitor's concern that
> Toutiao is trying to hire 200 AI engineers, a huge number given the limited
> pool of talent, Zhang says that's not quite right: "It may be more than
> 200.”

This is the interesting part. at $1M per head, 200 engineers is $200M. It
sounds like a lot and it is. I feel like someone is getting taken for a ride
and I suspect it is the poor idiots who are taking $3M+ in paper over a little
under $1M in cash salary and bonuses.

I'd take the $1M cash and save like crazy because this is ridiculous
overspending. I cannot imagine why you'd need 200+ data scientists to work on
this project.

But then I want to remind the reader that I have been wrong before and
spectacularly so about Dropbox. I cannot believe Drew and gang are doing so
well for themselves. Make sense that I am a poor idiot on the Internet.

~~~
mywittyname
Because each of those data scientists are a billion+ dollar per year lottery
ticket. $3mm per year is a steal when you look at it that way.

------
kalasoo
Toutiao is more than just a news aggregation app, it's a huge interest mining
and data recommendation system. Moreover, the company expands its services to
mobile video sharing platform and many other fields so as to collect more
dimensional data of users. \--- In my opinion, ByteDance is a
data/intelligence company and Toutiao is just a great app to adopt the
technology and grow fast. So, we look forward to seeing an even brighter
future of it, which might be able to leverage the market.

~~~
kalasoo
BTW, the company has acquired many popular user-data-content apps and
companies worldwide, while few of them were exposed.

~~~
tanilama
Flipagram for one

------
atomical
> Zhang declined to comment on specific figures, saying most employees prefer
> stock over cash.

His employees must be pretty confident considering that a few years of cash
could set them up for life.

~~~
walshemj
Or they are nieve - reading about the Chinese stock market it sounds like the
NYT before the crash of 29 eg house wives trading on margin

------
leroy_masochist
This article strikes me as a submarine with a buried lede, namely,

> Top performers can make $1 million in salary and bonus a year, plus options,
> according to people familiar with its hiring. Total compensation can exceed
> $3 million. Zhang declined to comment on specific figures, saying most
> employees prefer stock over cash.

So basically, these engineers are getting paid $1mm, which is not a crazy
multiple off of top end dev cash compensation in Bay Area, plus equity in a
Chinese software company.

This does not seem like news, per se. Compliments to Mr. Zhang's PR agency for
getting an article published in Bloomberg that makes the client look sexy,
mysterious, and elite.

------
xom
And yet the company still can't afford walls.

~~~
arjie
I know a HN trope is to be anti-open-office but maybe it's better to be
imitating the guys valued at 20B than the guys valued at 200k.

We need a "Show me the code" équivalent for claims about business. "Show me
the money"

If open offices were a big factor, I'd expect private office startups to out-
compete.

~~~
sooheon
"Show me the money" is biased toward the status quo. If your litmus test for
smart policy or decision-making "is everyone else who is successful doing
it?", you will always lag behind the best.

~~~
arjie
That's true, and I can't think of a good alternative.

But there's a clear problem on HN where people who don't run businesses and
don't know how to pontificate on things like this citing nebulous results on
productivity.

If open-offices are so remarkably detrimental, then I await the disrupting
startup that blows the rest of the industry out of the water by using private
offices.

~~~
alkonaut
> If open-offices are so remarkably detrimental,

Assume they aren't. This place may of course be a bit biased - but among
developers the opinion is at least appears to be very clear on that open
offices suck. I'd even dare argue that many developers would either not work
at a company with open offices, or would at least factor it in and weigh it
against compensation.

Now _if_ this is the case, then _regardless_ of whether there are tangible
benefits of having private offices, companies would either lose out on talent,
or need to compensate them more than they otherwise would. See the point isn't
only whether developers are less happy or less productive in open offices -
the point is also whether they _believe_ they are less happy and less
productive in open offices. And that is _much_ easier to test/prove than
whether they actually are.

------
quickthrower2
Cheaper than an acquihire and without the hassle.

------
throwaway2016a
How is a company $2.5 billion in (projected) revenue a "startup"?

~~~
Waterluvian
Depends on age and size? If I created a business model where I give you 1.15
for every $1 you give me, I bet I could see billions in revenue. And my
company only has three employees. Two of which are cats!

But your point is well taken.

~~~
quickthrower2
Hey leave Uber alone.

------
thisisit
Just wondering how much of this will actually cause a toxic work environment.
Sure the people hired will have top talent but do they actually work well
together? And are they comparatively paid? Because people will compete on
salaries with each other causing the environment to go bad a bit.

------
fffernan
There is a big difference from being paid in USD and being paid in the
equivalent of USD in Yuan. Ever try to get 1 million USD equivalent of Yuan
out of China before?

~~~
toephu2
If these engineers are Chinese (which they are) and live in China they don't
need to get it out of China.

~~~
charlesdm
You could say the same about people living in Venezuela, Ukraine and Russia. I
would assume most (at least as a store of value) would prefer not to hold
their local currency.

------
aedron
You couldn't pay me enough to work in the office pictured in the article.

------
abrichr
Is there an English language equivalent of Toutiao? If not, why?

~~~
nickrio
TouTiao is a literal translation of Headline.

（头）Tou = Head; （条）Tiao = Line

~~~
thaumasiotes
条 is a measure word for things that are long (rivers / snakes / pants), but
it's not the word for line. The character most closely related to the concept
is 线 xian, and 线 is indeed the word for "line" in many senses. In other
senses, you find words of more than one syllable.

~~~
nickrio
Yes, it's not very accurate in term of word-by-word translation. Maybe it's
for suiting the context and habits.

 _A strip (条) of news_ is works better than _A line (线) of news_ in Chinese.

------
kecoco0207
There are currently possible ways for early employees to cash out their stock
options, which further incentivizes talents to work for start-ups.

EquityZen is a platform that lets employees sell shares before IPO:
[https://equityzen.com/?utm_source=https%3A%2F%2Fnews.ycombin...](https://equityzen.com/?utm_source=https%3A%2F%2Fnews.ycombinator.com%2Fitem%3Fid%3D15327455&utm_medium=Hacker%20News&utm_campaign=Hacker_News&utm_term=news)

------
calinet6
The diminishing returns must be staggering.

I can only imagine their management practices are comparably dismal with their
focus on individual talent.

------
totalZero
Is this surprising?

~~~
vostok
A lot of people haven't really updated their expectations with regard to what
the top of market looks like.

------
jlebrech
at a certain level you're not paying people for their work but to keep their
knowledge hostage.

------
goyfoyxoyfypc
That's a start! What about paying all employees well and having executives
stand for election by employees once a year?

------
shamdasani
The desire for more often blinds us. We all are looking for more wealth, and
perhaps working for a startup like this will get us there. However, I
personally think that talent is priceless. You can't just throw money for top
skill.

In field like startups, you have to passionate on what you're working on to
make it the best it can be. Sure, say I have "top talent". But, what we fail
to realize that "top talent" may not translate into more revenue or users. I
must be willing to work the extra hours and focus my mind one hundred percent
of the time to utilize this talent.

And, honestly, I do not think even money would motivate me to work to such a
degree if I'm working on something I don't believe in.

~~~
closeparen
Does anyone actually believe in adtech? Are people truly passionate about
social media monetization?

Most signaling about passion is transparent bullshit. For a first pass: do the
people you hire apply exclusively to you and your competitors? No? Then they
aren't passionate about your company's mission. At least, not any more
passionate than the they are about the missions of the other companies they
would have worked for instead.

Motivation and performance will be driven by autonomy, quality, work
environment, peers, growth opportunities, technical interestingness, choice of
tools, etc. _way_ more than what the company actually does. And how many
software engineers actually work on their company's core line of business,
anyway? Some of the most interesting work is at systems level. The scheduler
doesn't care all that much whether its processes are doing video transcoding,
HFT, or protein folding.

We're professionals, and that's okay.

~~~
chrisweekly
Good points.

I recall a compelling RSA animate video about motivation and job satisfaction,
which distilled their factors down to just three: mastery, autonomy, and
purpose.

~~~
foo101
Yes, that's a really nice video. Here is the link:
[https://www.youtube.com/watch?v=u6XAPnuFjJc](https://www.youtube.com/watch?v=u6XAPnuFjJc)
(Unfortunately, the highest resolution supported is 240p. Anyone has a link to
a higher resolution video?)

