back
85 comments
Used to work at Intermec, which got bought by Honeywell. They just wanted the customers, so began to cut back the midwest office. Guy I knew who still worked there, a customer special projects Engineer, got asked "What would it take to keep you?" He said "$1M a year and my own budget". They said "No, really?"

See, he routinely made several times that annually for the company in retained customers and won contracts. If they'd had any sense, any idea of how profit and loss worked, they'd have snapped him up in a minute. But they let him go.

Of course later the office closed entirely, not making enough money. What a surprise.

Reminds me of the whole "I left b/c I asked for a raise to $X and then the company had to hire 3 people at a total cost of $2x to replace me" scenario.

Seen similar discussions of: "Well you have the skills of 4 people but we don't want to pay you 1.5x of what most people here make so we're not going to hire you."

I always wonder if this is just a poor understanding of the value individuals bring or just short shortsightedness on the part of management/the finance team.

People are replaceable cogs, and since people are replaceable cogs, one person can not create as much value as 3 other reasonably competent ones.

Since that is common knowledge shared by all the administrative personal, it's impossible to justify somebody paying 1.5x your salary range. Even if you personally realize some specific person doesn't look replaceable (who am I kidding? You don't. You don't stay in management on places like those and keep that ability, you either move or change), you can't communicate that fact.

> one person can not create as much value as 3 other reasonably competent ones.

That's the key behind that reasoning : If your so skillful, go right ahead and create your own business. Otherwise, it's your place in the hierarchy which dictates your salary.

Sounds like administration is made of replaceable cogs that are projecting.
I can't tell if this is sarcasm or delusion
No true person would be an unreplaceable cog!
> People are replaceable cogs, and since people are replaceable cogs, one person can not create as much value as 3 other reasonably competent ones.

What is circular reasoning?

You are going to get hired at 1.5x, you are going to get hired even at 10x, but only on the top of the hierarchy.

On the bottom of the hierarchy the lowest managers do not not want to hire special cases. If you are that good then the manager will really have no power over you and can't even replace you if it becomes needed.

So you only have 2 options if you are significantly above average. Fight your way up for big money or stay at the bottom and work very little to compensate for the small salary. You should be able do get an average work load done in no time if you really are good.

The highly paids at the top of the hierarchy are not compensated for what they know(that’s a given) but for who they know…the money is for the network and ‘Rolodex’.
> I always wonder if this is just a poor understanding of the value individuals bring or just short shortsightedness on the part of management/the finance team.

I'm thoroughly of the jaded opinion that when it's not a power play (no one's lizard brain wants to admit there's someone smarter than them), it can actually be a sort-of-rational decision: don't be beholden to someone hard to replace. Hence why you see tons of PHP jobs, but few in languages like the Lisps or Haskell.

How are all the young people we churn out of colleges going to find employment if someone has acquired skills or experience to do the job of 3-4 people?

Maybe it’s not a bad thing to employ two or three people at 2x cost. Or we’d end up with unemployment or underemployment.

You've gotta make your request just ridiculous enough, but not too ridiculous.

I don't doubt that he generated that value - it just sounds like he may have overshot just a bit.

As a negotiation tactic, perhaps. But as a realistic estimate of value - it was low.
> See, he routinely made several times that annually for the company in retained customers and won contracts

Did he explain that to them in a friendly professional manner? Or did he expect them to recognize his greatness right off the bat?

Of course he fully explained. He's actually skilled at dealing with people and situations - refer back to the part about pacifying customers and gaining contracts.
I feel this guy 100%. The economics of employment simply don't make rational sense, and was a huge part of why I started working for myself too.

You provide literally nothing of value to the customer, burden the customer-focused employees with unnecessary bullshit and use all of your political capital to advocate for the hiring of more deadweight employees? 100k per year.

You advocate for, build and maintain a product worth $10m/year to the business? Wow, you're pretty special. You can have 150k!

That reminds me of a few years ago when a director gave a presentation to the whole organization about innovation. Near the end of the presentation, he summarized that everyone needed to share ideas. Then he anticipated a few questions.

If we a good idea, would we be able to work on it? Probably not, the "innovation team", which was his team, would be the ones to build the prototype.

If we had a successful good idea, would we receive any compensation? No, and that's very selfish. He insinuated that we should rethink priorities or place of work if compensation was important.

He also talked about how he only wanted ideas that had the potential to make billions.

lol I've been on the receiving end of that pitch too.

Felt a lot like: "Give us your best ideas, then GTFO of the room so we can implement your cool brainchild - with no credit to you!"

There's practically zero reward for the folks with good ideas in that model, yet it's sort of the table stakes innovation model.

> we should rethink ... place of work if compensation was important.

If that's not a glaring neon sign telling you to quit, and quit now, I don't know what is.

This whole article is music to my ears. I left behind a rewarding career to test out entrepreneurship and while rocky initially, it's paying back in ways I could not have imagined. Similar to the author, I'm perfectly content with a 9-5 job but since taking the leap, I can now no longer imagine returning to my position.
What is the appropriate compensation then for someone who maintains a product worth $10m/year?

Suppose it’s $500k a year.

Well, what if someone says they could do it for $200k a year? Or even less? Why keep the $500k employee???

That is how they arrive at $150k. It maximizes profit and keeps costs to a minimum. Good business.

You're missing a whole lot of risk here, and for only a small gain.

You may not be able to guarantee that the new person can do it. This isn't a given, otherwise we would have all figured out how to hire the right devs for any given product and team.

There's a ramp up time to learning the product (and codebase, if it's software). If an emergency happens, only the new person will be fixing it and they will lack a lot of knowledge to fix it quickly or effectively.

Did the maintainer have any customer relations like customer feedback, including what works and doesn't in the product and what features they would like to see? Those have just been forfeited as well. Same for intra-company relationships.

The person you just fired could also go help make a competing product (legally or not), since they're the best person to do so. Chasing this down would require legal resources, which requires further expenses.

Sounds like a whole lot of extra potential complications for a measly +$300k.

Congratulations. You've just lost an employee that created a $10m/year system from scratch.
Good business… ceteribus paribus. Which is to say, rarely if ever at all.
Note that this is the same person from https://www.deepsouthventures.com/i-sell-onions-on-the-inter....

(HN discussion: https://news.ycombinator.com/item?id=19728132)

Peter here (author).. I'm guessing the person who laid me off from eTour may read this.. hi Jim! no hard feelings : )
Hey Thanks so much for the amazing article. What would you advice for someone in a full time job but feeling like the same?

I know a lot of people say quit and try freelance consulting but I'm not sure if it'd be sustainable. Would love to know your thoughts!

See if this essay I wrote (on buying & developing on neat .com domain names) helps: https://www.deepsouthventures.com/build-a-side-business/
The classic example of how (sometimes) when you're an employee you can't capture not even nearly enough of a value you create, as the existing form of employment was really not designed with this end in mind.
I've been saying it for years - all roles should work somewhat like sales. Sales incentivizes work and productivity. The harder you work the more you may get paid off that sweet sweet commission. That isn't easy to do for engineering roles though. How do you quantify productivity in engineering? There are probably a few ways:

1. royalties for reusable code (you no longer receive this if you leave, incentivizing people to stay as your royalties stack up). Any time code you've worked on is reused you get % x (equivalent hourly wage when you wrote it) x (# of hours it took to write the first time around). Possibility of backfiring if people ramp up hours spent producing high value stuff to maximize that royalty. This also only works in a job that allows you to build a lot of tooling for the team or something like that.

2. royalties/bonuses per team every time that teams work is used. This only works in highly profitable businesses maybe like google - i.e. anytime your code that served an ad is used the team gets a portion of that money to distribute evenly to the team. This doesn't really incentivize anything except getting onto productive teams.

3. in a fair and just workplace some sort of bonus based on democratic vote/ranking system on who is the most valuable to the entire team instead of one single person deciding (the boss) haha! that would never work.

4. bounty on features or something like that?

I don't know, I wish there was a way though.

Peter is an unsung genius of web businesses. Domains are automatic marketing jet fuel in a way that few other things are.
> So I sold my house to stay afloat – unloading a $130,000 mortgage that I was fortunate to break even on

oh, brother

I've seen references to Benihana online or in American tv. Why does it warrant it's own punctuation here? "..attended my own birthday party. At Benihana."

I understand it's a Tepenyaki place which are expensive places to go to. Though the novelty wears off. Is it considered tacky in the states?

What determines the value for a domain? 18k for duderanch.com feels insane.
Peter here.. I mention how I valued the duderanch.com domain in this essay I wrote a few years back, if you're curious: https://www.deepsouthventures.com/dude-that-built-duderanch-...
When a single vacation costs several grand, your commissions add up fast across hundreds of vendors - especially when there is little competition in the early days. This is before they had reservation software of their own tying then directly into other marketplaces.

This is an example of understanding and recognizing an opportunity earlier than the big guys.

Nowadays it looks like simple paid ads - but that can still add up to a lot.

>This is before they had reservation software of their own tying then directly into other marketplaces.

Dude ranchers are, for the most part, not a very technically savvy group, and that's an opportunity he's pursued pretty heavily. (This is reading from his own tweets and writing, plus a bit of my own experience growing up in Montana.) Peter's main gig these days is running RanchWork.com, which is a job board for dude ranchers. He's been writing and tweeting about how he paid like $3k for a print ad in a ranching magazine and nearly tripled his posting revenue the following month. ($3k posting per month before the print ad, $8k after.)

Most dude ranches are mom and pop shops out west. They're not owned by Hilton or Mariott; there's no software engineering staff helping them build SEO platforms and booking systems.

I guess it depends on the investor, but one question to ask would be.

Does it get traffic, and if so can I convert that traffic to $

I don't know either, but I can confirm that's within the scale for a domain I sold in the last year. Got 6.5k and it wasn't even a .com
but duderanch.com was going to be the name of my blink182 fan site :(

Value is what you do with it not what the name is.

If you can afford to hold onto something, the value is what others want to do with it.
Such as a great read!!
I hate how HN automatically strips out words like "how", "why", etc and this is a hilarious example of how that fails.
Context: the HN post title was originally "On earth I became an entrepreneur".
Heh I would have read that post too. Great title (but I agree with OP about stripping words)
its been fixed, but now i wish it hadn't.
…on Earth as it is in Heaven. Amen!