"Charlie didn't make $20M for cooking, he made $20M for taking the risk that the company he was joining would fail and that he could end up five years older, unemployed, and with nothing to show for his trouble."
Precisely--and the article should have ended there. It's all about the risk. Arguing for the raw amount of contribution a chef can have is a distraction from the core point and detracts from it.
I disagree that the rest is a distraction. It makes the article have a different point, but it is not an invalid one - there is a certain amount of elitism or classism (depending on your personal analytical bent) in statements about "Google chef syndrome". The fact that people find it acceptable to minimize a person's contribution based on job title or perceived place in workplace and social hierarchy, rather than actual contribution, is silly. The fact about rewarding the risk is a good supporting argument to the elitism point, and could be an essay of it's own sure, but again - a discussion about elitist attitudes isn't bad.
One thing I find weird about all of this (tangential tho) - When this article first made the rounds, many people defending the derisive attitude of towards the chef ("he's just a cook, he doesn't deserve it" type arguments) also make the opposite argument in opposition to unions ("why base pay and benefits on seniority rules rather than on actual skill and hard work"). It's a cognitive dissonance I feel would be interesting to explore.
Or how about "So this one guy effectively won a lottery, and is unusual enough that it's a story in itself. Let's move on to the next thing in life". It's not like there's a torrent of support roles walking away with golden handshakes.
That doesn't happen because most start-ups don't think most support roles are worth it until one of two things happens: Management gets tired of losing people to 24-hour on-call rotations or the company gets big enough that "the devs who wrote this stuff should be able to get some sleep" becomes a valid consideration. Almost every aux position is considered "needless" until, well, it isn't. Granted, I say this from being in the Operations and Support worlds for years since I get to see the other side of not having a functioning Ops model before making it big.
I think by support it's more the office manager, cooks, call-center style customer support, etc. Ops is pretty core to any software company that has servers.
I don't even think risk is necessary to consider. I am going to say anyone who help growing a company is valuable. Even a receptionist is critical. If you have a clumsy or rude receptionist, I will have a bad impression of your new startup.
> taking the risk that the company he was joining would fail and that he could end up five years older, unemployed, and with nothing to show for his trouble.
Isn't that what happens at most restaurants? My brother works as a chef, and that seems like a pretty common pattern. 20 million dollar payouts are not, from what I gather.
I think the guy got lucky and they were generous/kind with him. Good for them as human beings, but I am not sure you can justify things in strictly "homo-economicus" terms. Hard to say without knowing if or how much of a pay cut he took to join them, though.
> So if chefs take risks all the time it's not worth as much as if a developer would take the same risk?
If you compare salaries across jobs, no, it generally isn't, in economic terms, from what I know. That's not to knock chefs or say they aren't "worth" as much, because that's something of a loaded term with more than economic significance.
Of course, neither you nor I actually know the details of this guy, the market for his skills in that area at that time, or what his deal was with Google, so there's a lot of guessing.
I don't agree it's a distraction - it's a valid point. Say he was the Mail Boy ... would they quote the Google Mail Boy syndrome then? Is this another of those: if he/she is not a dev, he/she is not truly valuable to the company. In his own way he probably added value (keeping 50 people an extra 30 minutes at their desks for two nights is like employing another staff member).
That is how taking a new job works. You assess the risks of each option available to you (including the option of staying put if you are already employed, or including waiting for something better if not) against the potential benefits (salary and other conditions, future movement). It is a gamble and you use all the information and experience available to you in order to make sure the risk/reward balance is where you are comfortable. He could easily have made nothing if Google had gone down the pan, then he'd have had a low paid job for a few years and nothing to show for it aside from the experience.
How you assess the benefits/risks is a gamble every time, and some people play it safer (favouring stability) than others. How is the cook taking shares as part of his employment package (perhaps in lieu of a chunk of salary he might get elsewhere) any different to a national manager taking shares as part of his package?
Of course it could just have been the first half decent job that came along while he was out of work and he took it without much consideration, in that case he was just lucky rather than a lucky gambler. But there is nothing wrong with that either.
Sure, but the statement this article was written as a reply to was hinting that the chef did "unimportant" work and should not have his share of luck as everyone else. So explaining the impact makes sense.
Do you think the mean outcome for this /(gambling|investing)/ behavior over time for all people is a net positive or a net negative one? If we looked at all of the startup ecosystem employees in all of the startups over the years, would you say they have earned more or less, on average, than if they had stuck to enterprise industry?
Granted, that the outcomes have a much higher standard deviation in startups is probably a no-brainer. But if the mean is less, then it's by-definition gambling.
I guess the question centers on, do the winners outweigh the losers. In Las Vegas, they do not. That's why they advertise the winners so much, to make it look like winning happens all the time. They don't advertise the churn. Given how much SV "advertises" its big exits, to me it feels more like Las Vegas than a career.
You might be closer to my point that you imagine, I just wanted to say that his role was not only that of a risk taker, but also that of a valuable employee.
I'm actually fine with the guy making it big. If for no other reason, if that's the deal he negotiated, he deserved it.
But to play devil's advocate (since I don't see many people arguing to the contrary), companies should factor in how easy it is to replace someone when they offer these sorts of deals. I think it's a valid argument to say that it is easier to replace a chef than to replace someone who can fix that bug before the demo next week. Regardless of who works harder, the gear-up time for an engineer is typically longer and the built-up institutional and domain knowledge are very valuable.
In other words, what is the best alternative to the negotiated agreement for the startup when it comes time to make an offer or negotiate a raise?
You've never replaced the head chef at a restaurant, have you? ;)
Edit:
A rash decision when replacing this person leads to almost immediate drop in revenue. I'd argue that it's more difficult (and stressful) to replace a head chef than it is a SWE.
While replacing the head chef of the company cafeteria doesn't directly reflect revenue like it does at a tip-top restaurant (for which Charlie is obviously qualified), it can have numerous side effects, many difficult to ascertain ahead of time (will the new one remember that a majority of people on staff have an aversion to yellow squash, for a brash and hyperbolic example?)
Again, I have no problem with paying an employee $20M if he was worth it.
The actual occupation is a distraction, though. Replace chef with the guy that handing out fliers on the street. He's 100% replaceable. Does he deserve a million-dollar payout? Maybe. But I think it's fair to take that into consideration when evaluating compensation.
A company could be wrong that the chef is replaceable, but that's an empirical question. As a matter of evaluation, considering the value of the best alternative is 100% fair.
He wasn’t paid $20M. He was paid a salary plus options which had a good chance of being worth nothing at all, a good chance of being worth a nice european vacation, and a small chance of hitting the jackpot.
You don’t get to renegotiate the terms afterwards once you know where on the payout scale your company happened to fall (maybe you can legally, but then you’re an asshole).
“The guy who fixes the bug” isn’t worth $20M either. There are plenty of extremely competent engineers who you could hire for $300K that could also “fix the bug”. But you’re not paying him $20M; you’re paying him a smaller salary, plus a small percentage chance of the jackpot.
Again, the actual valuation of the compensation (whatever the form and whenever it is realized) is an empirical question.
I actually agree with all of your points here, including the one about retroactively altering compensation. I'm just saying it's fair to take value-over-replacement into consideration when negotiating compensation. And that I can see giving different compensation based on that measure of market rates for labor.
Maybe the compensation was fair. Maybe it wasn't. Maybe it's important to clarify what counts as being paid. All of those things are really beside my point.
Does it make sense to reward risk, for its own sake, so much? It's gotten to the point where picking a startup is like picking lottery numbers.
I pick the company that ends up taking off like a rocket and selling for gobs of money, and you pick the company that ends up running out of cash in 2 years. Our contributions to the businesses being equal, why do I deserve $5M in vested stock and you deserve to be unemployed?
Is this optimal? Is this the best way we've come up with to allocate wealth from entrepreneurship?
I don't know about optimal, but just like any other market, the job market is symmetrical. Why shouldn't employees who can pick successful companies out of a crowd make more money? Investors do.
They're not being rewarded for picking a company out of a crowd, they're being rewarded for taking less cash.
When a startup gives equity, they are doing it so they don't have to pay as much cash, since the cash is more valuable at the time. (Otherwise they would just issue more equity to pay the employees in cash)
As such, the chef is being given a lottery ticket in return for accepting a pay cut.
We're talking about huge, outsized rewards, orders of magnitude greater than salaries. Taking less cash may or may not be part of their employment agreement, but as long as they have equity, the amount of salary they take is irrelevant. The people with equity who picked the right company are rewarded, and the ones who did not pick the right company are not rewarded.
But it's also worth considering that there is softer forms of equity, especially in knowledge work, that likely accrues faster working at a successful company. In other words, when "investing in your career", picking good investments is important, regardless of how many shares you may walk away with.
In that way, even given two job offers with no equity, there are probably benefits to taking the job at the company most likely to succeed.
Imagine 2 scenarios for a corporate chef in San Francisco, who expects his next job to last 10 years:
1) He goes work at Safeway, and earns $60K.
2) He goes to work at Google, and earns $50K with a very high risk lottery ticket that has an NPV of $200K, or $20K/year. (Say 1 in 100 shot of getting $20 million, or use Black-Sholes on an option)
Who are we to begrudge him if #2 pays out? The company does it because it's better for them than getting more VC money to pay the extra $10K.
For the chef, it's a better deal than Vegas, Lotto, or the options market.
I don't think I'm begrudging anyone, and I'm not going to dispute the math behind expected value. Without passing judgment, objectively, he deserves his payout as much as a lotto winner deserves theirs, as much as any net-positive-EV speculator deserves theirs, since the act of picking a startup is similar to that of picking lotto numbers.
Once we agree on that, we can debate whether lotteries are a great way for our economic system to allocate wealth.
I think we're on the same page. It may or may not be, but shouldn't people be free to choose to enter a lottery? (Assuming there isn't fraud on the chances)
You still gain all of the experience of having helped start a company. you gained SOME monetary compensation. In the end, one person made the better decision (whether or not they knew it), and is being rewarded as such.
You've obviously never worked in a support position of a failed startup. Those are the people that don't get paid - the developers having been able to see the writing on the wall weeks before the paychecks stop coming.
The support staff (tech support, office managers) keep coming to works as the CEO promises paychecks "by the end of this week". Its not like its trivial to find another similar job on a weeks notice, and living paycheck to paycheck has a paralyzing effect. An established company has far less risk for support staff.
That's a little unfair. I work at an 30-year-old engineering company with the most market share in our field. If my company goes down, that's probably because someone did something illegal, or entire economies of multiple countries have just bellied-up. I take very minimum risks in that regard. A new start-up, though? Much higher risk of failure.
Running a restaurant is like running a startup only you don't get to a point where it just runs itself. And with low margins it's most often not even a good business either. In fact the better quality the lower margin.
Talk about taking a risk.
I have no problem with the chef getting 20mio, what I have a problem with is the claim of risk as if he is risking anything anyone else isn't.
Your risk isn't that the company goes belly up, it's that internal politics churns in such a way that you find yourself the next victim of a witch hunt, that your unit's contribution is identified as having become obsolete or lacking to the point where it's time to cut, etc.
He took no risk any other person going to work everyday didn't.
He obviously took enough risk that Google was willing to give him stock options. Google didn't make that offer to be nice. It was a business decision.
I'm siding with Google (and the chef) here. Because it didn't have the money at the time to pay him enough to fully offset the negatives (which may have been opportunity cost or long hours, not necessarily company-wide risk) it offered him stock. It wasn't being nice. That paid off handsomely for him.
You'd be right to argue that most working people are undercompensated for the suffering and the risk that they take on in their jobs. That, however, goes far beyond the Google chef. It's a systemic problem. As a society, we've failed to find anything within even a factor of 5 of a fair balance between capital and labor.
You mean he took a paycut so they compensated by giving him stocks.
Again I have nothing against him making 20. Just don't claim that he somehow made a risk. He didn't and if that is the reason why someone should get stock then most people going to work every day should get stock.
How so? He definitely took a risk. He is taking an elevated risk because the company might not be there in 6 months. Especially with a young startup. It's one thing if the guy is becoming a chef at lets say Mastercard or Bank of America or some major company that there's a reasonable expectation that the company isn't going to go out of business tomorrow.
With that said I actually think stock options are a good incentive for all employees. It provides some reasonable guarantees on both parties. On the one hand the employee is given incentive to work hard because the more productive they are the better the company does and the better the stock does. Also it gives them something nice in case they get laid off and the stock goes up. Also the company sees those same benefits. The employee will probably work harder and more productive because they have more incentive to.
He put capital (his time, not fully compensated) at risk.
then most people going to work every day should get stock.
Personally, I'd rather have it in salary. 0.05% of a 40-person company isn't going to motivate me worth shit. It has the opposite effect (uncanny valley). I'd much rather work for a hedge fund and be reasonably paid for my skills.
Unless it's substantial, equity is a bad sign for me. Why? Because 0.05% of a 40-person company ("checkbox equity") won't motivate me in the least, but it will motivate other people, which means I'm going to be competing (on hours, indignity, and suffering) against people who haven't done the math on their pathetic shares and are delusional and clueless. That's like wrestling a guy on PCP; it's better not to.
Exactly where's the incentive for early employees to take a risk on your startup if once the company makes it their just going to "renegotiate" their deal.
Early employees deserve their extra stock regardless of what they do.
Having worked in a professional kitchen during my time at the university, I can second a lot of what the author wrote on the pressure while working (and I only had to feed about 70 to 100 guests during a normal evening).
So anybody taking him as an example for undeserved money, is just some big idiot (stronger words come to my mind, but have to stay there).
Look at very strenuous working-environments like drilling rigs or anything like this and ask anyone there, what role the "ship's cook" plays.
That's not the right argument to make in favour of him becoming rich - unless you think all chefs deserve a $20m payout?
The argument is that he took a risk (presumably accepting a below market rate salary) and worked hard in the hope it would pay off, which it did. Sure, the fact that his job isn't piss easy to do, and is useful to the company, is what makes this argument work, but it isn't the argument in itself.
I don't understand why anyone would feel that the "Google Chef" scenario was a problem. By joining a young company, that probably can't pay you a market rate salary and that has a significant chance of failing, you are taking risks. You are compensated for those risks with equity.
It's an out of the money call option - you expect that 90% (95%? 99%?) of the time it won't pay out, but when it does pay out, the payoff could be anywhere from "pretty good" to "life changing".
Sure, the early Google employees are way out in the tails of the distribution (just like the early Facebook employees, early Twitter employees, early LinkedIn employees etc). But someone has to be in the tails of the distribution, and the fact that you see someone there certainly doesn't mean that they don't deserve their payout.
>I don't understand why anyone would feel that the "Google Chef" scenario was a problem
This feels like classism to me. I think they'd have the same issue with a support worker or even QA making the same payday, no matter what their contribution was. Being compensated for taking risks is "for people like them".
He's just a chef and a Lesser, after all. Not one of us engineering ubermenschen who make the world go 'round. Engineers work hard to deserve all of our hard-earned benefits like snacks and catered meals--after all, imagine how horrific the world would be without Zynga!
"Zynga's argument is that they don't want people who joined the company early to get disproportionately large rewards compared to someone who joined the company later but contributed more."
And we can stop right here. That's an excuse, not a reason. It's purely PR bullshit to make it seem like they're trying to do something right. It's nothing more than the company (whether executives or investors) going back on their word when they realized how much money their stock was going to be worth at IPO. This is one of the biggest reasons I loathe Zynga.
Regardless of whether or not one feels he's deserving of this - it's the payment all parties agreed to. Do companies now consider compensation notional? Should they be able to take it back whenever they feel like it? If they think that actually a chef was totally useless for the first year - why stop with options - why not make him pay back 50% of his salary?
This whole line of reasoning is senseless. Compensation was agreed to - that in the end Zynga valued their options less than they ought to have should be irrelevant to employees retaining them.
The OP completely missed the point on the value that Google Chef brought to google. One of the hardest things at a startup is hiring. Google Chef became such a phenomenon so fast that everyone wanted to work at google. He became the poster child of what it's like to work at google! "You even get a private Chef cooking for you."
I remember when a friend of mine went to work at Google, relatively early in their history. I'm sure he told me that there were smart people working there, working on cool things -- but I don't remember much of that. What I do remember is that if he was going to be working late, he could order up a steak and it would get delivered to his office. That anecdote stuck with me.
Early employees are rewarded for the risk taking first and their contributions next. Later employees are rewarded for making a well-running company better. That's what's profit sharing programs are for, not stock options.
I wish more chefs got the opportunity to walk away with millions in stock options. Because chefs are some of the people who deserve it the most.
I spent a few hard years at a health food delivery startup in Oakland - and spent those years sometimes working in a support role for two different chefs that busted their ass like any other chef I've ever met. (I say support role because I was the server/dba/programmer at the startup but it was all hands in the kitchen when we got big orders. All hands in the kitchen starting at 4am, son.)
First of all I find it inappropriate to discuss who deserved what.
Second of all, it is wrong to bring an example of a chef in the context of the problem of disproportionally large reward of people who joined the company early compared to someone who joined the company later but contributed more.
Early joiners get paid for the risk. They acknowledge the risk before joining the startup and have a choice. Unfortunately chefs don't have a choice and in most cases they have to accept what they are being offered, because there is no other alternative.
Third of all, paying $20M a chef can be treated as an extremely successful public relations move. This helped Google to gain that image of the "don't be evil" Robin Hood operating on the Land Of Opportunities. On the other side, rich Zynga executives paint themselves in evil tones when denying money from a poor chef.
The real question is what should be encouraged more: risk taking or professionalism. Zynga executives believe the later. Which probably reflects the fact startups are becoming more like corporations.
But this is a first world problem and has nothing to do with the poor chef who was lucky enough to win a lottery in form of Google.
I won't even go into my opinions on what kind of people Zynga is run by... sheesh.
However, in my opinion:
The greater question here shouldn't be whether the metaphorical chef (or literal in Google's case) brought as much value in the in the early days as he or she receive(s|ed) after the IPO. It should be about 2 principles:
1. The company gave a large amount of stock to employees at an early stage, which most definitely propelled the company to success, because the employees had an incentive to help the company succeed (see economics 101)
2. The company gave a large amount of stock to employees at an early stage, which were quite valueless at the time, representing a risk on the side of the employee, assuming the stock was taken as (partial) consideration for employment
3. The company gave a large amount of stock to employees at an early stage, and that's their own fault.
It seems the employees without preferred stock will be bamboozled at any rate.
The comments of support on that site for Charlie really inspire me and show that there is still good in the world. He has $20m in the bank now, so he is happy, but like any young company, every role feels a part of the family and should be able to profit as such.
I would love it my company organised lunch for us.
Nobody needs to defend anything. People win the lotto all the time. Not just money, but looks, brains, etc. It's like telling someone 'you don't deserve that hot girlfriend, what did u do to earn it? hard work?'
So people are upset that a chef who makes delicious food gets a big payoff, but not upset when moronic CEOs of financial firms run companies into the ground and then still take home millions of taxpayer dollars?
I would like to ask laughinghan what sparked the interest in this article? It has been on the front page of HN before (and during laughinghan's tenure on HN), so I am really interested to know the though process about posting it again (it was the same article as before, but with a new link). I have nothing wrong with this being posted again, but I see it over and over again with numerous topics, and I do find it kind of fascinating. At first I thought maybe laughinghan was a newbie on HN, but that's not the case, so this just makes it that much more interesting.
Don't you understand? Someone else read it before, therefore that must you mean you've read it before. If you didn't read it before, it must not be worth your time to read it now.
I'm with you, I truly do not understand this need to point out reposts as a negative. Sure, point out that it is a repost with a link to the original in case someone wants to read the comments from that thread as well. But there's no need to be negative about it.
Made-up controversy. If you don't see what is going on here, then fasten your seat belt because I'll tell you.
First of all, every decent human being is going to side with "the Google Chef" (you know, he has a name: Charlie Ayers). He took a risk and it paid off. He earned every fucking cent. If you really think "Google chefs" like Charlie don't deserve to get rich on their stock, then you're an asshole.
Now, let's look at why this controversy really exists. It's to emphasize the elevation of the Second Estate (programmers, data scientists, designers) over the Third Estate (workers) for the benefit of the First (executives, VCs). The First Estate of the Valley works overtime on creating divisions between the Second and Third so that the bricks go through the windows of Google buses (Second Estate) instead of houses in Atherton. It's divide-and-conquer.
Investors and executives are going overboard to make the software engineers who keep the Valley running that they're a privileged class, and that they should be happy to deal with long hours, unreasonable expectations, low autonomy, fast and dishonest firing, and age discrimination because it could be worse, they could be "out there" preparing food instead of churning through Jira tickets.
It's like telling a shit-poor, clay-eating Southern white person in 1850, "cheer up, you're still above the slaves."
There always have been and always will be class divisions. Every society has a version of the phrase "Shirtsleeves to shirtsleeves in 3 generations." But now the slaves are free. We all get world class free public educations (ask the teacher unions.) We all have access to free graduate level education in technologies online. I'll brashly assert that class mobility has never looked better, and while they are possible, there are no real-world examples of a better society than ours (at least to my view).
The chef got $20M because Google gave him stock options early, which later became worth $20M. That's mostly all the explanation this needs. It's mechanical. If someone bought a house unwittingly, and ended up 100x wealthier because it was on an oil reservoir, I'm sure people would still be spinning pseudo-economic yarns about some specialized type of value he provided to society, but those people would be just as misguided.
I can't say that the "risk" related explanations that this thread is full of are completely wrong. There's some small element there. But it is wrong-headed. It seems like people are really saying "Well, what does PG say about startup lottery? Isn't it something about risk, or compressing work in a short time? Well, that must have happened here." Next, you'll tell me that everyone's pay is fair ... because markets!!
And on the human/gossip-level, no I don't begrudge him in the slightest.
Whoever a company decides is eligible for Startup Lotto, is eligible for Startup Lotto.
Did you even read the article, or just these comments? Who is "spinning pseudo-economic yarns about some specialized type of value he provided to society"? In the article, someone who worked at Google literally alongside "the Google Chef", Charlie Ayers, is testifying that Charlie Ayers in fact contributed as much to Google as many of the engineers that also got $20M, countering the widespread perception that Charlie Ayers got more than he deserved. Which may or may not be true, but your comment seems to be almost completely unrelated?
Hacker News commenters spin pseudo-economic yarns like frogs say ribbit.
If the really real reason why the chef made $20M is really because he contributed as much value as the engineers, and if that is not just a cheering sentiment, then we should be discussing why so many cooks are unfairly paid less than engineers. But that's not really what's going on here.
Precisely--and the article should have ended there. It's all about the risk. Arguing for the raw amount of contribution a chef can have is a distraction from the core point and detracts from it.