Google offers engineer $3.5M to not leave for Facebook

http://techcrunch.com/2010/11/11/google-offers-staff-engineer-3-5-million-to-turn-down-facebook-offer/

by tlack • 16 years ago

191 145 16 years ago

techcrunch.com

DrStalker• 16 years ago

What a rip off.

I'll not work for Facebook for only $2.5M.

:-)

electromagnetic• 16 years ago

My problem if a company paid me $3.5 million not to leave for its competition would be that I'd quit the day the money was in my bank account anyway. I wouldn't go work for the competition, but I'd be starting my own company.

I could do a hell of a lot with $3.5M, and probably make more than I ever would being an engineer for Google.

vibhavs• 16 years ago

I don't think the money just shows up in your bank account one day. From the TC article: "this means Google is handing over stock worth $3.5 million based on its value today, and that stock will vest over time."

donaldc• 16 years ago

The $3.5 million is in restricted stock that presumably vests over four years. If you left the day after accepting the counter-offer, you'd get nothing.

tlack2• 16 years ago

Anyone inside Google care to anonymously comment how morale is over there these days? Why so many people jumping ship? Is it purely about money, or something else?

Uhhrrr• 16 years ago

I can't comment on Google goings-on, but sometimes jumping ship is simply explained by looking at stock option vesting dates. Google only had 6,000 employees at the beginning of 2006.

hartror• 16 years ago

If I just had a 10% pay rise in this economic climate I'd be pretty darn happy right now . . how long it will last of course . . .

dstein• 16 years ago

But remember, it's a 10% raise immediately after the company got caught with illegal no-poaching agreements with their competitors.

omouse2• 16 years ago

Maybe the work conditions have gotten worse compared to pre-IPO Google?

Mahh• 16 years ago

Techcrunch really is eating up these Google and Facebook stories. I mean they're kind of interesting, but not interesting in the way that stories on innovation are interesting.

I kind of want to see the perspective of lower level google employees. They wouldn't get offers like this, but they would all have some thought about the future of their company

tlack2• 16 years ago

They're interesting to me because of all the technologies that huge platforms like Google and Facebook spawn. For instance when Facebook launched the Places API, there were 3-4 Places apps out there within a week or two. For that reason the long term growth (or death) of these giants is interesting to me even if I'm not able to/don't desire to work there. Then again my startup is all about Facebook so maybe I'm just a nerd for it.

prawn• 16 years ago

I know I'm stating the obvious, but Google, Facebook and Apple stories like this get eaten up by mainstream news. There are more readers of mainstream news than there are entrepreneurial types like us on HN.

jonknee7• 16 years ago

"Part of that may be that Facebook is quietly telling people, never in writing, that there’s no reason their stock won’t hit $100 billion in total valuation over the next couple of years. No guarantees, yadda yadda, but hey if you get 1/10 of 1%, that’s $100 million in stock. Now it’s a party."

Shady shady. Not only are there plenty of good reasons for Facebook not hitting $100B market cap (that would be 100x revenue, making the P/E amazingly high), but they also aren't handing out .001% of stock to many new hires. There's just not that much stock available, there are already more than 1,000 employees and a lot of the shares are spoken for (Zuck's got ~30%, the VCs have another huge chunk, etc).

tafle2• 16 years ago

"that would be 100x revenue"

They are already expected to make well over 1B this year. Why would that be the same a few years from now?

ams6110• 16 years ago

s/Facebook/MySpace/ and ask again

jonknee7• 16 years ago

From what I read last year's revenue was ~$800M and this year is looking like $1.2B. I hit it right in the middle. Regardless, this is revenue and revenue gets you shit on Wall Street. No one knows what their profit is, but even if it's in the $250M range (which I think is about 5x high), it still has to increase ~10x to get into the territory that a $100B valuation would need.

They're also quickly running out of people with money to register, so I doubt we'll continue to see such huge growth. Not saying they won't make a great business out of it, but tantalizing would be hires with a $100B valuation seems pretty shady to me.

tedunangst• 16 years ago

At this point, I have to wonder if it's really Facebook telling people that, or if it's TC repeating that line over and over for everyone to read.

fleitz4• 16 years ago

It only matters that TC may be making this stuff up if you work at Google. If you work at Google, go find an offer from Facebook that is better. If you get such an offer, then you can see if you get a counter.

If not, go collect more money at Facebook. Worst comes to worst, you're getting paid more, it makes morale worse at Google leading to others getting offers.

Google isn't a unicorn, it's a business, the purpose of working at a business is to extract as much value as you can from the 'business resource'. And in return you should expect the business to extract as much value from their 'human resource' as possible.

That's how life works. Google provides snacks and benefits because it allows them to extract more value, if the expected value from such benefits were negative they would not do it.

zuckerborg4• 16 years ago

It's absolutely hilarious (and sad) that people here are jumping all over that nonsense line, and now's there's an actual debate over whether Facebook is worth $100 billion.

1) These are numbers Arrington pulled out of his ass.

2) 0.1% at present valuation is already beyond his $3.5 million counteroffer. Nobody is getting 0.1% anymore.

jrockway6• 16 years ago

I can't believe anyone would buy that, though. Facebook makes almost no money. That's not going to change. People are leaving the platform. There is constant negative publicity.

Facebook is not a sure bet, so if you want to work there, do it because you like the project you're going to be working on. If you want to get rich quick, start buying lottery tickets.

(If you want to get rich slowly, then take Google's $500,000 stock offer! While Google's growth may be slowing, they still have a solid product that makes them a shit-ton of money.)

younata• 16 years ago

I wonder what the ratio of new people signing up to people leaving facebook is.

I personally think it's more than just slightly higher than 1 to 1.

portman• 16 years ago

"Facebook makes almost no money. That's not going to change."

I doubt that you honestly believe that, but if you do -- want to make a longbet? I bet Facebook will 5x their revenues in the next 2 years. Loser pays $5,000 to a charity of the winner's choice. I'm 100% serious.

fleitz4• 16 years ago

People are leaving the platform?

Do you mean like someone deactivated their account?

Or do you mean more people leave facebook every month than sign up?

If the latter, can you provide a source?

swombat• 16 years ago

Facebook makes almost no money? You're insane. Facebook is making a billion of profits a year, and that's a 3-5-fold increase on last year. They're not shouting about it on the rooftops (why should they?), but they're clearly on their way to having a business that makes just as much money as Google (however it is they're doing it) and so will probably command similar valuations.

This reminds me of the few years before Google IPOed, when Google were deliberately keeping quiet about their profits so as to not generate lots of competition for themselves, but were quietly putting away hundreds of millions a year and multiplying that each year.

mfukar4• 16 years ago

Facebook makes almost no money.

Not only you have no way of knowing that (unless of course you work there, in which case please let me know), but you grossly underestimate their capacity to take a revenue of hundreds of billions and turn it into a profit. No matter what their management is smoking, I doubt they're complete idiots or are squandering it.

jamiequint• 16 years ago

I would be extremely surprised if anyone that joins as an engineer now is getting 0.10%. I would guess its more around 0.01%. 10 basis points is more like a 30th engineer offer than a 300th engineer offer.

robk• 16 years ago

But very very few people would get 1/10 of 1% these days at FB. More like a tenth of that. Nothing to sneeze at, but it's a long way to that $100B valuation still.

robryan• 16 years ago

As long as let some people go it's not to bad, if employees of similar importance to the guy they have given the stock to knew all it took was an offer for a big jump they would all do it. Letting some people take the offer though puts some doubt into the minds, are they really prepared to jump ship if Google calls their bluff.

VladRussian• 16 years ago

it finally took Google, Facebook and 3.5M together to make a story that HN crowd would be interested more than being bullied in school :)

sliverstorm• 16 years ago

Google is starting to look desperate.

redorb• 16 years ago

If Google as a company is starting to look desperate; I want my company to look desperate.

Timothee3• 16 years ago

An interesting part of this story is that Google knows full well who that person is (unless they've been giving out $3.5M to a lot of people...), and leaking that story to TechCrunch makes Google look desperate and less interesting than Facebook.

Especially knowing that they just fired the person that leaked a positive (though confidential) memo that was addressed to 23,000 people. (that is, not super private to begin with)

It feels a bit like biting the hand that just fed you a huge amount of money.

mrduncan• 16 years ago

I'm sure that person (again, assuming that there was only one) wasn't the only one to know about the money.

It's probably more likely that a manager, someone in HR, etc leaked the info.

Timothee3• 16 years ago

You're right, of course. Overall, it just feels that the person who did leak this story would have more reasons to be fired that the one about the memo... Especially if it's someone in HR who are clearly not supposed to divulge any information like that.

palish• 16 years ago

Especially knowing that they just fired the person that leaked a positive (though confidential) memo that was addressed to 23,000 people.

Really? Wow. I missed that --- link?

dmoney• 16 years ago

http://news.ycombinator.com/item?id=1892550

brown9-2• 16 years ago

Or this is just a misinformed rumor.

mfukar4• 16 years ago

Does it matter now, with no way to confirm or deny the story?

As a software engineer, I'm willing to say no, not beyond reasonable doubt.

zuckerborg4• 16 years ago

I can guarantee you that in the eyes of top young grads Google has looked less interesting than Facebook for several years now. Google is where you go if you aren't good enough for Facebook. It's a safe, stale, big corp that is the dream job of every mediocre, middle-aged programmer out there.

mfukar4• 16 years ago

Seriously? I have a bit of background on research, and Google always looked the more attractive choice, still does. I'd pick Facebook in anticipation of a massive IPO, honestly; I wouldn't expect to be equally appreciated in Google.

espinchi• 16 years ago

Are you implying that it is easy for mediocre, middle-aged programmers to join Google, and consider that as the plan B for their career? I'd say the opposite.

ojbyrne2• 16 years ago

One wonders if it's Steve Yegge.

absconditus• 16 years ago

Why? Is his work that valuable to the company?

streblo• 16 years ago

His departure would certainly be notable, at least to this community.

ojbyrne2• 16 years ago

His notability is probably useful over and above his engineering ability.

strlen• 16 years ago

No, else the story wouldn't fit on a single page

omouse2• 16 years ago

He's a computer scientist or software developer, not an engineer.

mrshoe• 16 years ago

Sounds like a good way for Google to guarantee that every one of their engineers will apply for a job at Facebook, just for the chance of getting an offer.

qq662• 16 years ago

And those who don't, might be able to bluff offers too.

blantonl3• 16 years ago

That offer will never happen again.

noonespecial• 16 years ago

And at the same time, test with absolute certainty your worth to Google. Your offer might turn out to be.. ummm somewhat less than millions.

The engineer who wanted to leave had a combination of skill and institutional knowledge that Google decided would cost more than $3.5M to replace. How many engineers could possibly be in this position at Google?

qq662• 16 years ago

I don't think anyone thinks they'll get $3.5 million, but I bet a lot of people now think they can squeeze Google for a hundred thousand.

yoak• 16 years ago

Everyone is talking like this is such a huge number. If it vests over four years (They mention vesting, but not period.) then it is roughly $900,000 per year. If typical is $150,000 , then we're asking how many people could possibly be worth six times that much? Maybe 10%?

Another way to look at it is that this looks small in comparison to early equity positions in startups that go on to work out. It sounds like a good way to combat a desire on an engineer's part to roll the dice on that.

bbb992• 16 years ago

That does happen quite a bit, but I'm sure the $3.5 million engineer was recruited by Facebook, and did not apply for a job at Facebook.

MikeCapone• 16 years ago

Example of perverse incentive: "In Hanoi, under French colonial rule, a program paying people a bounty for each rat pelt handed in was intended to exterminate rats. Instead, it led to the farming of rats."

19th century palaeontologists traveling to China used to pay peasants for each fragment of dinosaur bone (dinosaur fossils) that they produced. They later discovered that peasants dug up the bones and then smashed them into multiple pieces to maximise their payments.

http://en.wikipedia.org/wiki/Perverse_incentive

_delirium• 16 years ago

This is definitely what happens in academia, and is not really great for a lot of reasons imo. Quickest way to get a big raise, to be fast-tracked to full professor, to get appointed director of some lab, etc., etc., is to get made a good offer by another university, and get all that stuff in a counter-offer. So of course, everyone is always soliciting offers from other universities. The few people who don't, end up paid less and with fewer perks, even though they're often the people actually long-term building the department's research and education programs.

siculars• 16 years ago

I could not agree more. This has happened to a few people I know... including myself. As with most places, they never value you until you are almost out the door.

random422• 16 years ago

Isn't that a usual practice? (It is, in my country, not sure of valley culture)

guiseppecalzone• 16 years ago

This seems like a dangerous precedent to set.

It makes me wonder if this programmer was strategic, ie, he could have brought a very specific / useful skill set to Facebook -- or if he knew a lot about key Google developments.

dennisgorelik• 16 years ago

"However effective these counter offers are, they sure aren’t good for morale internally at Google. Unless, of course, you’re one of the ones winning the lottery."

If you got sweet counter offer -- why wouldn't you just shut up so the morale would not be hurt?

bd_at_rivenhill2• 16 years ago

For the same reason that criminals are often caught after they bragged about crimes to their associates (who then give them up in order to get a deal for themselves if they are caught): because people just have to run their mouths sometimes.

Evgeny• 16 years ago

How come no one asked yet, was the person who leaked this information fired or not?

bgray• 16 years ago

This is the market at it's best. I've heard from many times that Google's salaries aren't competitive but rely on the "you will change the world" mentality. Google pulls in the talent and Facebook gets to cherry pick.

DevX101• 16 years ago

Goldman sach's traders routinely get money in this order of magnitude for creating a net value less than top engineers at Google.

mdda• 16 years ago

That's a pretty bold statement : The Goldman trader's NPV will be pretty solid in cash terms (given that Goldman's risk group actually does a decent job, and values things accurately). The NPV created by a Google engineer is more difficult to judge - depending on how far into the future it is, and what risk/reward is embedded in Google's stock valuation.

I'm not arguing that either one is over or under-paid. Just that it's not apples-to-apples.

pbhjpbhj• 16 years ago

>traders routinely get money in this order of magnitude for creating a net value less than top engineers at Google

But traders don't create value they leech it. Yes they create price changes that result in profit, but that's a quirk of the financial system. Yes, fluidity, yadda-yadda, I don't buy that crap.

Engineers, if they're working effectively are creating value.

(Downvoters, please also comment).

dnsworks3• 16 years ago

Are people really worth this much money? I can't help but think "$3.5m gets me 15 really good developers for a year, and a swimming pool filled with chocolate pudding, just for fun."

PakG12• 16 years ago

If the guy is really top 1% in the world, why not? How much do the top 1% athletes, musicians, etc, make? An argument can probably be made for a top 1% coder.

arghnoname• 16 years ago

The top 1% athlete? On average probably about $0. There are probably a few hundred thousand high school football players. There are only 32 NFL teams. Even among those few that make it (probably much smaller than 1% I'd wager), few are superstars. Taking into account chance of injury, short career, and brain damage (in this case), the ~ $700K NFL salary isn't so great.

And musicians? Their situation is probably worse! The truth is talent is pretty bountiful. Finding out that no matter what hot shit you were in high school, there's an army of kids out there ten times smarter is a veritable right of passage. Maybe this guy is the top .01%, but I think the value you can extract from the relative brilliance of one member is a case of diminishing returns. Is he doing, 100% of the time, work that an actual 1% guy or several of them couldn't do?

axod• 16 years ago

1 fantastic developer would often be worth '15 really good developers'.

dnsworks3• 16 years ago

I don't buy it, not from a company as large as Google who has more institutionalized about scaling and building web properties. Just because it sounds really cool that Google throws gobs of money at engineers doesn't necessarily make it the best approach. It sounds like a fear-driven tactic, and if they're that worried about keeping talent, they're probably not going to put that good talent to use anyways.

birken• 16 years ago

I like how this article is suggesting new hires at Facebook get .1% of the company, or over 25 million dollars worth of stock at the current valuation.

I have a feeling if we actually knew the truth, and not this sensationalism, the whole situation would probably end up being pretty logical. Google is actually a pretty smart company.

firebones• 16 years ago

I'd work this backwards.

Consider a high-profile late-comer to Google who might have an existing equity position not comparable to peers who were there for the IPO, or peers who had hired in early (e.g., his grants were at pre-bailout highs and only recently recovered). Accepting a $3.5 million counter-offer means that the immediate "sure thing" is greater than or equal to the expected value of Facebook's offer when the risk of Facebook falling short is taken into account. Say this engineer thought there was only a 50% chance of Facebook actually hitting their "quietly told" market cap. That would imply the Facebook offer was something in the $5-$7 million range, or 1/15000th to 1/20000th of the outstanding shares. For recruiting a big name, this is much more plausible amount to offer than the 1/10 of 1% in the story.

If the story is true, then I'd bet that the engineer is someone who came to Google late (or at the wrong time), probably is pretty comfortable with his standing at Google is someone fairly prominent, and is more comfortable taking a stable, sure thing than taking a risk on a situation as early in the company life-cycle as Facebook is. (And it wouldn't surprise me to see this engineer leave for Facebook 5 years from now if and when Facebook becomes a more mature company and more of a sure thing.)

dbrannan2• 16 years ago

I remember having a conversation with the athletic director @ BYU in my younger years. I naively asked why the football team had 92 full scholarships when only a fraction of that was required to field a team. He told me flat out, "because those 2nd & 3rd string players might make something of themselves if they played for another team."

So, there you go. A rock-star programmer can be a dangerous thing in the hands of the competition.

neilk2• 16 years ago

I don't see how this could be good strategy.

1) Can BYU seriously hire enough of the football talent out there as to reduce the chances that other teams will succeed?

2) Is BYU so prized a destination among football players that they would be willing to sit on the sidelines at BYU rather than get more time playing, at another team? Consider that they also want to attract the attention of NFL scouts.

Google doesn't have any of these problems -- for many candidates, it is the NFL, and there's no real limit on how many people can "play".

dbrannan2• 16 years ago

1. Elite players within the state of Utah (U of U being their main rivalry), yes.

2. Nobody wants to sit on the sidelines, but if you can work your way up to first string at a top 20 University then yes, the scouts are more likely to take notice.

Why do you think the NFL pays millions and millions of dollars recruiting the best of the best? It's because talent at that level is rare, hard to find, and even harder to hold on to.

In my experience, a rock star programmer can be worth more to an organization than 100 of your common CS grads.

CamperBob2• 16 years ago

This is basically the whole raison d'etre of Microsoft Research.

jadence• 16 years ago

I'm an avid college football fan and the BYU athletic director's response doesn't seem right.

Roster depth is very important to a team for various reasons such as having players who can step in for injured players (important given the nature of football), allowing players to learn the system/schemes before playing (despite what many think of football it is complex and being able to "reload" rather than "rebuild" is key to the perennial powerhouses), giving players time to develop and grow before seeing game time (most are a mere 18 years old when starting college), being able to field scout teams for the starters to practice against, etc.

USC football is currently facing sanctions and lost 10 football scholarships per year for three years. Read any sports analyses on the sanctions and they'll tell you that the scholarship loss hurts USC not because so much because top recruits will be making something of themselves elsewhere but because it hurts USC's roster depth.

ajays• 16 years ago

Folks, from what I hear, "Staff Engineer" is a top-level position; it's not your garden-variety engineer on staff. These are people who have risen to a high position in the company as individual contributors, eschewing the management path.

EugeneG• 16 years ago

This is a nice case study that demonstrates an answer to the question of "Why do those evil Wall Street bankers make so much money?" Competition for skilled labor produces tremendous salaries.

neilk2• 16 years ago

The only way this story makes sense to me is if the engineer is one of the core contributors to Google Me, or some other strategically important new initiative.

Those teams are small enough that every engineer counts, and a defection could even delay launch.

Facebook would be interested in sabotaging that, but Google would pay even more to defend it.

herdrick• 16 years ago

Who knows if this is true, or what the full story is, but in general I think this kind of tactic is poisonous to a company. Please read this: http://news.ycombinator.com/item?id=1629201 (I just re-read that. Such an excellent post.)

nivertech• 16 years ago

This is ridiculous. Much better strategy to attack Facebook, would be to spin off startups for talented engineers. Give this $3.5M to Google Ventures, which will invest it into spin-off. The engineers still work for Google with much better upside (comparing to Facebook).

lee• 16 years ago

It seems to me that this story has a bit of sensationalism in it?

It doesn't mention the engineer's salary. At that kind of offer, I'm going to assume he's a super-star performer. So his salary is probably on the far right of the bell-curve.

Also, how long is the vesting period? 5 years? 10 years?

So that's a bonus of 350k to 700k per year? What if he was already making 350k a year? What if he was making 500k? If so, then 3.5M isn't that outrageous.

random422• 16 years ago

if you get 1/10 of 1%, that’s $100 million in stock. Now it’s a party

I dont get the maths here. Given that facebook already has 3000+ employees, I am not sure they can give everyone 0.1% stocks and given how 100 Billion evaluation is an atrocious claim, numbers dont add up to me.

martincmartin• 16 years ago

Can someone explain why Pre IPO stock would be worth so much? Either something is wildly inefficient, or the employees are getting duped. If X shares are expected to be worth $1m after IPO, Facebook could offer potential employees X/2 shares, which is still a $500k signing bonus, and use the other shares for something else.

ahi• 16 years ago

It's a risk/reward calculation. There is a small possibility of pre-IPO stock being worth fuck you money. Google can't even off the possibility of fuck you money, but they can offer decent money (although anecdotal evidence says they underpay) with low risk. Unfortunately for Google, many of their employees have risk/reward profiles closer to Facebook than Google.

Random numbers:

Facebook: Shares with a 1% chance of being worth $10m

Google: Guaranteed $100,000.

Same expected value, different tolerances for risk.

chopsueyar3• 16 years ago

I find it hard to believe that a bunch of post-IPO facebook millionaires ($100mill+) would stick around and maintain/work on Facebook afterwards.

Google offers engineer $3.5M to not leave for Facebook

Related Stories