[illegalmemory]

They have since updated it slightly

> Since originally writing this blog entry in 2021, we have increased our salary a few times, and it now stands at $207,264. We have also added some sales positions that have variable compensation, consisting of a lower base salary and a commission component.

[ekianjo]

so basically everything converges to having specific reasons to have different salary schemes.

[ArnoVW]

One exception, for sales. I don't see how they could have done it differently.

We have a "one rate per level" rule. The rates are published, and so are the definitions of the levels, and everyone's level (i.e. indirectly you can know everyone's salary)

Worked great, untill we started to look for sales. Doesn't work. They only know incentive-based schemes.

So now they have an incentive-based scheme just for the sales, which is (essentially) budgetted from their stock-option package (that everyone gets). I.e. they benefit from growth a little bit earlier and directer.

If we hadn't done that, we wouldn't have a sales department.

[abxyz]

I argued this in the previous discussion about oxide’s compensation structure: I disagree that sales must be commission based. Yes, finding sales staff that are willing to work for a salary and equity shrinks the pool but the same is true of engineers willing to work for a flat rate across the company.

Sales might seem mystical and magical to engineers but it isn’t. A small company with a small sales team can absolutely work without commission. Yes, it is harder, but it is not impossible. The carve out for sales undermines the ideas behind a flat salary structure. Just because we can measure a sales person’s contributions in dollar amounts does not mean we must measure it in dollar amounts. Sales is as much about the partnerships between sales people and product/engineering, why aren’t all the people who work on a deal getting commission?

I’d go as far as to argue that oxide is in the perfect position as a big-ticket long-cycle business to abandon traditional sales commission structures. They take on all the negatives (sales people overselling to get commission) with no benefits. There are other ideas. Company wide bonus based on sales made during the year?

[yencabulator]

> Just because we can measure a sales person’s contributions in dollar amounts does not mean we must measure it in dollar amounts.

I don't even know if we can.

Yes, you can measure the number of deals signed they called dibs on. But:

1. You don't know if the salesperson earned it, or the whole product. There's a baseline demand driven by the whole company. This is the whole old argument that nobody can prove that ads work; you just can't pinpoint the purchase decision to exposure to an ad. So yeah I guess you can make your salespeople compete against each other and reward the one who stochastically floats to the top while punishing others. Sounds like such a fun workplace, I thought everyone agreed Microsoft's rank system sucked.

2. Several times I have witnessed salespeople selling non-existent, non-planned, functionality and forcing the rest of the company into crunch mode to not have a major client semi-publicly end the contract early. You're often just rewarding the biggest liar while everyone else has to cover up for their shit. Once again, sounds like such a fun workplace.

It comes down to, competitive sales is a cancer, and you're choosing to have it.

[tock]

> Just because we can measure a sales person’s contributions in dollar amounts does not mean we must measure it in dollar amounts.

This is the fairest form of compensation. It's unfortunate that engineering contribution cannot be measured the same way. If we could engineers would all be getting a nice pay hike.

[tshaddox]

It's still just a market. You've got to make offers that people will accept. It's mostly silly to try to come up with some objective theory of value, except in the context of what potential employees will consider to be fair, which is right back at "you've got to make offers that people will accept."

Basing compensation on supposedly objective things like "the dollar amount a sales person brought in" might be important to a given pool of potential employees, but resist the temptation to think of it as objectively determining the value of the employee's work. Remember that all you're doing is making offers that people will accept.

[tock]

I agree. But if employees know their objective value I believe it will change what they will consider an acceptable offer.

[yencabulator]

Only if the salesperson also implements & supports the things they sell. Selling false promises of something the rest of the organization has to fulfill is not fair -- but that's the way to the biggest commission!

[ghaff]

And many would be getting let go because they weren't meeting some number.

[tock]

Companies already do layoffs without commissions. They are always optimising to reduce salaries and increase profit margins. And its not "some number". Its the amount of $ brought in. Thats what companies care about.

[ekianjo]

> One exception, for sales.

either you have a rule or you dont. the moment you start to do exceptions this will call for more down the road.

there is tangible reason for sales to be commision based. you could say its just like another regular position. An engineer can also be a sales multiplier if they improve a product yet they dont get a commission. Same thing. Having boots of the field is no justification.

[liamkinne]

Yes, but you aren't wasting time early on negotiating compensation.

[IncreasePosts]

Why is sales special? Why not just have some performance bar for that, just like all the other positions?

[castlecrasher2]

Because good sales staff make a ton of money through a ton of sales. Any other incentive structure is unlikely to attract high performers.

[bobsomers]

How is this not exactly the same in engineering though? Performance reviews at top tech companies are pretty much designed to identify the super high performers and shove massive bonuses and equity grants their way.

And those equity grants are effectively as good as cash, since they are publicly tradable stock.

[darren0]

It's pretty fundamental to the personality of people in sales to be driven by getting the sale and getting compensated based on the deal size. If you remove that carrot, it just doesn't work. Some sales people will make millions, some will make nothing.

[diggan]

> If you remove that carrot, it just doesn't work

How come it works for basically every other job on this planet? Developers aren't paid per feature implemented/bug fixed, and we still do those things, how come sales people are unable to do things for a fixed monthly salary?

[jasode]

>, how come sales people are unable to do things for a fixed monthly salary?

You have to separate out 2 different ideas of the "theoretical idealized salesperson that works for fixed salary" -vs- "real-world salesperson that works for variable commissions".

The businesses that have attempted to pay fixed salaries for salespeople end up attracting incompetent salespeople who can't sell. They become a negative cost on the company's payroll because they can't bring in any revenue. In contrast, the high-performance salespeople (the "rainmakers") are attracted to the variable high-commission, because they know they have the hard-to-find skills to actually sell and bring in the money. If a salesperson has the skills to get a customer to sign a contract and pay money, they have the leverage to get a percentage of that.

Developers, db sysadmins, tech support staff, etc are not in situations to directly influence and shake the hand of a new potential customer and convince them to write a check.

[ChrisMarshallNY]

Sales works that way in every industry.

A top salesman can make more than the CEO from commission. Many top salespeople have a zero base salary.

The pressure is pretty crazy, though. I’m not cut out for that kind of thing.

[diggan]

I do know that (I myself also worked in sales for a short stint, unrelated to software though), what I don't understand how these magical "sales people" apparently can't work for a fixed salary when literally everyone else can. Apparently the rest of us can do high quality work without being paid for each feature/bug fixed, yet these individuals cannot?

> Many top salespeople have a zero base salary.

Hmm, probably true in some places, but here (Spain) that wouldn't even be legal. When I worked in sales we had minimum wage + commission, but I'm sure the salary would be 0 if they were allowed to set it up like that.

[ChrisMarshallNY]

I have a few [wealthy] salespeople friends. Most have “commission-only” (0 base) jobs.

Many jobs will start you with a base for a few months, while you build commissions, but they stop it, after a while.

They can also get fired at the drop of a hat. Not much job security.

Sales are easy to convert to incentives. Just take a cut of the sale. It’s not so easy to calculate value from other jobs.

[Aurornis]

> Hmm, probably true in some places, but here (Spain) that wouldn't even be legal. When I worked in sales we had minimum wage + commission, but I'm sure the salary would be 0 if they were allowed to set it up like that.

In the United States having "zero base bay" is hypothetical. If a full-time employee had no commission payouts they'd be compensated minimum wage as necessary to comply with laws.

Sales jobs often come with a warm-up period with either a higher base salary or they get paid part of their commission target for a number of months regardless of how many sales they make.

[marcusb]

> what I don't understand how these magical "sales people" apparently can't work for a fixed salary when literally everyone else can

It isn't that "sales people"[0] can't work for a fixed salary. The good ones just won't because they can find another employer that will pay commission, and they know they will make more with commission than without.

Employers will pay commission because that's how you attract the best sales people, and the best sales people are worth orders of magnitude more to their business than average sales people. Despite how much they earn, in general and compared to their average peers, the best sales people don't cost orders of magnitude more (5x is a more typical spread in tech sales.)

The advantage of 100% commission -- where it is legal -- is pretty obvious from the employer's view point. The company only pays for production. These sales people are commonly (but not always) independent contractors. The benefit for the sales person is a little less obvious, but, generally, they have more autonomy, a simpler comp plan without any caps, and earn more per dollar sold than they would on a base + commission plan.

0 - whether magic or not

[geodel]

> the rest of us can do high quality work without being paid for each feature/bug fixed, yet these individuals cannot

Yes they can not. It is not high quality work but high quality results for sales guy. Developer work is complete once service deployed. It wouldn't be developer failure if user volume doesn't reach x thousands per day on their web service. It would definitely be salesman failure sales does not reach x dollars in certain duration.

Developer equivalent of sales would be to say "I have distributed x sales brochures and call x number of clients this month. My job is done."

[bpt3]

It's not that they're unable to; it's that the field attracts people who are financially motivated and other companies have compensation structures that reward personal performance.

Top salespeople generally won't work for a fixed salary because they want to make as much as they can, and the way they do that is by having as much of their compensation tied to personal performance as possible.

I personally think more engineers/developers should think the same way, but it's also much harder to directly tie job performance to compensation when contributing to a product.

[diggan]

> because they want to make as much as they can

But that's the same no matter if you work in sales, customer support or many other roles, a lot of people just care about the money with little regards to anything else, yet the sales department are the only ones who must have commission?

[bpt3]

> But that's the same no matter if you work in sales, customer support or many other roles, a lot of people just care about the money with little regards to anything else,

It's actually not the same for many roles. See the comments from people in this thread alone who scoff at the notion of maximizing compensation. I don't get it personally, but it's not an uncommon thought.

> yet the sales department are the only ones who must have commission?

I think there's a very high likelihood that a salesperson is primarily driven by compensation, and good salespeople will already be working in a commission-driven compensation model elsewhere.

Why would a top salesperson at Dell, HPE, Oracle, or wherever else a hardware salesperson comes from move to Oxide to take less money and completely decouple their compensation from their performance?

[Aurornis]

Sales is unique because the monetary benefit to the company is mostly objective: If someone closes a $10 million sales contract, that becomes $10 million in revenue.

If a team of developers work together to fix a bug, how would you calculate the revenue value of the bug and how would you distribute that to the team that solved it? Technically the value of a bug is negative because it costs the company, so do you subtract that from the pay of the engineers he worked on it? If 5 people implement a feature that uses a library developed by 5 other people, which was built on the platform team's infrastructure, how do you divide up the commission? It doesn't work.

[tshaddox]

A $10 million sales contract is objectively $10 million in revenue, sure, but it's silly to attribute that entirely to the sales person just like it would be silly to attribute it entirely to the engineers that built the product or the marketing team that bought billboards.

[speed_spread]

Because sales are quantifiable and directly mapped to performance.

To get that kind of proportional payback in engineering you'd need very clear financial objectives for a project. I could see that happening in optimization scenarios where consultants are brought in and get paid for whatever they can trim from operational costs.

[cestith]

In fact I’ve seen both tech and manufacturing efficiency consultants whose quotes include $x up front plus monitoring and reporting that shows the efficiency gains. Then rather than taking a closing fixed payment, they get a percentage of the savings to the client over the first six or twelve months.

[cestith]

Freelancers and consultants do absolutely have the option to get paid by the feature. It’s exceedingly rare for internal employees or contract employees though. That means there’s no market competition based on it yet. Some places do have bonuses or even profit sharing. Some senior ICs and many managers across the industry can get equity through either grants or options.

Sales professionals have a lot of different places they can sell things. The market-rate compensation for sales includes commissions. So to get the best sales people, you want something easy and exciting to sell with a good commission structure tied to the sales.

[jjav]

> How come it works for basically every other job on this planet?

In sales it is uniquely easy to identify your contribution since it's literally measured in dollars coming in.

There's no way to quantify that for feature implemented/bug fixed, it would devolve into endless politics.

> how come sales people are unable to do things for a fixed monthly salary?

Sure they are able, but no good sales person is interested. Presumably you'd want to hire the good ones. You can certainly staff a mediocre sales team on a fixed salary, they just won't do much selling.

[stefan_]

> In sales it is uniquely easy to identify your contribution since it's literally measured in dollars coming in.

This logic about stops working as soon as you sell something that is not some immediately exchanged mass produced commoditized gadget. Sales people on commission have tons of incentive to saddle the company with demands and imaginary product features they can't actually deliver on and be long gone before the bill comes due.

[sofixa]

Because sales people are used to work on incentives, including going over and getting rewarded for it.

If they have a fixed salary with a high objective to "make it" (e.g. if you sell less than $X, you get fired), lots of sales folks will skip on it because they can't go over, and most probably prefer to have a quarter or two or year at e.g. 70% salary while working on longer term deals, rather than losing their job for not being good enough within that arbitrary time period. And going over their quota can be wildly lucrative depending on the terms.

[Quarrel]

FWIW, it seems like nowhere is this truer than SF/SV.

Outside the bubble, it isn't always the case, or the structure can be a bit different, but salespeople in the Valley (as it were) are a different breed.

[sofixa]

No, it's just how sales works, it's almost always on commission.

[vlovich123]

Tesla salespeople do not work on commission. Also you can align incentives through stock grants which appreciate by you selling more.

[sofixa]

> Tesla salespeople do not work on commission

I work with tech salespeople with a variety of former employers as tech sales people, and I've never heard of anyone having worked without a commission. I'm vaguely in tech sales myself (solutions architect) and I'm on commission too, and so is everyone who joins our division from similar employment (solutions engineers/architect, or even customer success folks).

[cestith]

Ask a local real estate agent or real estate broker how much base pay they make. Or, heck, a car salesperson or an ad salesperson at your local TV or radio station. It’s all commission-based. In some of these fields in the US the norm is 100% commission-based with no base pay. In others someone might make one to three times minimum wage, but will end up being some of the highest-paid people in the company based on commissions of anywhere from 1% to 50%, depending on the industry.

[Aurornis]

Sales has been commission-based everywhere I’ve worked, including companies based in other countries.

Commission based sales was definitely not a Silicon Valley invention.

[OkayPhysicist]

The key difference between everyone else in a company and Sales is that Sales is where the money comes in, directly. It's approximately trivial to point at a sale, see how much money it made, and then who made the sale. So commission is a natural compensation structure for salespeople. For everyone else at a company, their individual contribution to the company making money is a lot more diffuse, and any metric you might be tempted to try and put a commission on is at risk of being gamed. Whereas "how much $$$/worth of stuff did we sell" is pretty much THE metric by which we judge a business as a whole.

[rubicon33]

If you’re asking this question then you have really no idea how the sales engine works at a company. It’s inherently incentive driven.

[hiddencost]

Sales culture is heavily incentive and performance based.

It sucks but they like to think that if they work harder they'll get paid more.

[ghaff]

It's not universal but B2B sales in particular have evolved to incentive/performance compensation to a large degree. Wasn't always the case but (most?) of those companies aren't in business any longer. Also extends to the sales hiring process. Not that companies don't look at track records but it's also the case that sales managers don't have any issue firing people who don't meet their numbers.