
Google offers engineer $3.5M to not leave for Facebook - tlack
http://techcrunch.com/2010/11/11/google-offers-staff-engineer-3-5-million-to-turn-down-facebook-offer/
======
jonknee
"Part of that may be that Facebook is quietly telling people, never in
writing, that there’s no reason their stock won’t hit $100 billion in total
valuation over the next couple of years. No guarantees, yadda yadda, but hey
if you get 1/10 of 1%, that’s $100 million in stock. Now it’s a party."

Shady shady. Not only are there plenty of good reasons for Facebook not
hitting $100B market cap (that would be 100x _revenue_ , making the P/E
amazingly high), but they also aren't handing out .001% of stock to many new
hires. There's just not that much stock available, there are already more than
1,000 employees and a lot of the shares are spoken for (Zuck's got ~30%, the
VCs have another huge chunk, etc).

~~~
jrockway
I can't believe anyone would buy that, though. Facebook makes almost no money.
That's not going to change. People are leaving the platform. There is constant
negative publicity.

Facebook is not a sure bet, so if you want to work there, do it because you
like the project you're going to be working on. If you want to get rich quick,
start buying lottery tickets.

(If you want to get rich slowly, then take Google's $500,000 stock offer!
While Google's growth may be slowing, they still have a solid product that
makes them a shit-ton of money.)

~~~
portman
_"Facebook makes almost no money. That's not going to change."_

I doubt that you honestly believe that, but if you do -- want to make a
longbet? I bet Facebook will 5x their revenues in the next 2 years. Loser pays
$5,000 to a charity of the winner's choice. I'm 100% serious.

~~~
jonknee
What's any multiple of revenue have to do with making money? Revenue is easy,
profit's hard.

~~~
drusenko
That's so unbelievably not true. Both can be difficult in their own right.

Making a lot of revenue is certainly not easy. Not a lot of business models
scale up to making hundreds of millions or billions of dollars of revenue per
year. Achieving that part is ridiculously difficult.

Making profit, on the other hand, is relatively simple: just control costs.
We're making many millions of profit per year because we have a high profit
margin. Making profit, relatively speaking, is easy.

For us to grow to hundreds of millions of dollars a year in revenue, that will
be hard.

The idea behind valuing "top line" revenue is that the leverage there is
unbelievable. If you increase your efficiency by 1%, you've instantly made
tens of millions of dollars per year in profit. In the meantime, most
companies voluntarily choose to pour all of their profits into growth, like
hiring ahead of the curve.

~~~
jonknee
It's only hard for you to grow to hundreds of millions of dollars in revenue
because of your profit margin. Start selling stuff for a loss and you'll have
tons of revenue (given that your goods are in demand and you are selling them
for less than everyone else). They're are tons of businesses with plenty of
revenue but shit to show for it. The auto industry comes to mind...

~~~
drusenko
Facebook is not selling physical goods at a loss, and the comparison is not
apt.

Facebook is making a bet that if it hires a bunch of really talented people
while they are available, those people will eventually make more money for
Facebook than they cost them.

Don't confuse that bet with an inability to make profit should they so choose.

------
mrshoe
Sounds like a good way for Google to guarantee that every one of their
engineers will apply for a job at Facebook, just for the chance of getting an
offer.

~~~
noonespecial
And at the same time, test with absolute certainty your worth to Google. Your
offer might turn out to be.. ummm _somewhat less_ than millions.

The engineer who wanted to leave had a combination of skill and institutional
knowledge that Google decided would cost more than $3.5M to replace. How many
engineers could possibly be in this position at Google?

~~~
qq66
I don't think anyone thinks they'll get $3.5 million, but I bet a lot of
people now think they can squeeze Google for a hundred thousand.

------
tlack
Anyone inside Google care to anonymously comment how morale is over there
these days? Why so many people jumping ship? Is it purely about money, or
something else?

~~~
hartror
If I just had a 10% pay rise in this economic climate I'd be pretty darn happy
right now . . how long it will last of course . . .

~~~
dstein
But remember, it's a 10% raise immediately after the company got caught with
illegal no-poaching agreements with their competitors.

~~~
yanw
I doubt HP and Adobe were poaching Google employees, the "clod-calling"
agreement was most likely to everyone else's benefit, a Google employee would
only leave for IPO money or to start their own thing.

~~~
PakG1
Why not? Especially HP, they're going heavy into the cloud infrastructure
space. A lot of Google's scale expertise would probably come in handy. And
Adobe being a software company... well, good software companies always want
good programmers. Clearly, Google has those.

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DevX101
Goldman sach's traders routinely get money in this order of magnitude for
creating a net value less than top engineers at Google.

~~~
mdda
That's a pretty bold statement : The Goldman trader's NPV will be pretty solid
in cash terms (given that Goldman's risk group actually does a decent job, and
values things accurately). The NPV created by a Google engineer is more
difficult to judge - depending on how far into the future it is, and what
risk/reward is embedded in Google's stock valuation.

I'm not arguing that either one is over or under-paid. Just that it's not
apples-to-apples.

------
Mahh
Techcrunch really is eating up these Google and Facebook stories. I mean
they're kind of interesting, but not interesting in the way that stories on
innovation are interesting.

I kind of want to see the perspective of lower level google employees. They
wouldn't get offers like this, but they would all have some thought about the
future of their company

~~~
prawn
I know I'm stating the obvious, but Google, Facebook and Apple stories like
this get eaten up by mainstream news. There are more readers of mainstream
news than there are entrepreneurial types like us on HN.

------
dbrannan
I remember having a conversation with the athletic director @ BYU in my
younger years. I naively asked why the football team had 92 full scholarships
when only a fraction of that was required to field a team. He told me flat
out, "because those 2nd & 3rd string players might make something of
themselves if they played for another team."

So, there you go. A rock-star programmer can be a dangerous thing in the hands
of the competition.

~~~
neilk
I don't see how this could be good strategy.

1) Can BYU seriously hire enough of the football talent out there as to reduce
the chances that other teams will succeed?

2) Is BYU so prized a destination among football players that they would be
willing to sit on the sidelines at BYU rather than get more time playing, at
another team? Consider that they also want to attract the attention of NFL
scouts.

Google doesn't have any of these problems -- for many candidates, it _is_ the
NFL, and there's no real limit on how many people can "play".

~~~
dbrannan
1\. Elite players within the state of Utah (U of U being their main rivalry),
yes.

2\. Nobody wants to sit on the sidelines, but if you can work your way up to
first string at a top 20 University then yes, the scouts are more likely to
take notice.

Why do you think the NFL pays millions and millions of dollars recruiting the
best of the best? It's because talent at that level is rare, hard to find, and
even harder to hold on to.

In my experience, a rock star programmer can be worth more to an organization
than 100 of your common CS grads.

------
Timothee
An interesting part of this story is that Google knows full well who that
person is (unless they've been giving out $3.5M to a lot of people...), and
leaking that story to TechCrunch makes Google look desperate and less
interesting than Facebook.

Especially knowing that they just fired the person that leaked a _positive_
(though confidential) memo that was addressed to 23,000 people. (that is, not
super private to begin with)

It feels a bit like biting the hand that just fed you a huge amount of money.

~~~
zuckerborg
I can guarantee you that in the eyes of top young grads Google has looked less
interesting than Facebook for several years now. Google is where you go if you
aren't good enough for Facebook. It's a safe, stale, big corp that is the
dream job of every mediocre, middle-aged programmer out there.

~~~
mfukar
Seriously? I have a bit of background on research, and Google always looked
the more attractive choice, still does. I'd pick Facebook in anticipation of a
massive IPO, honestly; I wouldn't expect to be equally appreciated in Google.

------
ajays
Folks, from what I hear, "Staff Engineer" is a top-level position; it's not
your garden-variety engineer on staff. These are people who have risen to a
high position in the company as individual contributors, eschewing the
management path.

------
DrStalker
What a rip off.

I'll not work for Facebook for only $2.5M.

:-)

~~~
electromagnetic
My problem if a company paid me $3.5 million not to leave for its competition
would be that I'd quit the day the money was in my bank account anyway. I
wouldn't go work for the competition, but I'd be starting my own company.

I could do a hell of a lot with $3.5M, and probably make more than I ever
would being an engineer for Google.

~~~
donaldc
The $3.5 million is in restricted stock that presumably vests over four years.
If you left the day after accepting the counter-offer, you'd get _nothing_.

~~~
CamperBob
Unless I factored it.

------
birken
I like how this article is suggesting new hires at Facebook get .1% of the
company, or over 25 million dollars worth of stock at the current valuation.

I have a feeling if we actually knew the truth, and not this sensationalism,
the whole situation would probably end up being pretty logical. Google is
actually a pretty smart company.

------
neilk
The only way this story makes sense to me is if the engineer is one of the
core contributors to Google Me, or some other strategically important new
initiative.

Those teams are small enough that every engineer counts, and a defection could
even delay launch.

Facebook would be interested in sabotaging that, but Google would pay even
more to defend it.

------
firebones
I'd work this backwards.

Consider a high-profile late-comer to Google who might have an existing equity
position not comparable to peers who were there for the IPO, or peers who had
hired in early (e.g., his grants were at pre-bailout highs and only recently
recovered). Accepting a $3.5 million counter-offer means that the immediate
"sure thing" is greater than or equal to the expected value of Facebook's
offer when the risk of Facebook falling short is taken into account. Say this
engineer thought there was only a 50% chance of Facebook actually hitting
their "quietly told" market cap. That would imply the Facebook offer was
something in the $5-$7 million range, or 1/15000th to 1/20000th of the
outstanding shares. For recruiting a big name, this is much more plausible
amount to offer than the 1/10 of 1% in the story.

If the story is true, then I'd bet that the engineer is someone who came to
Google late (or at the wrong time), probably is pretty comfortable with his
standing at Google is someone fairly prominent, and is more comfortable taking
a stable, sure thing than taking a risk on a situation as early in the company
life-cycle as Facebook is. (And it wouldn't surprise me to see this engineer
leave for Facebook 5 years from now if and when Facebook becomes a more mature
company and more of a sure thing.)

------
bgray
This is the market at it's best. I've heard from many times that Google's
salaries aren't competitive but rely on the "you will change the world"
mentality. Google pulls in the talent and Facebook gets to cherry pick.

------
sliverstorm
Google is starting to look desperate.

~~~
redorb
If Google as a company is starting to look desperate; I want my company to
look desperate.

------
EugeneG
This is a nice case study that demonstrates an answer to the question of "Why
do those evil Wall Street bankers make so much money?" Competition for skilled
labor produces tremendous salaries.

------
martincmartin
Can someone explain why Pre IPO stock would be worth so much? Either something
is wildly inefficient, or the employees are getting duped. If X shares are
expected to be worth $1m after IPO, Facebook could offer potential employees
X/2 shares, which is still a $500k signing bonus, and use the other shares for
something else.

~~~
ahi
It's a risk/reward calculation. There is a small possibility of pre-IPO stock
being worth fuck you money. Google can't even off the possibility of fuck you
money, but they can offer decent money (although anecdotal evidence says they
underpay) with low risk. Unfortunately for Google, many of their employees
have risk/reward profiles closer to Facebook than Google.

Random numbers:

Facebook: Shares with a 1% chance of being worth $10m

Google: Guaranteed $100,000.

Same expected value, different tolerances for risk.

------
ojbyrne
One wonders if it's Steve Yegge.

~~~
absconditus
Why? Is his work that valuable to the company?

~~~
streblo
His departure would certainly be notable, at least to this community.

~~~
pchristensen
Despite the number of people interested in him (myself included), his desire
to be out of the public Internet eye has made him less notable.

Plus I get the feeling he doesn't plan on leaving Seattle.

------
chopsueyar
I find it hard to believe that a bunch of post-IPO facebook millionaires
($100mill+) would stick around and maintain/work on Facebook afterwards.

------
robryan
As long as let some people go it's not to bad, if employees of similar
importance to the guy they have given the stock to knew all it took was an
offer for a big jump they would all do it. Letting some people take the offer
though puts some doubt into the minds, are they really prepared to jump ship
if Google calls their bluff.

------
herdrick
Who knows if this is true, or what the full story is, but in general I think
this kind of tactic is poisonous to a company. Please read this:
<http://news.ycombinator.com/item?id=1629201> (I just re-read that. Such an
excellent post.)

------
nivertech
This is ridiculous. Much better strategy to attack Facebook, would be to spin
off startups for talented engineers. Give this $3.5M to Google Ventures, which
will invest it into spin-off. The engineers still work for Google with much
better upside (comparing to Facebook).

------
random42
_if you get 1/10 of 1%, that’s $100 million in stock. Now it’s a party_

I dont get the maths here. Given that facebook already has 3000+ employees, I
am not sure they can give everyone 0.1% stocks and given how 100 Billion
evaluation is an atrocious claim, numbers dont add up to me.

------
dennisgorelik
"However effective these counter offers are, they sure aren’t good for morale
internally at Google. Unless, of course, you’re one of the ones winning the
lottery."

If you got sweet counter offer -- why wouldn't you just shut up so the morale
would not be hurt?

~~~
bd_at_rivenhill
For the same reason that criminals are often caught after they bragged about
crimes to their associates (who then give them up in order to get a deal for
themselves if they are caught): because people just have to run their mouths
sometimes.

------
Evgeny
How come no one asked yet, was the person who leaked this information fired or
not?

------
lee
It seems to me that this story has a bit of sensationalism in it?

It doesn't mention the engineer's salary. At that kind of offer, I'm going to
assume he's a super-star performer. So his salary is probably on the far right
of the bell-curve.

Also, how long is the vesting period? 5 years? 10 years?

So that's a bonus of 350k to 700k per year? What if he was already making 350k
a year? What if he was making 500k? If so, then 3.5M isn't that outrageous.

------
dnsworks
Are people really worth this much money? I can't help but think "$3.5m gets me
15 really good developers for a year, and a swimming pool filled with
chocolate pudding, just for fun."

~~~
PakG1
If the guy is really top 1% in the world, why not? How much do the top 1%
athletes, musicians, etc, make? An argument can probably be made for a top 1%
coder.

~~~
arghnoname
The top 1% athlete? On average probably about $0. There are probably a few
hundred thousand high school football players. There are only 32 NFL teams.
Even among those few that make it (probably much smaller than 1% I'd wager),
few are superstars. Taking into account chance of injury, short career, and
brain damage (in this case), the ~ $700K NFL salary isn't so great.

And musicians? Their situation is probably worse! The truth is talent is
pretty bountiful. Finding out that no matter what hot shit you were in high
school, there's an army of kids out there ten times smarter is a veritable
right of passage. Maybe this guy is the top .01%, but I think the value you
can extract from the relative brilliance of one member is a case of
diminishing returns. Is he doing, 100% of the time, work that an actual 1% guy
or several of them couldn't do?

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VladRussian
it finally took Google, Facebook and 3.5M together to make a story that HN
crowd would be interested more than being bullied in school :)

------
omouse
He's a computer scientist or software developer, not an engineer.

