How should we pay ourselves?
Here is a hypothetical scenario:
We are a blockchain startup that just raised 10 million dollars in a crowdsale.
How should we manage our runway?
More specifically, how do we pay ourselves?
Before I go any further, I should say that I have absolutely no idea what I'm talking about. I have been a solopreneur for majority of my productive life, and have limited experience with team work, and absolutely no experience in running companies. Perhaps my fresh, and rather naive view can be useful to re-think the 'standard' way of doing things. Feedback on these ideas is very welcome.
$5,000 a month for everyone
I think everyone should be paid the base salary of $5,000 in notional value. The actual means of payment may vary (Bitcoin, ETH, Fiat, etc), but its underlying value should be calculated and capped to the maximum with each payment.
Why $5,000?
This salary is high enough for comfortable living in most places around the world, but low enough to repel people whom are only interested in the size of the salary, and not the project itself.
Why Everyone?
Yes, everyone should be paid the same. The CEO as well as the junior developer we just hired. By paying everyone the same, we decouple the subjective value of each team member and behind the back politicking (playing favorites, asking for raises, etc...) from the salary.
Voting based Token Bonus events
Every 4 months, there should be an offsite gathering with goals of reviewing past progress, strategy and team bonding.
During each offsite, a certain, pre-determined quantity of token is to be distributed as a bonus. This token is the native blockchain token of the project that the team is working on.
The bonus is paid in tokens, so that every team member is incentivized to do the best work they can, for the benefit of the project, which benefits the team and individuals alike (virtuous cycle).
Voting based distribution
Every member gets an equal portion of voting shares. Every member can use their shares in arbitrary amounts to vote on other people in the organization. Typically, people will use their shares on people they work most closely with, in a subjective manner.
This system is imperfect, in a sense that it does not distinguish types of value from individual perspective - for example, someone might put more weight on how nice someone is to work with, over what they brought to the table in terms of innovation and code.
In the bigger picture view however, a consensus forms - based on combined opinions and views of the world from all individuals.
The premise is that this system could be more efficient and fair over an arbitrary, and often skewed bonuses tallied by people on the 'top'.
As a side note, the voting should be done with perfect information (who voted, how much, and for whom - should be available in real-time), and everyone can change their votes until the deadline. Participation should be voluntary.
Also, a weird anomaly in individual vote sums, particularly in regards to people in executive positions should trigger a performance review.
Fire fast, and pay well to leave
It is possible to hire talented, good people who just aren't a fit. We should be very vigilant in weeding out people with negative long term impact on team morale and culture.
New hires should be on a two month probation period, and should be excluded from participation in the first token bonus event.
On Firing
Fire fast, and pay people fairly when they leave. Its not their fault that it just didn't work out - remember both parties had limited information at the time of a hire.
Edit: As you may have noticed, there is no mention of founder shares or vesting. That's because there are none. Founders should not be entitled to a stake just because they started something - they should earn their place trough contributions and leadership.
Is there a chain of command? or is everyone equal? The higher the person is on the chain of command should receive more voting power.
I feel like there would still be politics within any group that gets paid the same amount @furion @bscot020, I feel that politicking would still exist because we would still have the few who would want to take control, and the sheeple who follow them. I've seen this happen in my own projects I've been forced into with other people... neat idea though, if I could vote on making that an actual system, I would be all for it. Keep it up! upvoted!
Yeah but theres people who think their shit dont stink and think theyre 100% correct everytime. I see it all the time in the corporate setting. The "If I get paid the same as you why should I follow your directions or listen to you?" People. Their would definitely have to be rewards/bonuses involved to have people driving the plane.
If the employee earns $1000 a month, his boss should earn $1025 a month. Problem solved, the worker no longer earns the same as the boss. :D
I love the idea. The only flaw I can see is what would motivate a staff member to excel and strive for an incentive without a financial reward (other than bonuses) in place? I understand pride in the project and work would be the primary attribute you’d be looking for, and you want the person to take pride and be exceptionally motivated of their own accord - but I can’t see a ‘permanent’ salary with no hope of that increasing as a viable option - even if their own project and therefore tokens increases in value over time
Without incentives we would eventually even run out of toilet paper. Why bother to innovate, to be more efficient, to work extra hours, to find new and better uses of the work hours, etc. SOCIALISM IS A DISASTER!
This is why I advise a democratic system in start-ups. The leader has to give a speech and petition, those who want to lead have to earn it, and those who don't want to lead get a say in who is chosen. Majority rules and that is life. All people will never be satisfied all the time, and that is totally fine.
Good question. If the person in leadership position is doing a good job, more people will dedicate their shares to that person, thus resulting in higher proportion of a bonus.
If a person on the 'top' does not receive sufficient votes, its an indication that he may not be doing a very good job.
Seems like it would work, also length of employment should be factored in
Length of employment is factored in implicitly, as people who worked together for longer are more likely to vote for each other. Veterans also likely have bigger role or stronger recognition in the organization.
People who join the team early also get more tokens during the first bonus rounds, because:
a.) The token is worth less, thus more tokens are given out.
b.) The team is smaller, so each person gets a bigger piece of the pie.
Got it. seems interesting for sure!
Furion do you think the Steemit Approach would work with the real world? Where the crowd decides who get what money?
This is how the decision about who gets what money is done on Steemit. Hint: it isn't the crowd.
The distribution of rewards on Steemit is decided by those that have the most Steem, and they keep it.
Can you elaborate a bit more on that or provide a link to where more info on this can be found?
Or he or she is not hot enough. :D
what about the time taken to work or taken by each positioned employees ??
The constant problem is the attraction of popularity. The higher in the foodchain or comment list the more likely you are to be heard and therefore the more likely t be voted up. Popularity breeds success not truth.
Thank you for writing this Article . It inspired me to write my own thoughts and dreams down.
how?
I don't believe in equal pay
no offense - IMHO - it would bring society down this way
seen it happened in my country
though I understand it when someone feels like - it should be so
and honestly I sometimes get upset casting my up
specially when the post sucks and didn't see it
but what sucks for me might be great to the others
so - still hard to weigh
Great post and many great points though
Why? Different tasks require different skills. If a pool of skills is necessary to a project, then why should one skillset be differentially weighted?
oh good
Or use a voting power to run the business instead of pre-define roles as CEO.
Cheers,
Follow me @Yehey
Flat organizations (google: Holacracy, Flat Organizations) do not have hierarchy and there is no "chain of command".
Hierarchies are problematic. They create stress for those lower down therefore stifling innovation. Perhaps a fluid system of creatives that get equal money but allows them to reward their betters for their output and or reliability. Reward others for their contribution to the whole and to your "wellbeing" - yes crap term. Steemit works like that.
Probably should be based on stock allocation.
Everyone is equal but some are more equal than others.
Interesting.
Good question. If the person in leadership position is doing a good job, more people will dedicate their shares to that person, thus resulting in higher proportion of a bonus.
If a person on the 'top' does not receive sufficient votes, its an indication that he may not be doing a very good job.
When you say that, you're talking about offering incentives based on performance.
I worked in an executive position for many years and was on the board. No, it wasn't anything like the hypothetical scenario you present. But Performance Related Incentives (PRPs) were offered based on specific performance results.
Everything from the performance of individuals and the results was discussed at monthly meetings, and decided upon only with the consensus of all employees.
There were a couple of employees who were frequent recipients of such monthly incentives, as they continued to put in far more effort than the others.
While the results were there for all to see - it led to envy and problems in the workplace.
Additional thoughts on the distribution of tokens?
I think the concept of equal pay may work better when it is equal pay for equal work.
Enjoyed reading your post.
In the system proposed above, hypothetically, everybody gets a bonus, however the size of the bonus varies based on final consensus of all members of the organization.
The social contract that sets expectations needs to be put in place and communicated properly (and frequently), so that there is some basis for evaluation.
People that are toxic to the environment, and don't deliver should be fired fast.
It is hard for me to envisage such a situation, having been used to the hierarchical workplace structure throughout my professional life. The majority of us get so caught up with the existing system that we forget there is need for change.
However, I appreciate the need for workplace equality that's not just gender-based.
Loved this:
People that are toxic to the environment, and don't deliver should be fired fast.
Enjoyed your post. Following you.
I only thought as far as startups go. Organizations at scale are a totally different beast, and I have absolutely no idea on how to structure those.
Thats true! listen to what Furion has to say :)
This sounds like a great idea but I don't think $5,000 would be enough. First off many techies live in expensive cities San Fran, Boston, NYC, London, etc. and for them $5,000 likely wouldn't be enough. Secondly if underpaid people might be more prone to selling votes or voting for self serving things. That said is there an amount high enough to prevent this?
There may still be some techie types living in Itapemirim, Huamboya, Charallave, Higuerote, Sibundoy and Tupiza.
I'm sure there are, but we should aim for every city to be livable with the pay so we can get the best most committed devs no matter where they are. Then again to get US devs you're paying enough others would join purely for the money but paying based on location seems unfair...
:)
I have not thought of the internal corruption that would lead to selling votes.
The only remedy against this is to have honesty and integrity as core values (founders need to posses these traits) and let go of people that aren't fit.
If votes are equal bad actors working independently or together could slowly infiltrate and corrupt the system. This is pretty much the biggest weakness of our current government. I'm not sure it's solvable though. It's a tough problem to tackle.
Maybe allow only a 70% community vote to fire someone. That way corruption would only occur if it was incognito or the users also became corrupt.
$5000 is more than enough unless you're living in time square.
Unless you're buying prostitute-time or going and getting $100 meals at restaurants every week I really can't fathom even spending $5000/month living a location as an individual or without a huge family.
I'm in Boston and with taxes, retirement, rent, etc. it adds up pretty fast. $5,000 after taxes would definitely be doable though.
Interesting pay model and different than what was used in the past.
As a thought experiment, I might go along with your ideas, with some modifications.
Founders might be offered compensation for their time worked on the project before the crowdsale, at the same rate of $5000 per month of work they put in.
I might do token distribution every 3 months, to match the standard business quarter. I might distribute half equally among all employees.
The other half I might distribute using the voting you suggested, but half of those voted tokens via open voting (perfect information) and half by secret voting. No secret voting could be for oneself. There are situations in groups where you feel you need to remedy a situation without it being public knowledge.
Just adding to the discussion you started, thanks!
I agree with the sentiment that $5000 is not enough. The problem with have a low salary cap is that people expect wage growth over the course of ~45-year career. Even if $5k was a good starting place you'd have huge turnover in your company. One interesting idea may be to pay everyone the absolute max you could afford. Say that ends up being $15k/month, for example. That way you'd attract top talent, retain them longer as they would have a hard time getting a higher offer elsewhere, and you could quite reasonably expect a lot from them. My experience of working in a tech company where there is large pay disparity everywhere is that people tend to perform up unto the level they think they're expected to perform at, based on title and salary. I think highly paid people would work harder and they would be easier to weed out if they're not living up to their high salary expectations. Your can decide to reinvest additional revenues into the salary too, were the business to be a runaway success which would only further boost morale.
The problem with secret voting is that its not really secret - at least someone has access to the vote info.
I think its better to make it public regardless, because if there are issues in the organization, and if voting event brings these issues up and starts the conversation, it will be better for the company in the long run (assuming action is taken to resolve the leading issues, and not just "kick the can down the road").
Thanks for your reply!
I like to think that when I vote in elections in the US in November that I am casting a secret vote, but maybe I am deluding myself. :D
I would keep the public voting in the process to help quickly resolve issues, but I think that the part of the process involving secret voting will also point out issues when the result is tallied. It just gives another way to do it, for people with different personality types who prefer to voice their opinion anonymously.
Plus, if the public voting and the secret voting yield completely different results, then THAT in itself is Information. It might show that there are issues in how freely a person feels they can bring up other issues without stigma or penalty.
I agree on that one, Nice views!
Isn't paying all skill-sets the same, regardless of their value, anti-meritocratic? Wouldn't that lead to poor long-term talent allocation similar to Communism?
Interesting view but same salary across the board will not work in my opinion.
People with higher skill sets and responsible will find it unfair. I personally wouldn't work in a company like that.
While the purpose is to dismiss a politic according to your view but in the same way it will create another politic :)
Take a look at this article
http://www.businessinsider.com/dan-price-gravity-payments-employees-leave-2015-7
Upvoted you :)
Free buffet and beer everyday.
$5,000 a month is a below-average salary for Software employees in many parts of North America. You will risk missing out on talent because of this - I know you don't want to get people who are only interested in money, but that's what an interview process is for.
A tiered system might work out better, where similar jobs are paid at a similar level (IE: all marketing get X, all software get Y, all HR get Z). Not all positions are created equal, and paying everyone the same amount (regardless of position) can lead to friction.
Just some thoughts! I don't mean to rain on your parade. Best of luck in your new endeavor!
I made a post below that was similar to this, but missed yours. I mentioned job family defined pay just for that reason. I also forgot to mention that I would rather see a monthly salary of 10k since taxes take quite a bit of that as it is!
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There is a tremendous difference between force and power if you think about it. Such a difference exists between creator and followers. A creator of an idea makes a platform where smaller creations occur. If you remove that difference then you may not foster the greatest creative minds. You must reward the top creator so more like him/ her can move the rest forward. We were not created equal but perhaps in the eyes of the one.