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Ask HN: Stay or Leave? SoundCloud has deferred salary reviews
84 points by throwaway-sc on June 17, 2017 | hide | past | favorite | 72 comments
SoundCloud has deferred salary reviews until the next funding round is complete.

Over the last few years, travel between offices has been restricted to business critical travel only. More expensive food items have started disappearing from our kitchen.

Employees used to get a small bottle of champagne on their birthdays & employment anniversaries. This doesn't happen anymore.

All of the above feels reasonable.

However, they recently announced that the July 1 salary review that everyone was promised will be deferred. There is no information about back pay or a date about when the next salary review will happen.

Salary increases are predicated on the next round of funding. They anticipate that the round will close over the next couple of months, if not weeks.

I'm sure that everyone here will have been in similar situations before.

What did you do? And, how did you decide whether to continue working or start looking for other opportunities.

Also, what other arrangements, we, as employees should consider putting forward.

Example: I'd be okay working 4 days weeks, until the salary review is complete.

What questions should we ask our founders that'll help us build confidence that the company's financials are in a reasonable shape?



> However, they recently announced that the July 1 salary review that everyone was promised will be deferred.

The company is obviously facing a cash crunch, but to me this is the key bit and why I would start shopping my resume if I were in your shoes. Management will have known about the cash crunch or should at least have anticipated it was a possibility for a while now, and should not have set expectations that they were unlikely to meet. The rest of the actions look like prudent cost-cutting measures, but if you can't trust that management will honor their promises today what guarantees do you have that they will do so in the future?

As a non-founder (i.e. very low equity upside), it's not for you to make compromises to keep their high-upside baby alive. Put your own interests first and find an employer that doesn't require you to subsidize their growth.

Also, if I had a dollar for every time a founder has told me that funding is coming in "months, if not weeks" .... well, you can guess the rest.


Key aspect of becoming a manager is making promises you may or may not keep. They cost you nothing, and when they come due it's the employees who suffer.


A good manager manages expectations when reality changes.


A great manager doesn't make promises he can't keep.


Sometimes, a great manager needs to speculate and do things at uncertainty and risk, while motivating their subordinates. They are clearly working to save the company in OPs case.


Ah yes, with a late June notification.

Maybe communicate earlier hmmm?

That would be better management rather than hold my beer I'll probably close this round while I risk the livelihoods and futures of my rank and file.


But alas, communicating earlier is when things have the most uncertainty. I have had great managers that set expectations around how much uncertainty and change is built-in to what they're communicating, but in general, the earlier they share something, the more likely it is to not be certain yet, still it's often useful information to have.

(I'm only speaking in general, not specific to this situation.)


But are the people in question really managers, or just harvesters of stock options?


...to employees who will actually quit. Ethical managers never do it, great managers (measured from above of course) always do, strategically.


There's a quote: "If you owe the bank $100, you've got a problem. If you owe the bank $100M, the bank has a problem."

Here's a tweaked version. If you can't get a raise, you have a problem. If a company can't pay its employees market rate, the company has a problem.

I pretty firmly believe that if money is tight at a company, paying fewer people more money (and setting higher expectations around performance) is the way to go. Otherwise you end up with top talent leaving and those left feel entitled to not give 100% (because they aren't being paid 100%).


Posting this with the company name is a little indiscreet.

If it was my company and I was having a bump in the road with funding I would hope for it not to immediately hit the front page of HN for the sake of a few weeks.

Soundcloud actually have a good reputation as an employer so maybe they deserve a small benefit of the doubt? I get the mercenary attitude but it's only potentially a few weeks or months for an incremental pay rise, not as if they are going under....

I suspect this won't be a popular point of view but I like to think company and employee owe each other at least a modicum of loyalty.


> company and employee owe each other at least a modicum of loyalty.

The company will not think twice if the have to fire an employee - why should the employee feel guilty about doing the same.


the only reason i can conjure as to why someone would out their own company like this is to either (a) get some real inside baseball on why deferred salaries are happening (unlikely and also kind of dumb; use the intranet), (b) get some pats on the back from those in similar straits within the company or (c) gives no fucks (which i agree is immoral; the advice won't change based on the company in question)


The OP is anonymous. Are there any other SoundCloud employees willing to stand up and confirm these accusations?


That would make it even worse.


You don't lose anything by starting to look at alternatives. You don't have to do that full time either. But if you're uncertain about the future, while still holding a paying job, this is the perfect time to refresh the CV, request old references, subscribe to some job ad feeds.

You can easily send an application a week or two to places you find really interesting without the "need money for food" feeling.


Strongly concur.

Also make this a yearly habit, so you stay on the ball, know where the market is at, and become comfortable leaving at a moment's notice to avoid this life changing anxiety you might be feeling.

Once you do it regularly, it's no big deal. Companies hire and fire dozens of people a year, it shouldn't be that different for you.


Yes. I would strongly recommending using something like hired. It's dead simple takes maybe 20 mins to sign up. Then once they approve you, you'll get a few inquiries from companies and if you're not interested you lose nothing and if something interesting comes along then you've got your out it should take a few weeks and you should know whether or not you want to stay with SC by then.


Maybe this makes me the devil's advocate here, but why would you suddenly only work 4 days a week?

I assume you have a valid contract that says you work X hours for Y amount, what makes you think you're not bound to that just because you don't get to talk about a possible (!) raise?

It's up to you if you interpret the company's behaviour as a red flag and leave, but reducing your working hours because you don't get your regular fix of more money seems like a sense of entitlement to me.

As a side note, your post would have worked just as well without publicly shaming your employer.

(I am not affiliated with SoundCloud, except for the coincidence that one of my previous companies used to share an office with them.)


I think he is not considering working only 4 days a week unliterary. He is considering negotiating working only 4 days a week instead of a pay rise.

He can try to negotiate whatever he wants, for example working only 4 hours per day, or 3 days a week, or ... but the employer is not forced to agree.


I think they are thinking of getting the pay rise, then work a four day week (and getting paid 80% of his increased salary) until the company can afford to pay them five days a week at the increased salary again.


I'm not sure how it works in Soundcloud but usually you are not entitled to get a payraise just because


Well, businesses come and go. Start ups come and go faster. Nothing tragic will happen if you accept that. I am sure you will find a job if you keep things in perspective. It is just business.

However there is no reason to panic yet. It is likely they will raise again.

Meanwhile you can use your energy to prepare yourself. Get your resume and LinkedIn put together. Make sure your personal finances are secure and can handle 3-6 months with no income (standard advice for everyone). Start inquiring about what other companies would be worth working for.

If you have a plan to handle the downside risk, this will be less terrifying and more of a business like decision of the merits of staying or going.

Once you can feel safe walking away then you can negotiate a better structure if you want the extra time. It is important to have the walk away plan as your BATNA when negotiating.


This is the crux of negotiating. The person with more options has more power. There's really only one way to get a raise: pay me X or I walk. If yay, good, if nay, walk.


A subtle way to reinforce your words is drawing on the famous million-dollar Amdahl coffee cup:

http://dealwhisperers.blogspot.com/2015/07/a-million-dollar-...

In this case, find a friend at Google/Apple/whatever and ask them if you can have some employee-only branded stuff.


You don't have to make a big decision right away, but those are certainly signals that the decision may be made for you in the next few months if you are unlucky.

I'd certainly start the usual job-hunting process: updating my CV, mentioning to friends that I may be open to a new position, breaking out the ol' whiteboard for algorithm interview practice, going to meetups etc.

Also, prepare yourself for being laid-off, financially and mentally. It sucks, but it's the reality of startup life.

Don't worry about questioning the founders - it's their job to be upbeat and optimistic to get the best result for their startup, but it's your responsibility to look after your career. But that doesn't necessarily mean giving up the day job - hope for the best, prepare for the worst.


This happens in a lot of companies, there are moments like this.

Also, nothing in your contract or offer letter would have said that the company would do a salary review every year.

When such a decision is made, companies are aware that what could happen, the way salary review is important for an employee, in equal measure it is important for the company too.

So if such a decision is made, they weighed in every thing, may be the fact also that, people might leave or they would look for another option.

And the company also knows that people who would have options are the good people, and no one wants to let go the good people and being left with average or above average people later, when the finances are sorted.

If you love what you do, stick with SoundCloud, it's just part of life and could happen anywhere.

PS: I have been through this once.


I'm sorry to hear this. However...

> What questions should we ask our founders that'll help us build confidence that the company's financials are in a reasonable shape?

... there is no question you can ask anyone that will help SoundCloud from burning money. Building confidence is just an act of faith, but this won't solve the underlying issue that SoundCloud does not have a viable business model, at least, with it's current corporate structure and business model. Don't get fooled by cheerleading VCs and CEOs, it's the oldest trick in the book. Always at the expense of employees and other stakeholders.

Many people join startup-land with the impression that these multi-(b)million, VC-funded companies are as safe as joining other old-school corporate companies which apparently are going to be disrupted by those very startups. Some other people joining startup-land are aware of this issue, and they will be the first to jump ship. All I can suggest is that you start looking for other opportunities, just in case. Do not get fixated on the back pay date, etc... just move on.


The company is not profitable. Compensation is based on raising money. The financials are not in "good shape".You say they haven't received their next raise so consequently you either. If that concerns you, you should seek employment elsewhere.


I went though a similar situation as an employee of a struggling start-up in the late 90s (dot com bubble 1.0). The founders (who by the way were wonderful people trying to make the best of a bad situation) decided that rather than start firing people, we'd all be taking half pay until we got funded, with promises to square everyone up eventually. I was young and dumb at the time so I, along with most, accepted this. A few months later, it went down to 1/4 pay, and we lost a few people but many stayed. Then, no more health insurance, at which point I finally bailed, and ended up unemployed for close to 6 months. I'm not sure what additional sacrifices the remaining employees had to accept, but I know it was much better for you the earlier you got out.

There's no way I'd make the same mistake today. No pay, no work. If I want to do work without being paid for it I'll get a hobby. While I might enjoy what I'm working on for you, YOUR dream is not my hobby. If I was a founder and the company went through tough times, I'd gladly work it for free because of the upside potential, but not as employee number 5 with 0.1% equity. No way, no how.


Whether to stay or leave is obviously an important decision that can impact your career, and you may not want to base it on something as simple as the things you've mentioned here.

Of the things you mention, there seem to be two primary concerns.

One is that you definitely won't get a raise until a new round of funding comes in, and even if that funding does arrive I assume a raise is not a guarantee. We obviously aren't aware of your status or current and past performance. We also aren't aware of how much you are making now, and whether that amount is perhaps at the higher end or lower end of market rate already.

Two is that the company seems to be having at least some financial concerns.

You've also told us "they anticipate that the round will close over the next couple of months, if not weeks". That sounds optimistic. Being that the next salary review isn't for a couple weeks, it sounds as if this entire thing could be about nothing.

If you like your job enough where not getting a raise is OK for at least a few months, you should stay.

Beyond liking your job, are you still learning? Are you becoming better at what you do year after year by staying there? If the answer is "no" to either of those questions, you should probably leave regardless of salary raises and free champagne.

You should always be prepared for the worst, of course, so if an event (layoff, closure) were to happen you should always want to be in a position to start looking for work quickly.

I don't think suggesting a 4 day work week due to an incomplete salary review is a good option. That suggests that you may have anticipated a 20% raise, which isn't all that realistic. Making unrealistic demands of a cash-strapped company could be a quick way to a layoff.

I'm not sure at this point it's even relevant to ask the founders any questions. They seem to be forthcoming about things - it's not like they told you there will be no salary reviews the day before they were scheduled to happen, and if they have been trustworthy in the past you should have no reason to doubt their honesty now about their expected timeline for the next round to close.

When should one start looking for jobs? There are lots of reasons. If you are not fairly compensated for what you do and there are no other 'upsides' to your employment that make staying a good option. When you aren't learning or challenged by what you do. When you feel work is having a consistent negative impact on other parts of your life. When your company clearly makes decisions that do not consider the best interests of their employees.

Good luck to you.


This seems like the most thoughtful response. Salary cuts and freezes, while painful and unfortunate, do happen.

If you're financially stable, enjoying your time and continuing to learn, stick around. It may be an informative experience for the future. Plus, you may have opportunities to take on new projects if other employees leave.

In the background, it can't hurt to sharpen your resume and start talking to friends about their companies in the event that you do have to depart SoundCloud.


> I don't think suggesting a 4 day work week due to an incomplete salary review is a good option. That suggests that you may have anticipated a 20% raise, which isn't all that realistic.

Came here to say this. Missing a 3-5% raise and cutting your work hours by 20% is a petty over-reaction, both practically and mathematically.

(Mathematically, that would be the even-money proposition if you expected a 25% raise.)


>Management will have known about the cash crunch or should at least have anticipated it was a possibility for a while now, and should not have set expectations that they were unlikely to meet.

As user bspn has said before, this is a bad sign. If the company has good financial management, they have seen this coming and chose to inform its employees very late (which is bad). If the company did not see it coming, they have bad financial management (which is also bad).

So yes, from an objective point of view it surely cannot hurt to start looking somewhere else.


Soundcloud is out there for several years raising rounds with great expectations (meaning high valuations) and still hasn't found a business model yet. They've lost a lot of high class tech talent such as Peter Bourgon. Users stay stagnant, no exit in sight. If you have equity, count it as zero, as latest at the next round, liq prefs will be so high there won't be much left for employees. If I were you, I'd start looking in any case.


This may sound too self-serving, but at the end of the day, you need to ensure your bottomline and well-being as well. You have responsibilities and the necessity to feed yourself (and those who may depend upon you) which involves in some ways some financial means, which would be perfectly alright that you start looking for places that may well use your skills/talent and compensate you accordingly.


> I'm sure that everyone here will have been in similar situations before.

No, because I've only worked for businesses that make money.


Not the time or place.


What? Why not? The OP is explicitly asking for advice. My advice is to work for a business that makes money.


That's not the advice you gave. In fact you gave no advice, you simply proclaimed your superiority when it comes to past decision making, in that you only worked for companies that make money.

Your reply was intentionally snarky at best; obnoxiously insulting, demeaning and entirely non-useful at worst.


You should have stated it this way in your original comment. Instead your comment comes a across as snarky and unhelpful.


Would you also recommend that he eat food for sustenance, and continue metabolizing it with oxygen?


With startups you often don't know if they will (in the long run); you want to say you only go for no risk big corps? Or you mean something else?


> you want to say you only go for no risk big corps

Yes -- I think it's worth pointing out the upsides of this option to counter the breathless startup optimism I routinely see on this site.


I agree. But also to counter the optimism would be to clearly explain that if a company does not have a solid fundamental plan to make money that is not 'running ads' or 'when we have millions of users it will come to us', you might not want to work there. There are plenty of great startups that have a solid plan and yes, it is more risk than working for Microsoft, however, it is not as much risk as working for a company that needs investment rounds until they figure out how to actually make money. I find those the most frightening and many of those you can find here. That is not to say even those do not stand a chance, but it is a big risk.


I think this might be evidence of the trend that is already occurring of IT companies (including startups) becoming more like companies in other industries. Which is to say, no champagne on your birthdays. I've noticed less lavishness. It was only a matter of time for the excitement of a whole new industry to begin to wear off. Many components of what is necessary to create a startup are becoming commodified by so called cloud offerings. There is less need to exert the same level of effort to retain your developers and a failure to do so has less consequence.


If you're in London there's a cool company called FutureLearn, they are not actively advertising for new employees but you should check them out.


I would probably send my resume over to recruiters and started looking at possible new opportunity while keeping your job.

It won't hurt to get a sense about the current job market, what interesting companies are hiring and what are salaries for positions with your level of experience.

You will find out whether you are underpaid or not (working for a startup you very likely are) and then decide based on that.


tl;dr - if you believe in the company future and are willing to make that sacrifice, stay. if you don't, leave.

all startups have risks. i think that's something people overlook and they tend to think about the non-corporate atmosphere. anyways, that being said, i think it boils down to if you believe in the future of the company.

if you believe in the company's plan and you're willing to stick it out, great! imo, you should expect to hear an explanation of a company/product strategy _you_ believe has a chance.

if you don't believe it has a chance, well, i imagine you are sticking around for other personal or professional reasons. that could be because the opportunity you are getting (with specific tech, roles, etc) that you believe will help get you to where you want to be. it doesn't have to be about money.

if genuine promises were broken, that makes it tough to trust the folks that you are likely looking to for said strategy and plan.


If you've been there a while it sounds like a good time to explore your options. You don't have to accept a new offer, but my experience is that it's probably going to get worse before it gets better. By the time they turn things around you could be making 20-30% more in a new role somewhere else.


As a SoundCloud employee myself, I seriously wonder why you had to post the company name in your question. Also, I have not yet heard any official announcement of the regular salary review being deferred (which I would also consider a company habit more so than a made "promise").


What questions should we ask our founders that'll help us build confidence that the company's financials are in reasonable shape?

They aren't profitable and trying to get another round of funding. Only in the world of tech would that even be a question.


One consideration is that is easier to get another job when you are still employed. So you have to weigh that against the other factors.


They are keeping the machine running with "funding". Not actual profit?

so understand they have to be mindful/careful on frivolities.

If you gave a 100 million to the company, would you be annoyed if you found out about people getting small champagne bottles on their birthday? Would you be worried about your investment?

The days of these companies building floor to floor slides, and pampering adult children was never going to last. Whats there to worry about?

Saying all this of course, if the Mgmt are still getting these perks (wasting money), while the employees are not, id leave.

That ship will hit the rocks very soon, and hard. And of course, it wont be the first company to get done under with high budget pay/perks for low budget mgmt.


As a founder of a startup, reading posts like that make me sad. In the imaginary world I live in , tough times a company is going through are triggering employees to give up their benefits and work harder to help the company recover.

Before my entrepreneurial journey I was working for a startup as a developer , I sticked there around for 5 years. For the last 3 years of the company existence I voluntarily gave up 20% of my salary and worked my ass off, simply because of being loyal and caring for the organization.

I work hard to create a sense of commitment and loyalty in my current start up, and during the recruiting process we pay a super attention to don't hire people who are looking for just money and are easy to abandon a ship during a crisis.


> I work hard to create a sense of commitment and loyalty in my current start up

I work hard to feed my family. I can't give my baby a bottle of loyalty before she goes to bed.

How loyal are you to your employees? If they come to you and say, "sorry, I can only work four days a week from now on, but I want you to keep paying me the same" - would you willingly give up 20% of your employees' time simply because of being loyal and caring for the organization?


If you really value people not abandoning ship during a crisis, do you know what you do? Have them sign a contract for a specific length of time so they are no longer at-will employees, and compensate them accordingly, because that loyalty to your company has an opportunity cost to them.

If loyalty during a crisis is valuable to your business but you do not intend to compensate people for that loyalty, do you know what that's called? Exploitation.

If you really don't feel like loyalty is something to be bought or sold, then you'd better make sure that whatever voluntary loyalty you expect from your employees is reciprocated by you, the employer. Like, assurances that layoffs are off the table, etc. But even that's not ideal, because it could put you in a position where you have to sacrifice the business rather than go back on your word.


If you love working at a company so much that "giving up 20% of your salary and working your ass off" for years is really what you want to do, then I guess that's your call.

But I don't really understand it. There are so many good places to work, being paid what I'm worth at a different place seems like a better deal.


I would never give up promised benefits because the company is struggeling. Because I know exactly what happens to my salary when the company is successfull again: nothing.


As an employee of a company, I'm paid salary for my time.

I'll take a pay cut for more equity if I want it, not for nothing.

If I take risk, I get rewarded with ownership, but if I'm paid cash, why do I honestly care what happens to a company.

This isn't some fairytale, we're all here to get paid, and employees​ aren't your buffer for bad cash flow management, that's the responsibility of owners and management.


Blaming management make it sound like you have never owned a company.

When cash is getting low two choices. Paycuts or firings. Pros and cons to both.

In the OP sounds like they arent that drastic yet. Just no raises. Seems not that dire all things considered.


Not holding management responsible makes me think you might have owned a company.

Let me spell out the compact that undergirds capitalism: employees don't take risks and are paid a constant stream of cash, owner's do take risk, and it is up to them to ensure there is enough capital buffer to meet their constant stream obligations. Employees do the work, management/owners ensure they get paid.


Ok so you are argued that OP or one of his coworkers should be fired, so OP can get his 3% raise. And on top of that, his workload now went up 10%, as there are less people to do the work.

Got it. Sounds like good decision making.


From what I read, throwaway-sc is being paid 100% of salary. They're just not being paid 103.5% of salary after a raise that's been deferred.

While there are certainly things to worry about, this is not a case of employees not being paid.


Funny thing is that salary changes with a raise, so technically they'd be < 100% of their promised benefits after July, and past that, who knows?


A vast, vast majority of companies do not think twice of getting rid of their loyal workers when it's beneficial to the company. Anyone who's been laid off will know this.


If the owners explain things clearly, lay out the options and make me a significant shareholder (over 5%), then I would think about it, but otherwise this is a strange idea in my opinion. Why would you suffer if, when there is upside, you 'only' get the salary you were (contractually) entitled to all along? If someone wants me to work for free/less and there is a risk of the company going under before any gain, I would like to see significant compensation in shares (like 10* a market-conform salary minus the salary I get); what is the point otherwise. If you are a (co-)founder or owner then I would say it's something completely different; you believe in it so buckle up. But I know many who do not agree with that either.


I'm a founder too and had a story similar to yours. There's much more to working at a company than cash and equity: Learning fast, good people around you, climbing up the career ladder much faster, freedom and autonomy.

It's just when you've got neither of these perks that you should start searching - because if you don't have that side either, you could as well go to a high paying corporate job. And then I'm on the side of the employees: Loyalty is important, but it's not a one-way street.


Why should non-owners give a shit about the organization? Only because you pay them to. If you can't pay them competitively anymore, guess what?


As an employee, reading posts like yours makes me sad. In the very real world that I live in, people get paid by their employers a rate they negotiate before employment begins, and use that money and the benefits provided to support themselves and their families.

Loyalty always seems to flow upwards in companies like you describe, where employees are expected to sacrifice during the hard times, but the company doesn't reciprocate during the good times.

I work hard in my job to fulfill the requirements I agreed to during the negotiation, but if the company can't or won't hold up it's end of the bargain, expecting me to continue to do so without compensation is just predatory behavior.

This is the business world, and the employer-employee relationship is a business relationship. Anyone who tells you otherwise is usually trying to take advantage of you.


It's unfortunate that you're being downvoted. Not because I agree with you, I don't in the least.

However, understanding the mindset of startup CEOs is interesting. Particularly the mindset of the minority of CEOs who are able to raise money (again, not saying I agree, but VCs select for particular personality types).

But, I doubt the majority of the workforce (even the really good motivated people) out there agree with you. The level of commitment you're talking about isn't what I'd expect form an employee. It's more what I'd expect from a cofounder.


99% of the startups are not loyal to their employees. Why would employees be loyal to the startups?




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