
Loyalists vs. Mercenaries - randomname2
http://avc.com/2015/06/loyalists-vs-mercenaries/
======
HelloNurse
The extremely cynical advice in the article is simply to hire people who don't
have many opportunities to run away and to convince them they have a leader, a
mission, and other reasons for irrational self-sacrifice.

The suggestion to "invest in values and culture" is particularly transparent:
it implies that by default an entrepreneur has neither, and that values and
culture can (and should) be fabricated for manipulation purposes.

The observation that a "loyalist" has to be either quite crazy from the outset
or too gullible and weak-willed to be smart never occurs to this sort of
manager, presumably because they don't have to actually work with them every
day.

~~~
carapat_virulat
It's quite funny to read something like this, coming supposedly from a startup
founder, a very market competitive field. The kind of adjectives he uses for
employees as soon as they start acting like they are in a market too, it's
like people should forget capitalism as soon as they start working for them.

I mean there was a time when that made some kind of sense, in the old
corporative world if you got a job in a good company you could expect to be
set for life and end up with a nice pension after your work life. But with the
current economy, the rising inequality, and the devaluation of most labor
compared with capital, it's hard to play along when somebody tells you to
pretend you aren't living in a market.

~~~
nostrademons
The author is a VC, and one with a fairly good reputation in the field.

The point of a market is to accommodate _different_ preferences in a way that
maximizes benefit to everyone. Some people are driven by money; others are
driven by mission. His goal with this piece was to advise founders he works
with how to attract more of the latter and less of the fewer; as an (unstated)
side effect, this will also maximize the financial returns of him and the
founders he works with. It's fine to be driven by money and to make decisions
that maximize your personal wealth, but if you're going to do that, why judge
people who are _also_ trying to maximize their wealth?

~~~
lmm
> It's fine to be driven by money and to make decisions that maximize your
> personal wealth, but if you're going to do that, why judge people who are
> also trying to maximize their wealth?

I'm trying to maximize my wealth by playing fair, interacting with other
organizations that have the same attitude. That's quite different from someone
who's trying to maximize their wealth by exploiting people who aren't.

~~~
nostrademons
But it's a reality that there _are_ other people out there who have a
different attitude. Many (most?) of them are fully aware that there are other
people out there who are primarily motivated by financial gain, and they don't
care. They look out for the things they care about (oftentimes it's time with
their family, a sense of purpose in life, a friendly work environment, etc.),
while accepting that other people will be making a profit off of them. This
isn't exploitation; it's trading something you value for something you don't.
And Fred Wilson's advice here is how to provide the non-financial things that
other people value so you actually have something to offer the folks who are
not motivated by money.

It's only an issue when someone _thinks_ they are motivated by non-financial
perks and then realizes later in life that they actually really do care about
money most. People that know what they value and are confident in that can't
be taken advantage of. So put some thought into that early in life and make
decisions accordingly.

------
nekopa
Interesting read, but I don't like the fact that I am a mercenary if I go
elsewhere. There are plenty of reasons for moving to another company, money
could be one aspect.

In fact, most of the advantage seems to be for the employer vs the employee -
if anything, the bosses are mercenary. There seems to be very few companies
that really are loyal to their workers.

But there was one startup who posted on here a while ago that had to shut
down, and they seemed super proactive about trying to find their team new
positions. Even going to the extent of speaking to other founders trying to
place team members.

I need to find that post again, because those are the type of leaders I want
to succeed on their next venture

~~~
vsync
> Interesting read, but I don't like the fact that I am a mercenary if I go
> elsewhere. There are plenty of reasons for moving to another company, money
> could be one aspect.

There's nothing wrong with money being the reason. You're at your job to make
your employer money, after all.

Prioritize whatever you like -- it's your life -- and don't let anyone make
you feel guilty about it, especially during salary negotiations. Just like
they're selecting you for the unique combination of benefits you bring them,
it's their job to come up with whatever terms will make the offer attractive
to you personally.

Many people have lots of mental inertia when it comes to their career. If they
leave, it's likely that they finally received an offer with a combination of
benefits _to them_ that really overwhelms what you're currently offering.

The way to ensure loyalty is to stay competitive, plain and simple; the way to
do _that_ is to be generous with compensation, flexible with work conditions
(but never quality), and most importantly to be aware of what's important to
the individual employee and actively watch the person's progress so you can
increase the scope of their responsibilities as they gain experience. As you
do so, make make sure their salary stays competitive with the market and also
reward them with those little things that are important to them personally,
not what you imagine employees like.

It takes hard work and financial resources to stay competitive. But if you do
so, you'll be rewarded with decreased employee attrition and increased
engagement while they're with you.

> But there was one startup who posted on here a while ago that had to shut
> down, and they seemed super proactive about trying to find their team new
> positions. Even going to the extent of speaking to other founders trying to
> place team members.

On the other hand, you have companies like Teespring.

------
irq-1
You could also pay more. Instead of trying to create culture and develop
leadership to get employees who "walk away from compensation packages 2-3x
what they currently make", pay them more. Then you can create culture and
develop leadership simply because its valuable to your company.

The premise of this article is disturbing: what can founders do (that won't
cost VCs money) to manipulate employees. Is having a mission valuable because
of the salary and retention benefits?

~~~
prostoalex
Paying significantly above market is not all it's cracked up to be:

* top-notch technical talent tends to value equity over W2 income (of which the take-home portion doesn't amount to much in states like CA or NY), people won't give up an equity position at growing company for a higher salary but questionable growth

* for employees that do get a sweet _way_ above market salary package, this creates an incentive to cement their position at the company as much as possible, Yahoo! is probably prime example of that - very little usage of open technologies, all custom-built, all requiring immense institutional knowledge

~~~
Akkuma
Do you have any data that top talent tends to value equity higher than salary?
All the smart guys I know favor the latter. Too many companies use it as a
tool to trick the less intelligent guys that they'll make bookoo bucks despite
being given a joke amount of equity. Plus, you as an engineer rely upon your C
team and potential investors to be competent enough to not screw things up. I
also live in a state with lower taxes, which could be part of it, and a weak
startup scene.

Equity will cost you at least 25% in taxes, should you get something out of it
and needs to be accounted for. Additionally, you need either a lot of equity
or a large exit to come out ahead of a higher salary that allows you to invest
the difference, netting you at least a 5% return normally. On top of that, if
you have 401k matching based on salary percentage contributed, you'll net a
larger 401k, which is even more money. Further, to get that equity you have to
remain at most places for 4 years, which seems to be pretty atypical nowadays.

If someone offered non-trivial amount of equity for a lesser salary that is a
completely different scenario.

I've ran the numbers for a startup that just made me an offer and it is pretty
absurd how much smarter a larger salary would be at a 200 million or smaller
exit.

~~~
prostoalex
No data unfortunately, just anecdotal evidence as well. Perhaps it's the
income tax rates is respective state, but when somebody has had a previous
exit (YHOO, GOOG, FB, YouTube, WhatsApp, etc.), their portfolio (and whatever
they diversified into) produces enough income to cover the everyday expenses,
which puts diminishing value on the salary dollar.

You're right about the taxes, as I've noticed early stage startups eschewing
83(b) elections and moving towards stock grants in general, which devalues
equity significantly.

> On top of that, if you have 401k matching based on salary percentage
> contributed, you'll net a larger 401k, which is even more money.

Most of the time with average engineering salaries the problems center around
exceeding the maximum contribution limit, but I agree that's a consideration.
I've never seen early stage (post-A or post-B) offer generous matching, but
they certainly can.

~~~
Akkuma
How many people come from companies with large exits like that? We're talking
what a total of 200, 300 people tops? It seems pretty unrealistic to expect
most "top talent" to be in the situation you describe.

~~~
prostoalex
I wouldn't estimate it that low - TWTR priced at $26 produced 1,600
millionaires [http://www.mercurynews.com/business/ci_24486370/twitters-
ipo...](http://www.mercurynews.com/business/ci_24486370/twitters-ipo-
means-1-600-new-millionaires-and) and that was at lower valuation with lower
vesting numbers compared to where Twitter is today. And Twitter is fairly
minor league.

You also don't need a big exit - every single big name out there keeps issuing
stock and it keeps vesting in someone's account. E.g., considering the stock
growth I'd be surprised if any AAPL or NFLX engineer who spent 5+ years with
the company is _not_ a millionaire.

------
serve_yay
I agree with his assessment of the bay area at least. The demand is so high
that it's a real problem if you try to take your time to figure out who the
hell you're hiring. They'll have 2 offers before yours, even if they're not a
spectacular candidate. I'm not really interested in interviewing candidates
for our SF office anymore for this reason, it's simply a waste of time.

I don't think it's a good idea to be a "loyalist", though. Your company will
never be loyal back, believe it.

~~~
mooreds
Interesting to me that (most) bay area companies are still trying to hire
there. Guess they don't have the institutional DNA for remote work.

------
tessierashpool
First, this is a false dichotomy.

Second, "loyal" and "obedient" are different words.

Third, if your team thinks something is a bad idea, and your investor tells
you to do it anyway, maybe you need a more "loyal" (i.e., obedient) team, as
this investor is arguing. Or _maybe_ you need an investor who has more respect
for your team's opinion.

After all, sometimes the team is much better-informed. Sometimes "a difficult
decision" is just a nice way to say "a bad idea." Sometimes you might tell an
investor that you think their incredibly stupid idea is great, and you wish
you could do it, but you can't, because you'd lose your team, and we all agree
my team is valuable, right?

I mean, yes, there's also the great loyalty Steve Jobs inspired, and for once
"inspired" is the right word there. But even Steve Jobs had to listen when
people told him he was wrong, at least once in a blue moon. He came back from
a trip to Japan convinced that he was going to set up uniforms for every Apple
employee, including engineers and executives, and that everybody was going to
love it.

Edit: and yes, mission-driven companies are a good idea.

------
jimmywanger
I personally would prefer to work with/for mercenaries. Anytime a company is
not providing me with a compelling value proposition, I'll look for another
job.

Employee loyalty is simply a tool for employers to leverage to make their
companies more successful, with very little benefit to the employees. Every
time I've switched a job I've gotten a significant pay raise.

~~~
rorykoehler
Surely money isn't the only reason you work?

~~~
douche
Why else? I could do all the parts of my job that I actually enjoy on my own.
I would work if I didn't have to to pay the bills, but I wouldn't GO TO WORK,
if you catch my drift.

------
Ernestas
I was a loyalist when I was young and stupid. Companies betrayed me too much
and I became a mercenary.

------
Jugurtha
So if I understand correctly:

There are loyalist teams and there are mercenaries. Loyalists have a special
feature of being behind their leader whatever happens, because he has a
mission.

If the employees are not in that category, they are, by default, mercenaries.

So you need to get people who are not mercenaries and go look for them in
locations that are not as active as the Silicon Valley (where they have, de
facto, more options). Look for them in the rural edge of the wafer.

Did I understand correctly the gist of it?

There are different words to describe this:

\- Cognitive dissonance: It is the employees who are mercenaries. The leader
has nothing to blame himself for. He's a leader with a cause and a mission.
It's their fault. (The world isn't in short supply of sanguinary people and
dictators. They are leaders. They have a mission and values. I guess people
who left them are mercenaries too, by the post's logic. Since it doesn't say
anything about what the "leader" is doing, what the "mission" is, and is the
mission in the field the same as the one on paper).

\- Manicheism: Either loyalists or mercenaries. Because hackers think in terms
of combo boxes and two options are enough. Binary is nice.

------
dmichulke
Firstly, mercenaries don't just choose their company by the money they make
but also by equity + location + culture + colleagues ...

Secondly, everyone becomes a mercenary at the right price (again, price = $$ +
location + culture + colleagues + ...) If someone really claims he has no
"price", I will have my doubts as to whether he speaks the truth or is smart
enough.

------
dmourati
Loyalty is a two-way street. As an employee, I'm loyal to people, not
companies. If those folks I'm loyal to in a company are loyal to me, we are
all good. If I don't feel loyalty from anyone in the company towards me, I'm
likely to turn mercenary and look out for what is best for me irrespective of
the company.

------
brudgers
Mercenary and loyal are behaviors, and it is more useful to think about them
as mutable based on context [as to some extent Wilson does] rather than
persistent properties of individuals as the title implies. Mercenary and loyal
behavior are two edged. Mercenary hiring provides speed and simple financial
semantics. Loyalty includes betrayal semantics and are encumbered with
emotional baggage and ambiguity. Close relationships have their place, but one
is playing make-believe if they believe that the can _hire_ for close
relationships. These things take time and a demonstration of trustworthiness
on the part of the person with the larger share of the asymmetric employee-
employer power distribution. Loyalty born from the necessity of a dearth of
better opportunities is simply wily mercenary behavior.

------
jacquesm
Loyalist or Mercenary investors?

------
restalis
TL;DR: Mercenaries are bad, loyalists are desirable, so here are a few tricks
on how to turn mercenaries into loyalists.

I expected something else when I read the article's title. I expected some
advice on how to identify the loyalists and the mercenaries and how to fit
them best into your work-system in order to get the most of it considering
their nature.

------
hollerith
some professionals ignore money 99.5% of the time and just do whatever is best
for their profession. for example (although I don't know him well enough to
say for sure) Paul Vixie strikes me as working mainly for the "health" of the
internet. I find it admirable for someone earning a solid professional income
to care mostly about the internet, the judicial system, his or her patients or
the nation's roads and bridges. It's important however to notice the
differences between that sort of professional commitment and commitment or
loyalty to a small organization that society can easily do without.

------
hans
yep and the issue of real estate + housing costs in SF pretty much ensure that
you have to be mercenary or you don't live there ..

