I think, what these employees don't realize is: Even when a company places values over profits, it is still in an attempt to maximize profits over the long term. By placing values above profits, it increases it's goodwill with customers thus increasing it's moat and it's retention, as well as it's employee retention. This strategy made sense in the early days.
Not anymore.
As Google's position becomes increasingly strengthend (with all the market share it can capture in search already realized ~ and it slightly decreasing anyway due to it's slightly tarnished brand), it doesn't need to maintain this illusion of values over profits anymore.
The "values over profits" approach was always more of a recruitment tool than a PR tool. It did give a nice PR boost, but realistically Google's been the best choice of search engine since it came out in 1998. They don't need additional customer goodwill for people to keep using them, they just need to continue to give good results for esoteric queries.
Since 2005, though, good engineers have had lots of options for where to work, many of which pay better or have more growth potential than Google. And "Don't Be Evil" was a great way to persuade them to come work for Google rather than Yelp or Facebook or some hedge fund, and keep them there rather than have them go off and found their own startups that potentially could compete with Google. Because so much of their product moat depends upon technical excellence, keeping the best engineers within the company is critical for them.
I'll predict that if they don't reverse course on this, we'll see a mini-exodus of Googlers who either end up founding their own startups or start working on political-tech projects. Ultimately I think that may be good for the world, but it's not really in Google's long-term interests, although perhaps at this point their moat is entrenched enough and they're big enough that it doesn't really matter.
> Since 2005, though, good engineers have had lots of options for where to work, many of which pay better or have more growth potential than Google.
Growth probably, but very few actually pays better than Google considering all the perks and work life balance you would get from working for Google. And since the startup boom is almost over, it is even more so like that now...
Almost all wealth in Silicon Valley comes from equity price appreciation. Google stock has appreciated 7x since 2009, but Facebook has appreciated 38x in the same time period, Yelp 13x, Netflix about 35x, Apple about 6-7x.
I think the boom in web & mobile startups is basically over at this point, but there's a new boom in cryptocurrency & AI startups that's just beginning, along with a social movement (multiple social movements, actually) that's just beginning and will likely need communication technology to organize.
This is only really true at startups. At a bigco, your on paper comp can be 250 or 350k annually in cash equivalents. That quickly generates wealth even if you are given only cash.
You're comparing 2 pre-ipo companies to Google and apple.
Still true at BigCo. Total comp as a senior SWE at Google when I left (almost 5 years ago - it's more now) was something like ~$175K cash, ~$125K stocks + options, ~$50K bonus. With the 5x appreciation in stock that was going on while I was there, the stock portion could be worth $625K/year by the time it all vested. That's as employee 20,000+.
Right, but this is different from having higher expected value, or higher likely-case value. Most people don't value compensation offers based on 'growth potential' (aka 'best case').
(I'm assuming you mean growth in the sense of 'growth in value of equity', based on your reply to another commenter)
I was actually thinking of growth as in "professional growth" - getting promoted faster, having a chance to learn more skills, doing things you wouldn't be able to do. I was thinking of the equity growth in terms of "pay more".
OK, so I'm curious: do many companies in the bay area pay more for engineers (on either an expected value or a worst case basis) than Google does? Sure, some of those startups will make their early employees very very rich, but most will fizzle or fail.
By reputation, Netflix pays more cash than Google. Like I said in the other subthread, though, the majority of your compensation in a tech company is in equity. The biggest price appreciation in equity is for younger, faster-growing companies. When I was at Google, that was largely Facebook; by the time I'd left, it was companies like AirBnB, Pinterest, Medium, and Snapchat (though I dunno how well folks at the latter 3 are doing nowadays).
There's something you've overlooked: companies are ultimately run by humans. Humans who make decisions at all levels of the hierarchy, in order to further their own personal priorities, even if it dramatically conflicts with the shareholders' goals of maximizing profits.
In some cases, the personal priorities can be personal advancement. We see this all the time when managers hire/promote their friends, sexually harass their subordinates, and make decisions on the basis of politics as opposed to technical/business merit.
And in other cases, the personal priorities can be moral values. Values such as promoting free speech, fighting censorship, protecting consumer rights, and avoiding layoffs.
The idea that every single decision taken by a company is perfectly optimized to maximize long term profits, is baseless. There simply does not exist any mechanism to monitor and enforce such a requirement. The shareholders have only one lever to pull: accept the current leadership team, imperfections and all. Or fire them and risk destroying the company in the resulting churn. This gives both the executives and employees tremendous leeway to prioritize values over profits, as long as they are good enough to not get fired.
Yeah, and then the CEO decides he'd rather make $124M that year and feel good about himself in not kowtowing to totalitarian governments vs doing so and making $125M that year. The entire point of this comment thread is that individual people are not motivated solely by money. They care about many other things too, like their values.
Hell, this entire post exists because some Google employees care more about their values than about making as much money as possible.
The only people not motivated solely by money are those who used the very tactics that are in question to amass enough not to care... Or simply have no stake in it, Or have a stake in a competing company.
I can assure you if google employees revolt on a number of projects and that drops the stock price in half over the course of 3 weeks PEOPLE WILL CARE... Even the ones that today you say don't care.
> The only people not motivated solely by money are those who used the very tactics that are in question to amass enough not to care... Or simply have no stake in it, Or have a stake in a competing company.
What an absurdly preposterous thing to say. Money is a motivator and a large one for many, many people, but it's ridiculous to call it the sole motivator for everyone.
> The only people not motivated solely by money are those who used the very tactics that are in question to amass enough not to care...
There are an awful lot of people in this very comment thread who would claim to be counterexamples to this. Are you going to say they're all lying or deluded about their own motivations?
Well, a publicly traded company has the fiduciary obligation to make its shareholders money. So it really does not matter what the "the people" want, it matters what the shareholders want. In fact, the board and executive team are legally required to make the the decisions that make increase the value of the company. They could be in real trouble with the law if they knowingly do something that devalues the company.
It's not to say that the employees don't have some power. Shareholders may play along with their request while figuring out how to maximize the profits and avoid such road bumps as this in the future.
So in the end you have to weigh the wants/needs of the employees and how much money might be lost or gained if you go along with their demands vs how much money can be made or lost if you ignore them.
I could see a argument that upsetting your employees could lead to a value drop that might be greater than whatever contract they are protesting. But it is hard to judge, and it will often only be looked at quarter to quarter.
Now if you give the impression that you are all bout money but don't act like it then shareholders can be rightfully upset. But if you clearly state your values and ambitions and shareholders don't like it? Then, sucks to be them! There is nothing more to it than that.
Serving shareholders’ “best interests” is not the same thing as either maximizing profits, or maximizing shareholder value. "Shareholder value," for one thing, is a vague objective: No single “shareholder value” can exist, because different shareholders have different values. Some are long-term investors planning to hold stock for years or decades; others are short-term speculators.
I am sorry, I think both you and Lynn Stout, are wrong, regardless of her credentials -- she sort of is making a name of her self by swing this sort of nonsense -- so her articles are self serving.
And yes, we can define shareholder value -- its the stock price. But I see your point and why I have talked about the grey area of what is the best move. But you would be hard pressed to find a group of shareholders who who all agree not taking big contracts is going to be the best move.
It doesn't matter if the shareholders believe it is not the best move. It matters if the board believes it is the best move for the long term benefit of the company and its shareholders. The duty of loyalty does not require a board to do everything the shareholders want or to maximize short term profits. If a majority of the shareholders disagree they can vote to replace the board, but that doesn't mean the board hasn't met its fiduciary duty.
If the companies value and ambition is to maximize the stock price then the stock price is a good metric. If the companies value is something else then stock price isn't really a good metric.
It will also attract shareholders that share those values and thus going against them will cause an uproar.
It really depends on their charter. People don't park money in a company simply to have the stock value drop or stay the same -- with exception of companies who pay out dividends.
Most companies charters talk about their relationship and obligations to the shareholders -- people don't invest in companies that don't intend on increasing in value.
Again, value doesn't have to be monetary. Shareholders has the right to expect return on their investment, yes. If the company delivers on their ambitions and values then that is the shareholders reward.
If the stock market is as amoral as you think then it seems something ought to be done to the stock market. But I don't think most people would invest in something that goes starkly against their personal ethics, no matter how profitable. And if you regard following one's moral compass as just "virtue gaming" I'm not sure what to think.
That is not how that works. A company -- with a few special exceptions and special charters -- ONLY goal is to increase value for this shareholders. A single shareholder with a non majority holding can sue if the company knowingly does something that causes the values of his shares to decrease -- even if the rest of the shareholders are okay with the loss because they agree with the sentiment.
There is some grey area along strategy short game vs long game, but a company's charter is to increase the value of its shareholders -- THE ONLY THING that literally matters for a publicly traded company*
* Some companies can be setup with a different charter that does not prioritize profit, but google and most of the publicly traded companies on the market today are not those. And it would be very hard to convert to such a company.
> the positive corporate culture that small companies tend to lose as they grow.
It's more like regression to the mean; it gets harder to be different as you grow. Good companies get worse, bad companies better (just look at Uber's internal culture).
Dunbar's Number, I believe, gives some insight. Basically, humans can only maintain about 150 relationships. As organizations grow personal relationships are replaced with rules and structures as a matter of necessity.
Agreed. I suppose sociopaths can get away with more when there's so many people that the relationship/connections between everyone are weaker on average.
I used to think the same way, but then I came to a different understanding of sociopathy as an evolutionary adaptation. Those sociopaths are important and useful. The video below has a little deeper explanation.
> I think, what these employees don't realize is: Even when a company places values over profits, it is still in an attempt to maximize profits over the long term.
Come on. A lot of people create startups to do something interesting that they're passionate about. Customers and profit merely serve these ends, not the other way around.
What are some potential solutions here? Some form of intervention by the US government? I think many of us will agree that the sort of behavior these employees are speaking out against is at least unethical, and it also seems this "profits-over-values" behavior is a common one for large tech companies to gradually start engaging in. To your point, corporations in all sectors always do what makes the most economic sense, even if it means building internet censorship tech, dumping hazardous chemicals into the water supply, etc.
As a society which (hopefully) would like to have some sort of moral compass, how do we prevent large companies from seeking profit even at the expense of our freedoms/health/planet? It seems to me that if the punishment for unethical behavior is economically "less" than the costs or potential losses associated with acting in a good, ethical way, companies will continue to do what we're seeing them do now. My intuition is that capitalism (in its current Western incarnation) can't function without some strict controls to protect what our societies value most.
Or do we simply value profit over everything else? If so, that's kind of depressing, but I get the sense that most people don't think this way.
The US government? I find it hard to believe they would intervene with china unless they plan on using it as leverage in order to gain economic standing. However, seeing as google is already censoring content via prioritizing search results with favored websites before relevant websites and since the government is always happy to find new outlets to get personal information from its own and foreign citizens. I don't see this as being stoppable unless you make your own company and start competing with Google.
The tech sector has always been ripe for co-operatives and profit sharing. Politically speaking libertarian attitudes were the popular norm in most tech culture but now small co-opts could become the next phase for many small tech companies. That could be a first small step.
I think it's always a combination of factors. Unless you subscribe to the theory that every CEO is 100% sociopath.
There's the consideration of true values. Then there's the consideration of lost opportunities from following those values. Then there's the cold consideration of the money gained from PR boost due to following the values. Then there's the "game theory" consideration of altogether dying in the marketplace if your competition don't act on those values.
I think the best thing for all of us to do on the outside is to create a culture where every company benefits from the PR boost. Google executives are one concentrated interest, separate from Microsoft, etc. The employees, I reckon, are not as financially motivated (i.e. don't stand to lose _as_ much individually) and can afford to advocate their values. It seems to me (I'll phrase it conservatively, since I'm just throwing out ideas here) that Google employees should make friends with Microsoft employees to make sure they raise the same noise on their end as well. Make it okay for each company to gain (monetarily or otherwise) from good PR, and make it less profitable for all of their competitors to sell out.
Not anymore.
As Google's position becomes increasingly strengthend (with all the market share it can capture in search already realized ~ and it slightly decreasing anyway due to it's slightly tarnished brand), it doesn't need to maintain this illusion of values over profits anymore.