[rdl]

Rent subsidy makes no sense to me. It's a fully taxable fringe benefit (at least in the US, if it's not for the benefit of the employer like at a mine), and basically the same as salary, but people don't include it in the salary calculation. It's just stupid for the employer to offer it instead of the same amount of extra income.

[dorkitude]

I'd like to clarify a bit here. Inside Keen (I'm the CEO), our name for this (what Michelle's spreadsheet terms "rent subsidy") is the "proximate living bonus". To qualify, you have to be within a short commute of the office.

Our reasoning:

All else being equal, people often choose a longer daily commute, usually to save money. But, as research* has shown time and time again, once basic needs are met by compensation, the factor which correlates most strongly and consistently with unhappiness is commute time.

What we're attempting to do with the proximate living bonus, then, is to incentivize happiness: We're intentionally designing our bonus structure to incentivize the better decision, which employees might otherwise neglect for a number of (irrational) reasons.

*Here's a good intro into the research on this topic: http://www.huffingtonpost.com/kirsten-dirksen/happiness-rese...

[bencpeters]

In this case, numerous things in the article seem to imply that Keen was/is working out of the house, and that the author was living with the CEO (and possibly other founders?).

Given that, it seems like the most straight-forward way this "rent subsidy" is working is that Keen is paying for the house where they live/work out of company money, and that's probably where the different category comes from, at least conceptually. (apologies for assuming if that's not correct)

[dkador]

Disclosure: I'm one of the founders of Keen.

With respect to the housing subsidy, you've got part of it right. We do work out of a big house that some of us live in. But the rent subsidy was put in place for one main reason: one of the main drivers of employee happiness is commute time. They're inversely related, and the rent subsidy is our way of incentivizing employees to live close to the office.

[harryh]

That's hella creepy.

What if I think I'll be happier living closer to friends or family and that happens to be far from your office? All of a sudden you're going to pay me less? Since when are you a better judge of what will make me happy than I am? Since when is that even your job?

[dkador]

Every company incentivizes its employees to behave in certain ways, and one of the main ways to incentivize is through monetary reward. We're big believers in keeping our employees happy. And research* shows there's a big correlation between commute time and employee happiness. So we've made the decision to try to encourage, through a bonus, all of us to stay close to the office.

I see it as similar to the way FullContact is trying out a program to encourage its employees to take real vacation time - paid, paid vacation. They believe (and we do too, actually), that people SHOULD take time off work to go cool places. But they often don't. But if you give them money to do it, maybe they will.

Of course, you don't have to agree. And maybe it means we wouldn't be a good culture fit for you. Sounds like you're okay with that?

* http://www.huffingtonpost.com/kirsten-dirksen/happiness-rese... http://www.fullcontact.com/2012/07/10/paid-paid-vacation/

[rdl]

It's different in SF than NYC: we have a totally dysfunctional transit system AND shitty traffic (on purpose, due to "transit first"; they just forgot to actually use the pressure against cars to build a transit system people who can afford cars otherwise would want to use).

Facebook did the $500/mo rent subsidy in downtown PA thing for a while (2008?), but this just had the effect of raising all rents in downtown SF (within a 1 mile radius) $500. Which I hated, since I didn't work for FB.

I think it's reasonable to encourage people to have a short commute. It helps the company -- people are more likely to put in longer hours, or irregular hours, if they don't have an hour long commute through traffic to look forward to every time (my current commute takes between 40 minutes and 2h, depending on exactly when I leave. A 0900 VC meeting on sand hill basically means I need to wake up at 0500, whereas an 1100 meeting means I could theoretically sleep until 0930.)

The difference was FB was paying market+ salary, so the housing subsidy was an extra perk. In the case of offering $70k salary + $12k, I'd really just do $82k; $70k is enough below market that you don't get considered by some people.

For really early stage companies, I do like the rent house and live/work there, for 6mo. That's one of the things I regret about current startup, not doing that. (we actually live in oakland, sf, and south san jose, with an office in mountain view; it means driving 40k miles/yr each, which is stupid.)

[dennisgorelik]

Why aren't you renting a house for your office now?

[rdl]

Cofounder T owns a house and lives with his wife in SF. Cofounder E lives with GF in South San Jose. All of us are in 30s, and while I think "rent house for office and move there for 3 months" is viable, it's not viable for longer (the other two, especially, have a lot of stuff).

We still might rent a house as an office eventually, and cofounder T is moving to LAH, and I'm moving to Menlo Park, later this year. But at that point I'd rather get a light industrial building ($1-1.50/ft2) in Mountain View or Menlo or EPA or similar, build it out to spec, and use that as the office. A wall, roller gate, parking, onsite generator(s), RF tower, etc. would be awesome, along with 3-phase power, and being a bit more legitimate than using a house, long-term.

We had some confusion about SF vs. Peninsula for startups, but the "the lower on the stack you are, the closer to San Jose you should be" seems true, even in 2012 -- all the great people we've talked to are in PA or more south (all the way to Cupertino).

[rm999]

Agreed. My theory is that people irrationally value free stuff. I spend about 3,000 dollars a year on work-time food (250 work days * 12 dollars for lunch/an afternoon snack). The way people talk about free food at some tech companies you'd think it's worth way more than a few percent of a typical developer's post-tax income.

[rdl]

Food onsite is a special case. It's tax-advantaged for the employer (if offering meals onsite is "for the convenience of the employer, and for a business purpose"), and food has a high search/storage/etc. cost. Similarly, I'd value a 30" monitor at about $1k/yr salary.

[rm999]

> Food onsite is a special case. It's tax-advantaged for the employer (if offering meals onsite is "for the convenience of the employer, and for a business purpose"),

Interesting, I read somewhere that Google pays taxes on their free food. How do they argue the free food is for their convenience when their employees can just go out and purchase food and eat at their desk? Especially non-essential foods like snacks, smoothies, etc? Either way, I still think people overvalue free food.

>Similarly, I'd value a 30" monitor at about $1k/yr salary.

Why? Buy a 30 inch monitor for 1200 dollars with your own money, write it off on your taxes, and you've spent less than 1000 dollars of income on a one-time payment. And now you own a 30 inch monitor!

[dorkitude]

One thing worth noting: You have to hit the so-called minimum deduction (9K last I checked) to benefit from this sort of write off, whereas a company can do it regardless of absolute annual business expenditure.

[tedunangst]

The lunches I used to get were usually worth more than $12 (though the company paid quite a bit more than that). But there's more to it than money. There's not having to decide, which is something you can't buy as an individual. There are other cultural benefits, which I'd argue both the company and individual benefit from.