In defense of the Google chef

http://rondam.blogspot.com/2011/11/in-defense-of-google-chef.html

by lisper • 15 years ago

994 188 15 years ago

rondam.blogspot.com

rhizome• 15 years ago

Ooh, I think thinking twice about the Google chef is to accept Zynga's "pray I don't alter your option plan any further," take on things, i.e. the argument's already lost.

kls2• 15 years ago

I'm not usually a get out the E-Pitchfork type guy, but this subject has really gotten under my skin. I got stiffed on an exit so you can take my view as biased if you would like. It most likely is given my irritation at the subject, I generally don't get worked up over stuff so it has certainly hit a nerve.

But the part that really gets me is it has absolutely nothing to do with the role these people played and every bit to do with the longer hours, reduced compensation risk and how long a person takes that risk for. If they came in on the ground floor then have been riding the roller-coaster and getting paid dirt for longer then they deserve those early and current options, I just cannot understand the attitude that is being displayed where the CEO feels that later employees that are "now" more strategic to the company (read executives) are more deserving of that equity given their worth to the current goals of the company. That is such a warped perspective, it has nothing to do with the future and everything to do with how much risk and how long those early employes took that risk for.

earbitscom6• 15 years ago

We are talking about unvested shares to be earned in the future. There is not much risk in working at Zynga from here moving forward - no more than any large company. They're not taking back shares people earned during the risky period. They're saying, now that the company exploded we'd prefer to pay you differently from here on out. You have the choice to stay or go. Nothing that already happened is being rescinded except that 2 years ago we put together a plan to keep you highly motivated for 4 years, and now that we know what the stock is worth, it's not equitable to trade the latter half for 2 more years of your work. We could fire you to preserve this capital, but we're offering you a regular compensation package instead.

DaveMebs• 15 years ago

No, we are not really talking about unvested shares to be earned in the future. We're talking about unvested shares. These are shares that employees have already been paid. This payment is contingent upon the employee continuing to work at the company. Zynga is in effect blackmailing these employees. They are telling them "Give us this money we promised you, or we'll fire you."

The idea behind putting together a plan to keep early employees highly motivated is that you all work hard to grow the company, and in return for the risk and hard work you stand to make a lot of money. That's the whole idea behind tech startups. To grow the company and then tell these employees they don't get the rewards promised them the entire time they have worked there is ridiculous. It violates the entire idea behind vesting shares, which if it is unclear, is that you have already earned those shares. It's merely a matter of when you gain access to them.

dylangs10304• 15 years ago

The latter half of your comment reveals Zynga's deceit in pulling this, and why it's not just another case of grudgingly correct capitalism. Zynga used the promise of unvested shares as motivation for its workers. Taking it away now is akin to promising delicious, gourmet cheese to a mouse while it runs on a wheel for a few years, then saying, "Hey, thanks, but a renewed evaluation of your performance indicates you're more deserving of some more bread crumbs every year, no cheese." You can't reneg on valuation made during the early stage.

davesims6• 15 years ago

I'm pretty disappointed to see a YC founder taking Zynga's point of view on this Joey. You can finesse this however you want, some basic trust has been undermined, and this hurts entrepreneurs like yourself as much as anyone. Good luck on your next (or current) venture trying to convince a prospective developer or technical co-founder that you're "not like Pincus."

jphackworth• 15 years ago

Wow. Why in the world would you post this as a founder? It's like saying, "Watch out, anyone who works for Earbits, I'm a big fan of screwing people out of options!"

chairface• 15 years ago

I have read every comment of yours on this thread, and in an effort to be charitable, I have taken a few days to digest your points regarding the status of unvested shares.

It occurs to me that in multi-founder situations, founder shares typically vest as well. As a founder, if your startup made it beyond the "risky period" before you were fully vested, would you think of it in the same way if your unvested shares were clawed back? I'm willing to bet dollars to donuts that the answer is no. And this is why your position is immoral, reprehensible, and hypocritical. It's not "one way to look at it", it is being self-serving and twisting facts to justify altering the deal, Vader style.

I'm sure you've made it onto more than one "people/companies I'd never work for" list.

sounds2• 15 years ago

I'm pretty sure you already know this, but for the sake of clarity, few people are surprised Mark Pincus (Zynga CEO) would pull this.

There are lots of CEOs with bags of dirty tricks. But it's not hard to imagine why YCombinator is trying to get the word out!

The best way to stop Pincus' insanity is to make this as big a news story as possible.

matwood• 15 years ago

few people are surprised Mark Pincus (Zynga CEO) would pull this.

A company that produces what I think are pretty scummy products is acting scummy? Why would anyone be surprised, especially the people working there?

andrewfelix• 15 years ago

"Charlie didn't make $20M for cooking, he made $20M for taking the risk that the company he was joining would fail" This succinct sentence sums it up for me perfectly. His ability and contribution aside, a gamble was made and it paid off.

alexwolfe2• 15 years ago

Who determines who is actually worthy 20 million or a billion? In every case there is a tremendous amount of good fortune, luck, and incredible timing.

Anyone who thinks they deserve that much more money than someone else because they are just a better human being needs to get a reality check. Its really about being fortunate. The Chef certainly has just as much right to his 20 mil as all the other guys that cashed out. Again, its not about just talent or brains, its about luck.

bad_user2• 15 years ago

Great people make their own luck.

The Chef took a risk that may have impacted his career negatively. That's not necessarily luck, that's an investment that payed off. And if you don't want the Chef to get rich, then don't offer him any stock - but then you do need to pay a higher salary.

It's funny that Zynga tries to paint this negative picture of Google's IPO, when clearly at Google everybody won tenfold, including founders and investors and being good employers is partly the reason for that. Zynga will never be Google and it starts with their attitude towards their employees.

alexwolfe2• 15 years ago

There are a million great people people out there that you don't know who aren't lucky. Having money doesn't make you great, being great makes you great.

I do think that the harder you work and the the more opportunity you give yourself to get lucky the better your chances are to be successful. But believe me, luck plays a huge part in everyones life no matter how smart or great you think you are.

damoncali7• 15 years ago

Haven't you neen paying attention? Pincus decides. Then he decides again later, differently.

tlrobinson• 15 years ago

Also, if I were Mark Pincus or another Zynga executive I'd probably avoid the Zynga cafeteria for awhile...

muppetman2• 15 years ago

I know it's frowned to post these sort of comments, but I spat my beer (Friday night in New Zealand) on the table laughing your comment.

raganwald• 15 years ago

I don't soeak for anyone else, but I've always thought that an ocassional witty comment was fine, it's just lazy joking that's reviled. So for example, pun threads amd lowbrow memes are discouraged.

The guidelines for submissions speak to piquing intellectual curiousity. If there was such a guideline for cracking a joke, it might be "anythng that uses humour to sneak an insight into the conversation."

The post above made me laugh and certainly makes a point about the morale at Zynga. Well done!

p.s. There is another kind of wit that is explicitly discouraged, the "witty reply." That is a special case where a comment tries to make fun of another comment. As a general rule, this lowers the tone of the discussion by emphasizing rhetoric over ideas. This isn't the case here, making fun of Pincus is not the same thing as making fun of a comment or making fun of the OP.

goodside• 15 years ago

It's ludicrous that it's even necessary to paint the archetypical "Google chef" as someone who daringly sacrifices for their scrappy company for them to be worthy of windfall profits. If you compensate employees with options, they deserve whatever they end up being worth. Period. That's the whole point of options. If there were an asterisk attached that said, "...but only if people agree in retrospect that you deserve the money," nobody would accept them as payment.

retrogradeorbit• 15 years ago

Yeah. I find it humourous that they say they are clawing them back so they "could attract more top talent with the promise of stock." What? By demonstrating how they'll screw them out of that stock when the time comes?

perfunctory• 15 years ago

That's exactly right. It's bizarre how people believe they can improve their business by being dicks.

zem2• 15 years ago

there are always people willing to believe that they won't be screwed out of their options because they deserve them more than those lazy early employees.

Vivtek• 15 years ago

Exactly. If they didn't want early people to have disproportionate gains, they should have paid them with money. This just looks like what it is - regret that they didn't keep more, now that Zynga is successful. Cheap bastards.

stfu• 15 years ago

Absolutely. But I somewhat see this as a growing trend. That some "social concerns" are increasingly trying to reduce the rewards of taking a risk.

Ironically this is somewhat reflected already here in the discussion in regards that the chef earned that by physically working hard. He would have had to do the same at any other restaurant job. But the real issue here is that he was willing to take the risk of working as the chef for some unknown company without knowing what is going to happen, while most of his colleagues were going for much saver options.

oacgnol• 15 years ago

Zynga and Groupon just seem to have shot themselves in the foot right before their IPOs for stupid reasons. It's a shame how greed and stupidity in leadership have negatively impacted the payout for the people who toiled to make the dream possible.

mmaunder• 15 years ago

My sister's a french trained chef and I've been writing software most of my life. She works probably 3X harder than any geek I know including me. It's brutal. She arrives 8am to prep and leaves 11pm after service, 6 days a week when she was working for someone else. 7 now that she's opening her own place. She's on her feet all day. The job is both time critical and requires constant teamwork. If you or anyone else drops the ball the angry customer is right there, including the angry wait staff and angry team mates. It's very high pressure.

She's now busy opening her own restaurant and it's a far cry from writing software once and kicking back while each incremental copy sold costs you zero effort or money. Every incremental product a chef sells is hand-made and has to have its raw ingredients bought without any certainty it'll actually get sold. What's worse is many ingredients have a shelf life of mere days.

Every product is hand made to a customer's specifications and delivered in real-time with immediate feedback. If a product is rejected, it's expected to be replaced immediately without interrupting the flow of products heading out to new customers. And of course the tools of the trade are not a keyboard, but sharp knives and open flames.

So yeah, the "google chef scenario" comment bugged me too.

bambax• 15 years ago

"Kitchen Confidential" describes exactly what you're talking about; it's a fantastic book (published in 2000).

petegrif2• 15 years ago

brain5ide• 15 years ago

There's a metaphor, I believe by Stallman, about programs being much like recipes that just came back to mind. Probably that's what makes this comparison so vivid.

Natsu• 15 years ago

That reminds me of a local family-run bakery I frequent. They work long days, six days a week as well, and the head pâtissier there has been doing this for practically his entire life.

So plenty of chefs are entrepreneurs too. Including Charlie Ayers, who has his own restaurant.

VBprogrammer• 15 years ago

What annoyed me is not the suggestion that the chef is in someway less entitled to the money than other employees, or that he didn't work as hard.

It is that it is just factually wrong. How many great people joined Google when it was an up and coming start up who loved the emerging culture and the idea of having a great chef.

sophacles• 15 years ago

To expand on your point: I remember that pre-IPO articles about Google always mentioned the great working conditions, including the amazing meals in the cafeteria. Recruitment material from Google touted the chef as a major reason for working there. People talked about Google as the de-facto model for treating your employees well "look they even have a good chef". Given how much that chef played a role in Google's name making, he certainly deserved every penny he made.

scottschulthess3• 15 years ago

In general, in startups, aren't people compensated based on the value their skills provide?

I'm not taking anything away from chefs, but Google is an engineering, product, and advertising company, so chef isn't a core skillset and should probably be compensated thusly.

vaksel• 15 years ago

yeah...if the chef's contribution was considered to be worth less, then their # of shares was lower to begin with.

mseebach• 15 years ago

It's getting off-topic, but being a chef in a restaurant is a different kettle of fish from being a chef in a corporate canteen setting.

I used to work in the latter as a temp kitchen-hand, and most of the chefs there specifically quoted sane hours and working environment in general as reasons for preferring that over a restaurant.

Buying is is easier as you typically know fairly precisely how many mouths you have to feed. If you do end up with too much of something, then there's a stew on the buffet the next day. Said mouths are also less particular. If you arrive at the end of service and the lasagna is a bit dry, you don't send it back, you eat it anyway or pick something else.

anjc• 15 years ago

I was an apprentice chef, and it is true what you're saying, but it's still hard physical work no matter where you are. Kind of slightly more physical in canteen style settings (or the ones i was in) because you're cooking/carrying far bigger quantities of food, and still have fairly tough time constraints.

jacquesm• 15 years ago

It's not bad at all for keyboard wielding persons to be reminded every now and then that in 'the real world' people have to work very hard for their money.

And that's not just limited to chefs either, try being a car mechanic for a couple of years (your back will be shot), a bricklayer or a person cleaning stuff.

We get comparatively large sums of money for relatively easy (in a physical sense) work.

codyrobbins3• 15 years ago

It’s good to be reminded of this from a standpoint of empathy, but at the same time I think it’s missing the fact of the matter: we don’t get paid more money because we work harder. That’s just a remnant of the Puritan work ethic. The economic fact is that we get paid more money because there are fewer people available to do what we do. Generally speaking, anyone can be a line cook, a bricklayer, or a janitor. When (more or less) anyone can do a job, it doesn’t pay as well because the available workforce is ample. If a software developer got paid as much money as a line cook, then software developers would be deployed at tasks that don’t warrant their more valuable time given their (relative) scarcity in the workforce. Deploying scarce resources in a suboptimal fashion is bad for everyone in an economic sense. It’s like using copper during the war effort to make brass bathroom fixtures instead of wiring for airplanes—it’s a poor (and potentially disastrous) use of the resource.

You can see this at work in NYC right now: the relative ease at acquiring financing means there are a lot of really dumb startups here right now with stupid ideas and no real market that are tying up valuable engineering talent which makes recruiting harder for legitimate startups that are genuinely creating value. Imagine if all the engineers who worked at Google during the early days were instead tied up working for Pets.com and Webvan such that Google was never really able to get off the ground and folded. That would have been bad for everyone, because Google ended up creating a lot of real value and Pets.com did not.

This same reasoning, I think, applies to the question of why CEOs get paid such astronomical salaries. The answer is that the kind of people with the skills to run a large company are extremely few and far between. Sure, a lot of them do fail at their jobs despite getting paid so much money; but that's not a reason for a hew and cry about how much they’re paid—it’s (usually) simply a testament to how hard the job actually is to pull of successfully. (Incidentally, it’s a common lament that the people at the top get paid disproportionately more than everyone else. But that’s just because the scale doesn't increase linearly—it grows exponentially. I'm not sure what the outrage against such a fact is—if you’ve taken differential equations you’ll remember that myriad complex mechanical, electronic, chemical, astronomical, biological, economic, etc. systems have nonlinear characteristics.)

So the idea is that salaries for scarcer resources are generally higher such that only enterprises creating sufficient value (i.e., profits, or at least a general confidence in future profits) to pay for them are the ones who get them. It’s certainly arguable whether this is what occurs in practice; and—while there are always exceptions, transients, and outliers—I think by and large it’s a good approximation.

This is kind of tangential to @jacquesm’s point, I know, because he’s simply pointing out that we should be cognizant that we get paid more for arguably easier work—but all the same I think it’s important to keep in mind that making things more ostensibly ‘fair’ may not always be in everyone’s best interests in a larger sense.

electromagnetic• 15 years ago

I do siding, soffit, fascia and eavestrough on mainly renovations.

I work most of my life 2/3 stories above the ground with no safety equipment, generally because fastening the anchors in a workable place is 10 times more dangerous than just not using the safety equipment (generally because you're supposed to have the fall protection in place because we're just barely above the requirement, but to get it into place we have to essentially go double the requirement height or more to place the anchor - so we're talking the difference between a fall that might break your arm or leg to a fall that might put you in the ICU).

The part of my job I like is figuring out the solution simply to get set up to do the job. Just recently I had to figure out how to get our staging poles up in a 3ft gap between houses to do a dormer. The only problem is it was about 26ft in the air and at best I'm supposed to have the bottom of my ladder out 9 feet and I can only manage 2 to be able to get past the eave. In the end I had to use 2 ladders simply to get onto my ladder as you have to keep your weight past the centre of balance otherwise your ladder will pull back and then bad shit generally ensues.

I have the utmost respect for the keyboard cowboys because my brother is a developer and I've seen how hard he works. Back in the day I used to develop, but I didn't have the interest to pursue it. I know the jobs are hard, and I've seen my brother come home and spend a few hours working on his own code after he's already done 8 hours of company code.

I, however, don't have respect for the developers that think their job is the only "real job" out there or that they're the only ones who work hard.

In my experience I see people across the board who are extremely hard workers from people doing minimum wage jobs in walmart to doctors. I've also seen lazy people across the board from walmart to hospitals. People are people, some are hard workers and some are lazy fucks. It would be nice to see the hard workers in jobs rewarded far more than the lazy, regardless of what job they're doing.

hfthrowaway2• 15 years ago

Great post because sometimes we forget how easy some of our jobs are.

One thing that bothered me about the article and your post, however, is the "google chef" comment is bugging you for the wrong reason.

You and the OP are in agreement with Pincus implicitly, if you believe that merit and contributions as an employee is what justifies the rewards of equity appreciation.

That's not how the world works. Warren Buffett did not lift a finger building railroads, soda pop, and newspapers. That's not why he is rich.

Pincus wants you to think of this portion of your compensation as an employee, instead of an investor. Charlie made money because he became an investor, not because he was a chef.

archgoon3• 15 years ago

> You and the OP are in agreement with Pincus implicitly

No they aren't. They're arguing independently of that. In fact, the OP explicitly mentions that he's not commenting on that. What the OP was arguing was that _if_ you were to give compensation to people based on their contribution to the company, it would be absolutely absurd, and insulting, to claim that the original Google Chef did not contribute substantially to the company.

kschua• 15 years ago

Anyone who joins a startup be it a chef or masseuse (Bonnie Brown) who take a risk by joining a startup deserves to be compensated accordingly if the startup succeeds. Just because they are not developers doesn't mean they didn't contribute to Google's success.

Glad that I am not alone in thinking that the "Google Chef" deserves what he gets.

danbmil992• 15 years ago

All I can say is Ayer's restaurant serves really amazing food at an affordable price. So he's giving something back to the community. He's hiring people and building a business. Is he less of a contributor to Google's success than the worst programmer who made $20M on their IPO?

What I don't get is the zero-sum thinking here. They're worried that someone in their organization might get rich, and maybe they didn't deserve to get so rich. So what? They should worry about their company, not be squabbling over percentages.

Reminds me of the end of "Treasure of the Sierra Madre." The prospect of real money seems to drive some people insane.

earbitscom6• 15 years ago

They're not worried about whether someone gets rich who doesn't deserve it. They no longer need to pay someone $10M to keep them working there because the risky part of the journey is over. So, they're saying, you earned X already for the risky portion, you can keep that, and you can keep your job, but we're not going to keep paying you a startup equity share for you to work at a big company with total stability, benefits, vacation, etc. We need to scale it back, and we want you to stick around for what is probably a competitive comp package if you look at it objectively.

div• 15 years ago

The deal was x amount of shares for the risk of working for a startup.

Renegging that to x/2 amount of shares in hindsight is evil.

It's a construct in which an early employee can only lose, if the startup fizzles, he gets nothing, if the startup booms he is screwed out of half of what he and his employer agreed on.

zem2• 15 years ago

no, you're missing the point. here's how it works:

zynga: want to be an early employee in our risky little venture?

emp: um - the salary is kind of low and there's no job security

zynga: but we're tossing in 100,000 options. potentially worth $10M if our stock hits $100 in the ipo

emp: okay, that sounds better. i'm in

zynga: of course, to prevent you from just exercising the options and leaving, they'll vest over four years

emp: works for me.

so basically the entire chunk of options was the employee's payment for joining the company when there was low salary and job security. the vested part is payment for sticking around to help zynga succeed. and the implicit contract is that the unvested part is an already made promise that his compensation for each year of work will be $x in salary + $y in incrementally vested options. since employers tend to have disproportionate leverage in these matters, there are of course a whole range of clauses stating that he could be fired for any or no reason and lose his unvested stock just as if he'd resigned, but that's harking back to the letter rather than the spirit of the agreement. abusing that leverage is a scummy thing to do, regardless of the technical legality of it all.

dylangs10304• 15 years ago

Just the fact that Ayers was stylized as a "Google chef" and not by his name is demoralizing. It just gets worse when they speak of his success as something a company should avoid if at all possible. It's manipulative to hire someone, offer them stock options, then decide they're not worth it later on. Just don't offer them in the first place!

sounds2• 15 years ago

Fortunately, Pincus' attempt to paint Ayers with this brush _is_ backfiring. Ayers is getting tons of free publicity, while Pincus is utterly failing at what he was trying to accomplish.

Zynga is bleeding valuation right now.

michaelochurch4• 15 years ago

Just the fact that Ayers was stylized as a "Google chef" and not by his name is demoralizing. It just gets worse when they speak of his success as something a company should avoid if at all possible.

Last time I checked, Google has multiple high-quality products that users love, and it's not hurting because of the "Google chef". Zynga has... what, exactly? A bunch of shitty games that die (and have to be reinvented) as soon as the novelty wears off.

Who the fuck is Mark Fucking Pincus to decry the "Google chef"? Zynga will never achieve 1/100 of what Google achieved. Pinky should learn from Google, not trash it on no basis whatsoever.

brown9-25• 15 years ago

I'm not sure if you should really be demoralized by it - this is one of those textbook actions where how person A treats person B tells you all you need to know about them. I don't think this incident has revealed some ugly aspect of our culture, but it has revealed a ton about the people that run Zynga and the "others in the Valley" that think this way.

I'd stay away from these folks at all costs.

JulianMiller520• 15 years ago

Couldn't agree more. I'd expect a comment/attitude like this from people on wall street but not in the world of tech. It's sad that they could even pervert the phrase "Google Chef" into something negative or something that should be avoided.

wisty2• 15 years ago

"Charlie didn't make $20M for cooking, he made $20M for taking the risk that the company he was joining would fail"

Maybe. Or how about this:

Charlie didn't make $20M for cooking. He effectively made a normal chef's salary, some of which he effectively invested into Google shares.

What's the issue? That a chef (unlike a banker or programmer) helps fund a company, and gets shares for it?

gmazzotti• 15 years ago

Exactly, thats the best way to see it and makes the "Give back our stock" more ridiculous: employees get les money in cash because they decided to invest some part of their salaries in the company shares, so, if the company go to IPO and they get rich they are not geting rich because of how much value they provide to the company, they get rich because they could recognize a great company in the early days and invest on it.

Is like saying to an angel you didn´t help me so much in your mentoring so give me your shares back.

wisty2• 15 years ago

I kind of understand why they want to stop giving them shares, as they no longer need funding from little people.

But it seems a lot like tearing up a term sheet 5 minutes from signing the final contract, just because you managed to shop for a better deal. It might be legal, but it's just not done.

davros• 15 years ago

That's the best way to look at it. All the talk of what is 'fair' misses the point - remuneration is not inherently fair, never has been. You can point to market forces or regulations or whatever, but there's no real and fair basis for most differences in income.

What we can be fair about is how we treat people, if we give them shares and later we wish we hadn't we should live with that gracefully. We can give them bonuses for both self-interested (motivate employees) or altruistic reasons (it happens!).

andywood• 15 years ago

Begrudging the 'Google chef' is taking the effects of market forces that influence the relative pay of chefs and software developers, and trying to apply them by sheer assertion to the stock option lottery. The mechanics that influence pay are completely separate from the mechanics that make early employees rich. If a CEO honestly believed that certain workers should not have any chance of getting rich, the consistent thing would be not to offer them options in the first place.

This issue also reeks of the Just-World Fallacy. Individual early employees of wildly successful companies don't get rich because it's fair, even if it sort of works out that way on average. They get rich because someone gave them options, and then the stock skyrocketed. Efforts to explain it in terms of justice are mostly post-hoc rationalization.

dylangs10304• 15 years ago

Right, and the problem is that everyone wants to be a captain of industry, but no one wants to clean the toilets. So they promise wealth to someone who cleans their particularly promising toilets, but they don't really believe in the worth of that job, otherwise, they'd probably be doing it themselves (I think most programmers would sooner learn a new sector of information technology than give themselves a position as a cook on the side). It becomes "I don't want to do y, I'm much too busy with important x" ----> "Eureka, pay someone for necessary evil y" -------> "Wow, look at all this money, hey wait, my company is selling x, not y!" The fallacy is revealed when it's simplified.

MaysonL• 15 years ago

At this point the only question worth asking about this situation is whether anybody on Zynga's board has the balls and integrity to tell Pincus to go fuck himself.

potatolicious2• 15 years ago

They can't. Pincus isn't an obstacle in the way of the company. Pincus is the reason Zynga is successful.

Without the aversion of innovation, the complete disregard for ripping others off, and partnerships with incredibly shady companies, Zynga would not be anywhere close to where they are today.

A business in the theme of Zynga needs the unscrupulous head honcho who can't care less about what's right, only what's profitable. Get rid of Pincus and Zynga sinks like a rock.

Let's be honest, if you take Zynga's games, strip out the blatantly psychologically manipulative bits, inject some real fun into there, and actually spend some money on innovation... none of it would be profitable.

nasmorn• 15 years ago

Lets not forget, the basis of their business is that they found a way to replicate the economics of a slot machine without falling under gambling regulation and without ever having to pay out real dollars. It is still the same business though. As a former game developer I am shocked by the fact that people buy their image as a gaming company. They have about as much to do with computer games as roulette has to do with Settlers of Catan.

kamaal2• 15 years ago

What really is a important question to ask now is Would anybody worth their salt really want to work or deal with them anymore?

If I know someone is going to rip me off sooner or later. I am not going to do business with him.

DodgyEggplant• 15 years ago

Conduit famously gave options to the cleaning ladies

kamaal2• 15 years ago

Its not about chef or a Janitor or whatever. Why are these people acting as though only a few have the right to be rich?

Why can't a Janitor be rich? Why can't a chef be rich? What really is so wrong with it? This attitude is so despicable! So anybody who doesn't go to a big Ivy league, or some one who doesn't have an MBA next to his name or hasn't worked at a investment bank can't be rich?

Which in case, what this really turns out to be is alternate form of slavery where a selected few have to resign themselves to a lesser standard of life to serve the remaining self chosen elite and act in every way such that the elite are benefiting.

If you want some job to be done and you are ready to pay for it, money/stock or whatever. And you promise and the contract so. You just need to pay up. That's it, it ends there.

You don't get the work done, squeeze the juice out of the employees. Then one fine day realize that what you promised is now worth a lot of money. So you suddenly dump them, loot all the money yourself and say that they don't deserve it.

You had promised that it was worth paying something for some one from some work. So now when it is time to pay up. Just pay.

Tichy3• 15 years ago

Also, I think most people are not doing anything useful at all while they rake in the money. That probably irks me the most, or rather, I think it is a pity because of all the wasted productivity.

TDL• 15 years ago

Hey now, not all MBAs think this way;-)

lancewiggs2• 15 years ago

Ivy League MBA here. I completely agree. And so far we are missing the two other points - fairness and fun. It's simply the right thing to do to get everyone onto the bus, to let everyone share in the upside of a start-up. Sure the amounts of options can vary between employees, but it's just not fair to be stuck on a salary while everyone else around you gets millions from an exit.

The second reason is fun. Isn't it a whole lot more fun to come to work where everyone has a stake in the company? Wouldn't it be wild fun if your company did an exit or IPO and everyone came to work with a huge smile on their face?

For the sake of giving up a little bit of founder equity we can create an environment that is not only a lot more fun to be in, but is potentially life-changing for everyone and their families. Thinking anything else can lead to the situation that Wall Street is in now.

grandalf3• 15 years ago

This is essentially a Trolley problem that people are getting quite indignant about: http://en.wikipedia.org/wiki/Trolley_problem

Here's an oversimplified example that mirrors the classic Trolley problem:

Suppose the company consists of three people: The founder, the engineer and the chef. The founder can't raise more money from investors and she realizes that if she fires the chef it'll free up 200K ISOs which can be used to recruit a sysadmin. Without a sysadmin the startup will fail. If the founder gives up her own shares, she loses control of the company to one of the investors, who she knows will sell the company to cash out immediately. If she stays in control, the founder aspires to grow the business to 20x its current size. Should the founder fire the chef?

What small detail would have to change in order to quell the ire of all of the people claiming that Pincus is acting unethically?

blrgeek• 15 years ago

The fact that in this case the founder alone has 20% of the stock (after multiple investments & dilution), has 40% of the vote share, and is probably talking about < 5% given to early employees. And his investors are gaga about him, and super unlikely to take control away from him.

If he gives away 5%, he will still have 15% of the equity, 30% of the voting share, and retain complete control of the company. Or he could issue 5% addn shares and dilute everyone equally by 5%.

Now he just looks like as ass.

OoTheNigerian3• 15 years ago

Like I said earlier, how about keeping your own side of the bargain?

Remember the 'useless' chef already got you to where you are presently. The place where you need to raise more money.

Why then did you hire the chef in the first place? If the chef has started cooking poorly, you sack him/her. Just like your board would fire you for poor performance.

That this is even up for debate is baffling.

PS: Grandalf, so I suppose the stock people receive in your project 'Dandelion Labs' do not really have any worth because two years down the line the people canget disposed if the founder needs to free some stock without getting diluted

grandalf3• 15 years ago

I'm not making an argument here, just comparing the situation with a Trolley problem and wondering what details are most troublesome for people.

I think it was probably a stupid decision by Pincus to do this, but not necessarily an unethical one. ISOs with a vesting period are not money in the bank, and anyone who thinks of them that way has been foolish.

prodigal_erik3• 15 years ago

The answer here is dilution. Issue enough added stock to solve the problem and everyone ends up with a smaller stake in a more valuable company (if only because it's no longer doomed). You don't single out an employee and mug them, at the very least because then the sysadmin would have to be an idiot to believe it couldn't happen to him during the next crisis. For this to be a trolley problem, the chef would have to be holding a supermajority of the equity—more than the founder and the investors put together.

tkahn6• 15 years ago

You might fare better if you conceived of a more realistic scenario. The idea that you would hire a chef in a three person company before a sysadmin is unbelievable.

grandalf3• 15 years ago

In this contrived example, the chef is the employee who turns out not to be crucial to the company's success.

nandemo• 15 years ago

Your example is not even remotely close to the Trolley problem in substance.

danssig• 15 years ago

>Should the founder fire the chef?

No, the founder is incompetent and should be fired himself or go out of business. If he gave too much money to positions he doesn't even care about he has no business being responsible for share holders' money.

To be honest here, the fact that you don't find this unethical sends up very large red flags about doing business with you.

maxerickson• 15 years ago

People think that the noble founder in your story is firing the chef because she can make more money hiring a different chef, not because the future of the company directly depends on it.

You seem to think it is clear that Zynga can't afford to attract 'top talent' without the clawbacks. Other people, in the face of a billion dollar IPO, think that is silly.

kaze• 15 years ago

Beautiful.

There was a chef of similar capabilities at my first company. Ten years later, me and my ex-colleagues still rave about his food and the inspiration it gave us.

EVERY employee counts.

OoTheNigerian3• 15 years ago

How about just keeping agreements?

Does it matter if the money allotted to the barber down the road becomes worth $100m?

If he kept his part of the deal, you should.

ck2• 15 years ago

I wouldn't have a problem with a startup janitor taking home $20M in a stock payout.

A rising tide should lift all boats, not the boats they specifically select with hindsight.

damoncali7• 15 years ago

Not only is it not a problem, it's a good thing. We sell dreams. In order to do that, some of them have to come true.

petegrif2• 15 years ago

If the Zynga story is as reported it is beyond despicable.

suprgeek• 15 years ago

What really stinks about "not creating a Google chef" scenario is the implicit belief that the chef should not become rich and should not be able to participate in the success of your company. Why the arrogance? If an employee (Chef, Janitor, Developer or CEO) played a part in the success, exactly why is it that they should not participate in the payoff

Tichy3• 15 years ago

Also the food comes up pretty high on the list of incentives for working at Google. Who knows how many talented people now work at Google because of their chefs.

Also consider opportunity cost. The chef could have opened a restaurant instead and perhaps also earn a lot of money that way.

jiggy2011• 15 years ago

I thought most restaurants basically hemorrhaged money? A job at a tech startup + stock options might have been quite low risk by comparison.

Tichy3• 15 years ago

Sure, but if he is a really good chef? Just saying that chefs can make a lot of money, it is not a given that chefs have to be poor.

neilk• 15 years ago

According to BusinessWeek, new restaurants are not quite as risky as people perceive. Only 60% of new restaurants fail or are sold in three years[1], which is a bit higher but similar rate to any new business.[2]

I can't find any good numbers on tech startups with some Googling other than the oft-quoted 90%. This is hard to compare, because you might earn some sort of salary while the startup is in operation, but it closes down because it fails to meet growth targets.

But on balance it seems to me the startup is still riskier.

[1] http://www.businessweek.com/smallbiz/content/apr2007/sb20070...

[2] http://www.newventurelab.com/resources/blog.php?id=261

gwern2• 15 years ago

> Also consider opportunity cost. The chef could have opened a restaurant instead and perhaps also earn a lot of money that way.

Would he have profited millions, on top of his salary? I read routinely about hugely popular top-rated restaurants going under (eg. https://www.nytimes.com/2011/04/27/dining/27zakarian.html?re...) or nearly going bankrupt (http://tmagazine.blogs.nytimes.com/2011/08/16/gordon-ramsay-...). When we're considering risk, let's remember the upside to an option on a restaurant is small, and the risk is practically startup levels.

OoTheNigerian3• 15 years ago

This Zynga position is the reason why most Nigerian politicians have second wives.

A poor young man finds a woman wo will marry him a starter in life, poor with fair education.

20 years down the line after the woman has bore him kids, supported his career, this man becomes a Governor. Then aha! He realizes his mid aged wife is not really educated, not fit for the position of a first lady.

He does not want the situation of a high school educated first lady.

rooshdi• 15 years ago

They also share another commonality: breaking their vows after hitting it.

lurker14• 15 years ago

This happens in most other contries as well.

jackgavigan2• 15 years ago

If these people were underperforming, then why didn't Pincus address the issue before now? Why do it now, when Zynga appears to be preparing to IPO?

This strikes me as pure greed. Pincus offered people shares as part of a package to persuade them to come work at his risky startup. He made a deal and now he wants to go back on it.

Say what you like about Bill Gates but he was perfectly comfortable with early Microsoft employees like Andrea Lewis growing rich from their share options.

PS: Lots of people talk about the greed on Wall Street but it strikes me that the prospect of riches is causing greed to rear its ugly head in the startup scene too. What's more, people seem to turn a blind eye to it if the perpetrator has been successful. It's disappointing and I think it bodes ill for the entire sector.

michaelochurch4• 15 years ago

Very ill. We'll never know the real numbers, but it wouldn't surprise me if Mark Pincus has done $1+ billion worth of damage to the startup ecosystem. Fewer people will want to work for options/equity because of this story (which has caught on outside of our echo chamber) and the reputation of Silicon Valley's leadership has taken a hit.

On the flip side, this is a great opportunity for Facebook and Google+ to repair their reputations. Drop Zynga. Denounce Pincus. I don't know about Facebook, but the vast majority of Google engineers who have to work with Zynga detest that company, so this move would also be beneficial for internal morale at many companies.

jackgavigan2• 15 years ago

Do you really think that Facebook, led by Mark "I'm going to fuck them in the ear!" Zuckerberg is concerned about ethics?

fauldsh• 15 years ago

Are there no laws in the US protecting employees from this kind of scenario? Something like Unfair Dismissal in the UK.

As others have said, the first employees took the risk of working for a startup, any-one who joined later can't possibly deserve more because they "contributed more" because the company wouldn't exist without the original employees.

smackfu• 15 years ago

I wonder if the chef was hired at typical chef wages, or at "startup" chef wages?

jfruh• 15 years ago

The thing that most bugs me about this is that the Google chef somehow needs to have his rights defended. He was made a promise when he was hired and Google cheerfully fulfilled its obligation to follow through with that. Ditto on whoever is being screwed at Zynga. "Unvested" does not mean "maybe you will get this at a later date, who can say."

alex_c• 15 years ago

Most of the business world has no issue with a "you deserve what you negotiate for yourself" mentality - if it applies to your own high compensation, or to someone else's low compensation. It only becomes an issue if someone you perceive to be lower on the pecking order than you has successfully negotiated a good deal.

A contract's a contract, and a deal's a deal. "Deserving" it doesn't come into play beyond the scope of the contract.

esrauch9• 15 years ago

That is exactly what unvested means, it means "maybe you will get this at a later date, maybe you will be fired, who can say."

Zynga could just fire all of these people if they didn't want to give them the stock, and that wouldn't be "taking back stock", that would just be "you never had the stock". The only reason why it's evil is because they think the employees are actually valuable enough that they want to keep them around but not valuable enough to keep good on their stock units. They could easily fire the employees and let them re-interview for their old jobs if they wanted and it would be perfectly legal (companies do this on a regular basis to rehire employees as contractors without benefits).

RSUs and stock options like this are pretty interesting to me because it provides a huge incentive for employees to stay at the company, but it also provides a huge incentive for employers to fire their employees after (N-1) time periods where N is when their units vest.

damoncali7• 15 years ago

If the only reason you're firing someone is to keep their stock, you're a dick and it's wrong. This, unlike options agreemetns, is not complicated. It may be legal. And it may be financially rational. But it's wrong.

sliverstorm• 15 years ago

"Unvested" does not mean "maybe you will get this at a later date, it depends on whether it is worth anything.

Fixed for accuracy.

jronkone• 15 years ago

It's not that Google chef needs defending, it's that the dickheads at zynga need to be exposed for what they are.

dasil003• 15 years ago

It's laughable to think Pincus is worried about a "Google Chef" scenario. There will be no Google-anything scenario at Zynga.

webwright• 15 years ago

I'm not sure I agree with earbitscom (commented a few times here), but I upvoted him because I think he's boiled it down to the important point. But for the people downvoting his "options are future compensation" argument, here's an interesting thought exercise:

Say you joined a young/really hot startup that was heading straight up. You negotiate a good options package, but it's lean-- they aren't super eager to part with these (obviously valuable) shares.

Then, the world explodes. The company gets sued, the market crashes, the users revolt. But the company manages to emerge from the carnage beaten-but-alive. It's no longer a sure thing. In fact, it looks risky as hell. But you believe in the vision and the management, so you want to stick it out.

You're 1.5 years in. New hires are getting packages that reflect the (newfound) risk in the stock. Your stock package looks small in comparison. Given the new information, would it be wrong to negotiate for more stock?

SourPatch• 15 years ago

If you didn't have some leverage over the company, it would not be wrong. If you were, say, lead engineer, and knew that training a replacement would take quite some time, then it would be wrong.

doki_pen• 15 years ago

To argue that he deserved it is to cede the point. It was what he signed up for and google was right to respect that agreement.

gwern2• 15 years ago

> Feeding a few hundred people in a professional setting is not just taking the process of preparing a home-cooked meal and multiplying. If a software engineer screws up, the site goes down. But if a chef screws up, people get sick. In extreme cases, they die.

Wow, hyperbole much? A chef only gets people sick or kills if he epically screws up.

A thought experiment: figure how many restaurants and fast-food chains there are in the US; multiply by how many people they serve a day; multiply by 365.25; divide by number of annual deaths. Ponder this upper bound on risk. Ponder whether the base-rate risk is greater or lesser than the risk of walking across the street or driving to work. Finally, ponder on whether this base-rate ought to be adjusted upwards or downwards for a trained corporate chef working in a controlled environment with good facilities (as opposed to a newbie teen or immigrant working for minimum wage in a kitchen somewhere).

davesims6• 15 years ago

The real problem Zynga has created is summed up nicely is this comment from the OP's blog:

"Pincus has violated the basic tenant of start up economics and, thus made start ups vastly more risky for people to join. In short he's just ups the cost of hiring at start ups by 10-15%."

I suspect long-term it will be much more than that. Whatever the reality behind the scenes, Zynga has created a new startup narrative to replace the "Google Chef" narrative that was precisely the story that made it possible to hire premium talent willing to risk a few years and hard work on the chance of a big payout. Zynga has quickly and fairly decisively dealt a near death-blow to that idea.

Between Zynga and the stories coming out of the Skype acquisition a few months ago, I expect startups will find it increasingly difficult to trade stock options in lieu of compensation early on.

Unless and until some legal device is created to re-establish that trust, I expect we'll be looking back on this incident in years to come as the moment when startups lost one of the essential strategies to hiring top talent early. Everyone will be skittish over this for quite some time.

whacker• 15 years ago

Why is this even being debated?

How is the chef, or any other employee, any different from an early stage investor?

pg• 15 years ago

It's not about cooks vs hackers. This is the critical point:

  Charlie didn't make $20M for cooking, he made 
  $20M for taking the risk

The money that founders and early employees make from startups they make as investors. They're getting compensated for risk, not simply for the work they do. Startups are volatile, which is why investors like them. Like other startup investors, early employees sometimes get really lucky. But that is not the same thing as being overpaid.

I can't say much for sure about this particular case because I don't know the details, but I don't like the sound of it. It seems so shortsighted. The amounts of stock involved must be small, and the damage done not just to Zynga but the whole startup world could be big.

codyrobbins3• 15 years ago

Disclaimer: Only having read the WSJ article and knowing nothing more, I think it’s more or less a form of blackmail—the employees are unfairly being put in a no-win situation.

That being said, my takeaway was that they had thrown around equity so liberally that they’ve exhausted their employee options pool and it’s going to interfere with their ability to recruit going forward. Is that the wrong interpretation?

If it’s not, and given such a situation, do you think it’s fair to say that a startup should generally be trying to allocate its options carefully such that a chef doesn’t end up with $20M worth of equity?

aneth• 15 years ago

Given that most equity is worth nothing in the end I don't think you're correct. The beautiful thing about equity is that its future value can not be determined and it's not possible to limit the upside fairly. If employers start putting a cap on the upside, it undermines the shoot-for-the-moon lets make this a $100 billion dollar company spirit that equity otherwise engenders. Had Google had a $1B exit, or a $100M exit - both far more likely scenarios when the chef joined - the grant would have seemed perfectly reason.

This has nothing to do with risk and all to do with incentive. Whether your grant is on top of a full salary or not is irrelevant.

blacksmythe2• 15 years ago

  >> That being said, my takeaway was that they had thrown around equity so liberally that they’ve exhausted their employee options pool and it’s going to interfere with their ability to recruit going forward.

They can issue more stock to incentivize new employees, which is fair in that it dilutes everyone equally (preferred and common together).

What is unfair is to assume that the preferred stock allocation must be a constant, and that you have to claw back existing stock options in order to pass on stock in the existing options pool to new employees.

blacksmythe2• 15 years ago

  >> the damage done not just to Zynga but the whole startup world could be big.

They have already added a new verb to startup vocabulary - to get Zynga'ed.

paul• 15 years ago

This is a good example of why Google became a great company: they understood the big picture. Zynga apparently does not.

davesims6• 15 years ago

For all of you trying to parse this on a purely business level and justify Zynga on some ethical or legal distinction between 'vested' and 'unvested', etc., understand this: The take-away lesson, from the standpoint of an experienced developer being offered stock options in lieu of compensation is, from now on, a simple story, and it's the one you will have to overcome for the foreseeable future, thanks to Pincus:

Once upon a time the "Google Chef" could become a millionare.

Now he can't.

The End

martian• 15 years ago

My startup has an in-house chef. It is the best investment we have made. Employees are happy, morale is high, we eat healthy food, and stay late to have a family-style dinner. When we make it big, I'm going to be stoked to share profits with her. :-)

One of my colleagues takes pictures of our food and puts them up here: http://thumbtackfood.tumblr.com/

justinhj• 15 years ago

being a chef is a hard job for sure but the real point here is that being on board for a succesful ipo is like a lottery win for all early employees. let them have it and enjoy it. don't make them feel like shit by telling them they don't deserve it. i don't see any win for zynga here

linuxhansl• 15 years ago

I do not understand this entire discussion. He joined Google, got early stock options that ended up being worth a lot. Good for him. Where is the problem? The system worked.

code_duck• 15 years ago

This is a pointless rebuttal, because it's not about who contributed what, or how hard a chef worked, or whether their job was worth it. If you make a deal with someone for x amount of stock, or whatever, they get it. You don't try to strong arm them into giving it back later on - that's dishonest. It doesn't matter if it's worth 20 million or 20 cents.

HarrietTubgirl• 15 years ago

I interned at Google back in the day, and when I came back to school, I can only remember raving about one thing -- the food. It was absolutely fucking amazing. I gained 10 pounds that summer (starting at 145, this probably wasn't a bad thing).

There was a lot I could have raved about. The fact that around my area in ads there was probably a 20% chance that an individual had his own Wikipedia page. The debugging tools I got to work with and the MapReduces I got to write. All of the geeky stuff that makes Google a cool place to work at.

But when I got back to school, the food is really what stuck out about the experience. I would argue that those cafeterias are one of Google's most marketable benefits.

A bad programmer who is overcompensated just blends in, a great chef gets singled out.

No matter what, equity distributions are going to look insane in retrospect. Probably the most glaring ones are not even going to be the under-performers who plodded along or folks in less-important roles that were hired early, but the crappy execs that were hired well after the risk was decreased, but got a huge stock grant anyway. Start with those guys.

Let's be honest here -- how hard someone works isn't directly relevant to the discussion, it's how much value they end up adding. But to that point, I'm pretty sure Charlie added a lot more value to the company than many software engineers there had.

missy• 15 years ago

I know in stocks you can sell futures. So you say, the shares are worth 1$ today as a fresh start up, in 2 years we will buy them back of you for 20 $, if the share is worth over 20$.

If your are Zynga and you are confident that they could go above that its a good buy and the worker feels a bit more secure but wont earn these too high returns that Zynga may not like .

Sorry if my application of basic futures to Zynga are bit off, hope explains more or less what I mean, my memory is flaky here.

balsam• 15 years ago

I don't know, man. I would rather give shares to someone who can keep my teammates and I on the brink of starvation. Does nobody remember the motto "stay hungry, stay foolish"?

In defense of the Google chef

Related Stories