37signals is older than any YC company. In its current incarnation, I believe it's older than Facebook. It is clearly not on the same trajectory as the typical company we talk about on HN. It is not a flavor-of-the-month, or even of-the-year, for Fried and DHH.
and
Supply and demand probably does give them an edge on employee comp, but from friends I know who've worked there, they're making market wages. People aren't taking jobs there on the promise of hockey-stick upside. It's a pretty amazing work environment. You should see the offices. Place is nuts.
You don't have to take them up on their comp plan, but it's naive to write comments as if there was something wrong with it. Most YC companies would be very poorly served indeed by the comp plan 37signals laid out here; those companies are all on VC shoot-the-moon trajectories, and a stake in a liquidity event is a big chunk of the reason you'd work at any of them. In 37signals case, you have to start by defining what a liquidity event even looks like.
It was not my intent to criticize their overall compensation plan. Jason put this blog post up as their response to the employee request for equity participation. My analysis was to look at how his solution responded to that request. I works well in some ways, not as well in others.
As I mentioned the desire on his part and that of the other owners to respond to that request was admirable. And certainly for non S-Corp type businesses it can be very difficult to respond to this sort of request in any way.
My comment on compensation was targeted to exactly this:
"People aren't taking jobs there on the promise of hockey-stick upside. It's a pretty amazing work environment. You should see the offices. Place is nuts."
Compensation is such a rich confluence of things, from wages to benefits to corporate culture to 'lifestyle perks' to profit sharing. My mother-in-law ran a CPA practice for 30 years and did various things over those years as forms of compensation. So its a rich, complicated, highly nuanced, and rarely replicatable space where companies have to operate. I get that.
The word "disingenuous" means something unflattering. Also, compensation may indeed be a rich tapestry, but options only matter if you're going to sell, go public, or buy them back. For companies without a defined trajectory towards liquidity, they're actually deceptive.
Ahh, got it. Perhaps naive would have been a better word, although I recognize that in some circles that can be a larger insult. And for the record, I think that their plan for this 5% is much less deceptive than options in an S-Corp can be.
The disparity for me is that Jason makes this claim, "And since we have no intention of selling 37signals or going public – the two scenarios where options/equity really make sense – the complexity became too hard to justify."
My claim is that that statement is disingenuous because it posits the following argument; The company will never be sold, thus options or equity would never be liquidated, so providing equity or options doesn't make sense. The implicit claim on which this argument rests is that they will never sell the company, and that claim is neither supported by a structural contingency on the company, nor supported by a statistical comparison with the ways in which LLCs are dissolved (granted medical practices and law practices seem to dominate in this area, and can skew the results). In my opinion, it deceptively leaves that impression rather than being 'up front' about what are the real constraints.
I would completely believe him if he said instead "The Articles of Organization for the LLC specify exactly how any proceeds from the sale or dissolution of this company are to be distributed, and we are loathe to change them. Thus we don't really have an option here." (no pun intended)
And again, I think its really impressive that they came up with a way to share 5% of the proceeds when the company is sold. I merely suggested some ways they could make it 'look more' like what other people get in terms of equity and options by both allowing people to keep accumulated time after leaving the company and by having those 'units' represent a similarly sized chunk of the company.
I agree. Different strokes for different folks. When you go to work at a YC company, you are betting on the upside. The salary is a good 'pay-my-bills' perk. But the real sweetspot is the 15% tax you pay on a liquidity event.
Whereas with 37Signals, you are getting a 'regular' job - where you can do everything to excel and become better at what you do and earn a nice living.
If you want to save your own money and invest in companies, then that's up to you. But it's not the same type of math.
37signals is older than any YC company. In its current incarnation, I believe it's older than Facebook. It is clearly not on the same trajectory as the typical company we talk about on HN. It is not a flavor-of-the-month, or even of-the-year, for Fried and DHH.
and
Supply and demand probably does give them an edge on employee comp, but from friends I know who've worked there, they're making market wages. People aren't taking jobs there on the promise of hockey-stick upside. It's a pretty amazing work environment. You should see the offices. Place is nuts.
You don't have to take them up on their comp plan, but it's naive to write comments as if there was something wrong with it. Most YC companies would be very poorly served indeed by the comp plan 37signals laid out here; those companies are all on VC shoot-the-moon trajectories, and a stake in a liquidity event is a big chunk of the reason you'd work at any of them. In 37signals case, you have to start by defining what a liquidity event even looks like.