Salary is that high in the US because we have no social net or price caps here. Your on your own for everything. Healthcare, retirement, overpriced homes, out of control rent, etc
Overpriced homes, out of control rent, retirement are extremely problematic in a lot of European countries. And in the US, healthcare is usually covered by the company (talking about big tech corps).
So the extremely high salary is still a net positive compared to EU
With this in mind, it's just a good salary. Until they have competition squeezing them on margins it looks like an OK approach. At some point their board most likely won't agree with paying some people below market rates for important roles and other more fungible roles paying 2-3x market rates but while they can keep doing it, it's great free marketing.
Wouldn't an employee making that $201k salary in another country be responsible for paying all the taxes to support the socialized healthcare, etc? In other words the take home pay may be significantly less.
Other taxes (GST~VAT 15%, city rates, high petrol excise, etcetera) will easily take another $10k. Interest on your home is not deductible (NZ has very few deductables). People earning six figures will often pay for private health insurance and medical fees on top of the socialised healthcare - maybe another few thousand.
retirement is covered by social security
healthcare by insurance (offered by the state if you can't afford it yourself)
homes, etc is true though and we just need to build more inventory IMO. but there are tons of areas with affordable homes, they just aren't near the big cities like NYC or SF or LA
You can not live on Social Security, no way. If you don't have a job your not getting healthcare and even if your job provides healthcare. Its too expensive to actually use. Also you need to be living below poverty wages before a state will give you healthcare.
While that may be true, it's also unfortunately true that stock in startups has a high probability of ending up worthless. It's important to compare real money now, not just theoretical money in future.
I doubt my Aspen vacation home developer will accept payment in startup stock.
That's probably [EDIT: decidedly] on the low side for the bay area for rock star devs, and Oxide has lots of rock star devs. I haven't looked but I assume they pay bonuses, probably differential bonuses.
Hi Steve, bit of a tangent, I stumbled upon your blog from intro section and went down the rabbit hole. Wanted to ask if you have any recommendations on documentaries. TIA!
Like Steve, I also took a pay cut (from around 400-600k a year TC at a FAANG) to work at Oxide. I'm very passionate about what we do and was attracted to the values-oriented culture.
Exactly, man! That's the way it should be done. It's not a company's business to decide how much your life should cost. It's its business to reward you for the value you provide, and that value is not tethered to your location, so neither should be your salary!
This really is one of these things where every employee in a cheap cost of living area will say "Exactly, man!" and people in an expensive area will see it differently because it might cap them lower than what they could get.
I always find that a very naive point of view, of course I would want to earn a US tech salary while living somewhere in the country side, who wouldn't. But I'm also aware that this is not how the world works in reality, there's different tax systems, different expense costs and we don't live in a global one-market world.
I find the strategy of defining different "zones", like most of the remote first / salary transparency companies much more realistic.
> of course I would want to earn a US tech salary while living somewhere in the country side
It's not about what you want, it's about knowing your value. If your work is worth a SF salary then that's what you should be getting.
Moving from Idaho to SF doesn't magically make you more productive. The company knows it's still getting more value from you than what you're being paid. They just want to keep more of that value for themselves whenever possible.
Have some respect for yourself and know your worth
Being in SF makes the market for your labor more competitive. If I'm living on a ranch in rural Idaho, I would interact with very few people on a given day, and most of them would be the same people I interacted with yesterday. In SF, I'd be interacting with far more people, and far more new people, with a much higher probability of those people working in tech, some subset of whom will be willing to offer me a job.
> Moving from Idaho to SF doesn't magically make you more productive.
If your entire world consists of staying home and interacting remotely with a company, then you are correct: Location doesn't change anything.
However, moving to a high-energy city with a high density of experienced engineers and tech companies can increase your rate of learning, career advancement, and experience much more rapidly than living in a smaller city. You have to actually branch out and interact with local companies and people, but it does happen.
But this is all beside the point. Hiring is a labor market. Developers who live in SF have more high-paid job options to choose from than someone living in Idaho. As a result, you need to bid more to get them into your company. Hence, the higher salary.
The discussion about cost of living misses this point. The real reason developers from places like SF get paid more is because if you don't pay them wages that are competitive with their local companies, they're just going to walk away and take any number of higher paying jobs they have access to.
I am so confused by this. I demand more in the Bay as Bay area landlords and their Nimby pals are exploitative jerks and California taxes and fees add up quick. Why is that cleanly separated from the discussion? I see it as more “I will demand more here than other places” vs. “I know my worth and it’s exactly X”
> This really is one of these things where every employee in a cheap cost of living area will say "Exactly, man!" and people in an expensive area will see it differently because it might cap them lower than what they could get.
Well the co-founders live in the Silicon Valley area, with their physical HQ being in Emeryville:
If you owned a home in the Bay Area prior to 2020 and refinanced down to a sub 3% mortgage 200k is plenty. If you’re trying to buy now on that salary it will be challenging.
Early stage VC-backed startup compensation is very different from later stage companies or bootstrapped companies. It's very common for founders or early employees to receive a lower salary and receive equity instead.
Assuming interchangeable human resources there are basically 2 options, either the company is extracting more value from everyone than the salaries they pay, in that case paying fairly would eat into the company's bottom line. Poor CXOs would not turn extra profits by keeping less fortunate employees on low salaries but just the regular one. Or the highest paid employees are not pulling their weight and their salaries are already subsidized by the rest of the company, which is also not quite fair.
Nevertheless, I agree everyone looks at this problem from their own POV, however it should not be the norm to provide equal compensation for equal work.
I understand! That's what I suspected, but wasn't sure. I tried understanding it for a minute then thought I'll just ask you! :) haha
Also, thank you for the links. I'll read this because I'm interested in knowing more about thinking behind this. My instinct is in this direction regarding salaries, but I want to develop more clarity. :)
If that's your blog, well done! I am totally on board with everything you say there. I've been thinking this way for years, thanks for articulating some more reasons why this is really important! Love your work! :)
Hmmm...I actually had to look up what crab mentality meant but I don't see how it applies here. From my quick lookup, crab mentality apparently refers to a reactionary state of mind where a person wants to sabotage another's success even when it doesn't directly impact their own.
In the case of everyone making the same salary, you could certainly still sabotage someone's success but I don't see how having the same salary makes this type of mentality _more_ likely than at a company with a more typical salary distribution.
My concern with everyone having the same salaries is that, potentially, employees have less motivation to excel in their individual work and are more likely to do the minimum to just stay in good standing with their employer and not get fired. Maybe a company can offset the lack of direct financial motivation with more of a team motivation that the financial success of the company as a whole results in financial reward for the individual or some other way of recognizing individual success inside the company.
I am doubtful this flat salary structure will result in a more successful company overall but I do think it's good to try new things. And yes this has probably been tried a number of times before but maybe not exactly like this. Or maybe some other external variables have changed w.r.t. other attempts in the past and this time it works. The typical salary structures we see in US companies today are the result of a large number of trials and errors and learning.
Ah I think you misunderstand. I think employees in the west being pissed that someone in a third world country makes the same salary as them is crab mentality.
I totally understand why companies want to pay less though. It's massive cost savings and it makes sense for them to hire for less money.
Replace "somewhere in the country side" with "some other place where the cost of living is lower than the highest one in the country" if it makes you happier.
Just like Wikipedia and many other information sources. Don't trust one source blindly, do your research and you'll be fine. It gives a good enough general indication. A comparison like this will always depend on too many factors to make it applicable to everyone in any case.
Your perspective on egalitarian salaries is intriguing, but it's important to remember you can't speak for others regarding their intentions or their whys, or what it is for them. You can't pretend to define that for someone who is not you.
While you argue it's naive and cite different tax systems and costs, companies are successfully adopting this approach even in high-cost areas like the Valley. It might be hard to argue that the world doesn't work like that in reality, given that it’s already happening.
While it may not be widespread, it doesn’t mean it’s without merit or unrealistic. After all, remember that today's 'unrealistic' could be tomorrow's norm! It's tempting to think that people in less expensive areas would be the main proponents of a uniform salary, but the reality is nuanced. Preferences are likely influenced by a variety of factors, not just cost of living.
Your later points about the differences between compensation at different company stages are well taken, however it could be difficult to assert how much this dynamic affects preferences given the practice is not limited to early stage companies and equity vests often fail to yield returns.
In addition, your suggestion that only people in poor places want egalitarian salaries, could be seen as disrespectful of other people, because it seems to ignores the totality of an individual while preferring to try to reduce them to simplistic motivations. In that way, it’s also considered abusive. And can also be seen as disrespectful of others experience, and maybe arrogant: "Only people in poor areas want such naive, unrealistic salaries."
Looking deeper, this aspect of your comment, combined with its narrow focus on a single explanation, might be interpreted as your attempt to express your personal frustrations at your own salary performance, or justify and rationalize why you may not be making more. This might occur because you may find it easier to view something you don't have as unrealistic and naive, rather than the result of choices you could change.
In short, while you mention that egalitarian salaries and enthusiastic support of them is naive and unrealistic, it could be argued that the view espoused in your comment is naive and unrealistic because: it lack awareness of complex dynamics; ignores the totality of an individual while preferring to try to reduce them to simplistic motivations, and dismisses real practices as unrealistic, which might also be seen as out of touch. Overall, your views unfortunately could be interpreted as narrow and an expression of personal frustration, instead of a reflection of underlying real dynamics.
To conclude, while it's likely there's some truth to the correlation you propose, it's also likely true that even if some correlation exists, location is not the only factor at play. People may have various salary preferences, independent of their location, just as the value they provide is also independent. Finally, indeed, your view could be expressed more respectfully of others.
Anywho, it's understandable you may have that perspective, given what your background might be. Yet it's always good to remember that you can adapt your view over time, can grow and can include more data to expand that awareness of reality which you value! :)
Except if everyone gets paid the same, you're not being rewarded for the value you provide. I don't think salary should be tied to location, but it should be tied to experience, ability, and effort.
You raise an important point. There's certainly multiple ways to look at it.
The egalitarian way where a business can divide the share of revenue that is allocated for salary equally, no matter the role. This makes sense from a philosophy of everybody being a team and contributing equally to the results of the company. It can foster an esprit de corps and and a sense of fairness. On the negative side it could encourage companies to have more burdensome measures of fairness and contribution, and lead to resentment towards colleagues who don't pull their weight.
Then there's the other method, where a value-based salary is allocated to each employee taking into account their experience, ability and effort. Crucially, however, this salary is not adjusted for location. That's the case to which I was speaking, specifically, even tho the type used by 0xide is clearly the egalitarian one.
> I don't think salary should be tied to location, but it should be tied to experience, ability, and effort.
That's the labor theory of value (see: Smith, Marx), which in theory sounds meritocratic but it can't really be measured or assessed.
In reality compensation either becomes a function of power, social currency and negotiation skills, which is the general norm in professions, or you have an institutionalized, perhaps even democratic process to determine salaries. Both of these variants generate overhead and are only approximations to what anyone would see as fair.
The variant here where everyone gets the same, generous piece of a pie seems refreshingly simple and honest. I would also assume that it attracts the right kind of people, who are intrinsically motivated (at least after the threshold of a very high level of comfort is reached.)
Saying that people should be paid according to experience, ability, and effort is absolutely not the labor theory of value.
The idea that contribution "can't really be measured" is a cop-out. Contribution can't be measured perfectly but it can be estimated with some accuracy by people who are involved in day-to-day work. "Some accuracy" is really all that's required: as long as contribution is correlated with compensation to some extent, you have a functioning meritocracy.
> The variant here where everyone gets the same, generous piece of a pie seems refreshingly simple and honest.
I bet it works great if you have a small team, are extremely picky about hiring, and quickly fire bad hires. Otherwise it will be awful.
The problem is that in the end, power, negotiation and social currency often dominate over merit (such as effort, experience etc.) when it comes to compensation.
Even if you actually do measure and agree on metrics, then the measurement can easily become the goal for those who are not intrinsically motivated. Work ethic can't be taught by dangling carrots in front of people, because acquiring the carrot becomes the goal instead of moving the cart. This can be detrimental in a highly collaborative workplace.
Having a flat, generous salary might solve this problem, because you filter out carrot hunters and get cart movers.
> I bet it works great if you have a small team, are extremely picky about hiring, and quickly fire bad hires. Otherwise it will be awful.
Finding the right people to work with is difficult regardless. The same worker can be miserable in one place and flourish in another.
> Contribution can't be measured perfectly but it can be estimated with some accuracy by people who are involved in day-to-day work
This is handwaving in the extreme. Anyone involved in software development knows that a single line of code can be critical to success or failure, as can a blob of 100k LOC, so product-quantity metrics are of almost no use. The "estimate" you're talking about generally comes down to general "feelings" about who works hard, which have repeatedly been shown to be poor metrics for actual contributions.
Life is full of handwaving. In almost any workplace, it's very simple to know who's doing the work (and it's usually a shockingly small number of people). It's the idea that we can reduce this to a mathematical formula (the opposite of handwaving) that's odd.
> The "estimate" you're talking about generally comes down to general "feelings" about who works hard, which have repeatedly been shown to be poor metrics for actual contributions.
How has this been "shown"? Anyway, you're begging the question that there's some way to determine "actual contributions" that we can compare to "feelings".
If you actually work with a group of people on a daily basis and can't rank order them in terms of usefulness, I find that astonishing. And remember, rankings don't have to be perfect, they just have to more accurate that random.
That is not the labor theory of value. The whole point of LTV, at least in Marxian economics, is that workers can't be payed according to their socially necessary labor, because a surplus labor is extracted.
Besides, LTV as a theory is meant to be a description of the world as Smith, Marx, etc. see it, not a prescription for how things should be done.
You're right that it is descriptive and not normative.
But the underlying belief of paying someone according to their effort, is very much based on the same premise.
What I'm saying is that nobody is _really_ paid according to their effort, experience etc. because those things cannot be reasonably measured.
The typical process of determining compensation is based on negotiation and power. In some places the process is more democratized and rules based. Both of these are only to some degree related to actual effort, experience and so on. This discrepancy becomes larger the more people are involved as well.
Location independence is not the interesting part of Oxide’s compensation strategy. It’s that everyone makes exactly the same. There are no negotiations, no levels, no promotions, and consequently no promo packets or promo projects. This is extremely enticing to FAANG types who are tired of a certain kind of bullshit, at the cost of a certain level of ambition.
I wonder if they offer equity. Hierarchies always form, they tried this with Gore Associates in Arizona (totally flat company structure) and has major problems.
Yeah this I’ve seen everywhere, but more related to the company size. In a 50 employee company, it’s hard to pull that off. As organizations get larger, you get this as inevitable part of human nature. If the salary table is flat, then highly ambitious people will ask for more skin-in-the-game.
The skin-in-the-game bit can be promotions, equity, stock compensation, etc.
I don't understand why you would compare total compensation at Oxide with base salary at other employers? Total compensation is the relevant figure across the board, and senior (as in, experienced, not some specific levels.fyi tier) engineers often make significantly more than $201,000.
Oxide equity, like for all private companies, isn't worth anything until and if they go public; it has no cash value. For total compensation purposes, it's $0.
> Oxide equity, like for all private companies, isn't worth anything until and if they go public
Open AI just had a tender offer for employees this month. It's not public. Clearly the equity is worth something even though the company is not public.
Some companies facilitate secondary transactions for their employees.
There are ways many employee friendly companies provide early liquidity without IPO.
That is only a problem if you insist on hiring people from such expensive areas. Given Oxide hires remotely, I doubt this is an actual problem for them.
Hence the word "concentrated". Your snark seems misdirected.
I live in flyover country, and there are no shortage of talented people here, but I wouldn't dispute that the per-capita software developer talent in SF is going to be higher.
I think it's mostly societal perception. For whatever reasons, a lot of people seem to think of professionals in SF and NYC as smarter or more capable than professionals from Boise or Salt Lake City. Just like a lot of people assume those who got into Harvard or Stanford as 18yr olds are smarter or more capable than those with degrees from the large public universities.
user: sunshowers has been replying in this thread and mentioned going from FAANG-> Oxide and taking what seemed like about a 60% paycut.
Yes it is somewhat of a stumbling block, but I'm betting they are getting extremely high quality employees who are doing it for the passion and not just for the money.
We've got designers, me included, and a few others on the team who aren't engineers. I also hail from what people like to call a "third-world country". So far it's working great, and we're hiring more folks from all over the world, not just the USA.
If ya'll are looking for a remote security engineer from Europe hit me up. :)
For those numbers I'll walk the servers into the customers myself.