> But you will not lose capital as an employee, since you did not put in capital to lose.
The conversation is a lot more complicated because there's an opportunity cost, you lose time (your time is finite, company time is infinite), you lose reputation, and so on. Besides, your argument is a bit weak as it's not like hedge fund managers put up the cash themselves, either.
My point is only that value-generators should be rewarded as such, and it's a bit weird that engineers are totally cool with not getting a piece of the pie.
> My point is only that value-generators should be rewarded as such, and it's a bit weird that engineers are totally cool with not getting a piece of the pie.
Software engineers are some of the best-paid labor in the world with great benefits and workplace conditions. They often receive equity as a compensation, even when the salary is still vastly above many other lines of work. They are absolutely getting a piece of the pie, and in much greater proportions than almost any other economic activity.
You may be discounting the value of capital, management, sales, and other roles in a successful software-related business.
The remuneration that labor and employees receive is never going to be in line with the value that they generate, precisely because the former group doesn't take any risk. They don't invest any personal capital and they aren't liable for anything. They can walk away any time, sometimes voluntarily, sometimes not. In return, they work fixed hours and get paid on a routine basis. The owners receive only what remains above and beyond all that, which could be great profits, just breaking even, or even losses.
> there's an opportunity cost, you lose time (your time is finite, company time is infinite)
Everyone everywhere loses time, because time passes whether or not you choose to do anything with it. Employees aren't unique among economic entities that they face opportunity costs.
> it's not like hedge fund managers put up the cash themselves, either
This is actually a good example to dive into. Hedge funds are typically paid "2/20", meaning 2% of assets under management every year whether or not there are any gains, and 20% of any gains above some benchmark. It's similar to, say, a commission-based sales role that gets paid a certain fixed salary and a percentage of sales they make. Whether or not 2/20 is "fair" is solely up to those who buy their services, since there is a competitive market of providers of fund management (the "employee") and providers of capital (the "employer").
And in some situations, the "employers" do in fact lose a lot of money, while the "employees" walk away; the limited partners of Melvin Capital, for example, lost many billions of dollars, all while Melvin Capital itself continued to charge the 2% management fee.
And within hedge funds itself, there are again employees who receive a stable salary and maybe some performance-related bonuses on top of that, versus the principals and owners who have personal capital invested. When LTCM blew up, for example, it's estimated that its owners lost $1.9B[0].
> The remuneration that labor and employees receive is never going to be in line with the value that they generate, precisely because the former group doesn't take any risk. They don't invest any personal capital and they aren't liable for anything. They can walk away any time, sometimes voluntarily, sometimes not. In return, they work fixed hours and get paid on a routine basis. The owners receive only what remains above and beyond all that, which could be great profits, just breaking even, or even losses.
The people at the top get an even better deal. They get given stock options, so they get the upside but not the downside. They can also walk away, but they'll get a big payout if they walk away involuntarily. They work fewer hours whether you're counting butt-in-seat time or making-efforts-about-work time (some people, bizarrely, compare the CEO's making-efforts-about-work time to the employees' butt-in-seat time and conclude that the CEO "works more").
> And in some situations, the "employers" do in fact lose a lot of money, while the "employees" walk away; the limited partners of Melvin Capital, for example, lost many billions of dollars, all while Melvin Capital itself continued to charge the 2% management fee.
You're flipping the categories. Being the "investor" can be a bad position, sure. Being the manager, the decision-maker, is where you can't lose. Concluding that that somehow makes employees better off than owners is ass-backwards.
The conversation is a lot more complicated because there's an opportunity cost, you lose time (your time is finite, company time is infinite), you lose reputation, and so on. Besides, your argument is a bit weak as it's not like hedge fund managers put up the cash themselves, either.
My point is only that value-generators should be rewarded as such, and it's a bit weird that engineers are totally cool with not getting a piece of the pie.