Reserving judgment about the other merits of this article - it's sad to witness again how simplistic, shallow generalizations are the norm when discussing financial matters:
"Another thing which is crucial to the financial services industry is the concept of being too big to fail, which has been put to good use by Citigroup, Bear Stearns, and Goldman Sachs over the past few years in sucking money from American taxpayers."
While this may be true in some sense for Citigroup, applying that to Bear Stearns is dubious, and it's plain wrong for Goldman Sachs. Banks like Goldman and JP Morgan Chase were basically forced to take TARP investments:
In other words, Goldman didn't want or make any profit from the TARP investment - the American taxpayer did. GS didn't want that investment at all - it took it to comply with the wishes and policy of the American administration.
The current Abacus scandal is occurring not because, but despite the fact that GS collaborated with the administration and took the TARP investment. In fact, this scandal is mostly about how GS foresaw the collapse of the housing bubble, and set up positions to profit from it - thus absolving itself from any need for taxpayer assistance.
If anything, the American administration and public opinion seem more forgiving toward institutions that played the "too big to fail" card, taking too much risk and heavy loses as a consequence. Those institutions were bailed out, and are currently seeing nothing like the penalties and negative attention that GS is suffering. If the SEC's portrayal of the Abacus deal is accurate, GS should be punished - but the "too big to fail" approach is vastly more dangerous and damaging.
Either way, the discussion isn't served by over-generalizations and lumping everything together.
Goldman received over $12 billion directly from the AIG bailout. Perhaps it could have survived without TARP, but almost certainly not without both TARP and the AIG bailout.
Would Goldman Sachs have crumbled if AIG were allowed to default? The company claims it was properly hedged, but it stretches credibility to believe this given (1) its massive exposure to AIG and (2) the state of the financial markets at the time.
This is valid point, but its implications are limited: you're basically saying that if AIG collapsed, it would lead to further collapses (due to "the state of the financial markets at the time") and that could very well lead to GS suffering as well.
This is true, not just for GS, but for almost any other financial firm and bank in the United States. In that sense, we all, including end consumers, enjoyed the benefits of TARP bailouts - assuming that without them and policies related to them, the entire financial system would collapse and drop the US to something like the great depression or worse.
Those closest to the bailouts got the most milk in their pails. Maybe the consumers got a dribble, but that doesn't disqualify criticism of those who got a whole bucket, especially if they stole the cow to begin with.
GS practically set up AIG to collapse. You might say that's just business, but you have got to be kidding me if you think GS didn't see major ramifications for the economy and predict some kind of governmental assistance. (Normally, if AIG was less entangled with all of the Street and had failed on its own, GS would have have simply lost a bundle on all of its credit default swaps).
No. I'm saying that Goldman received $12 billion from AIG that it wouldn't have received if AIG went under. So wipe that money off Goldman's balance sheets before talking about the health of the business absent TARP, etc. The issue is claiming the company would have done fine without government support and selectively ignoring the fact it had just received a $12 billion dollar bailout in the form of a federal payout of AIG's debt to it.
Startup execs fully realize that their pitches and figures are incredibly optimistic (read: improbable). The prime recipients of such pitches - investors - are well versed in tuning them down and seeking the grain of truth within the hype.
Candidates, especially young or recent graduates, are not. If you, an exec, hone a pitch on a jaded 40-something VC manager with 20 years of industry experience, and then use it umodified on a 20-something candidate with 0-1 years of industry experience - you are not being truly fair and honest.
And yes, the candidate is likely to discover that a year later, feel cheated and abandon you. Tweet about him being a "flake" if that makes you feel good; the blame lies solely with you.
First of all, "high" is relative. The exit may be high, but still not cover the funding, so all the proceeds go to the funding entities (the VCs) and maybe a few top executives / founders. That happens in countless startups that sell for $50m after raising $30-40m. Even "senior" employees get basically nothing.
Another common issue is dilution. Your vested shares can and will be severely diluted. Again, the VCs and maybe the founders are the only ones with any control or protection over this.
A lot of other interesting things can happen at or around that all important payday. You may want to read about how things like IPO and other liquidity events are actually handled by law. Surprisingly few startup employees do, and this stuff is far from trivial - there's a reason why Goldman et al pay the best and brightest to figure this stuff out.
All of this is doubly true if the founders / execs are untrustworthy / morally indifferent and actually strive to dilute or otherwise deprive you.
Our very first investment agreement (3i as main investor with a local VC doing the legwork) had a table of equations defining various things that would effect how much founders and option holders would get in the event of an exit. Working out what these actually meant was non-trivial and we argued strongly against them - no luck.
Ironically when we went public we made a chunk of money from the very ratchet agreements we had argued so vigorously against (combined with help from the taxman).
"short tenures could also signify a rapidly growing company"
Sure, but if everyone interviewing you are less than a year in, where are all the people who worked here before?
And why are you being interviewed mostly or exclusively by junior team members who haven't proved themselves yet? Is the company entrusting the selection of successful employees to newbies who haven't yet proved they can be such?
An interviewer for a company in the middle of a growth spurt should be able to explain that, quote some enticing growth figures, and mention that "almost all of the original team members are now project leaders and executives... in fact, if this goes well, you'll meet some of them shortly".
This whole discussion about "job hoppers" is so bogus.
Employment is a relationship. It has two sides. When one party decides to end it, the most common reasons are:
1) Other party's chronic inability to respond and satisfy the breaker-upper's needs.
2) A competitor coming along who satisfies those needs much better.
Employers regularly break up employment relations for those two reasons. But now some CEOs and VC managers will have us believe that it's wrong for employees to do the same to them.
Employers are expected - nay, obligated! - to fire employees who fail to meet performance expectations. But if an employer fails to meet your compensation expectations, and you leave, the Susters and Calacanises shall publicly insult you and announce they will not hire you, and nobody else should either.
It is telling that only very specific employers and very specific dream-dealing businessmen are among the mob shouting indignantly about loyalty and morality. When was the last time Google or Palantir blogged petulantly about "Generation Y" and "trophy kids"?
Suster, Calacanis et al are reacting to their own failing at keeping employees, with all the grace, maturity and effectiveness of that girl you dumped, who went out on the street and shouted about what a terrible person you are to leave her, and how nobody else should ever trust or date you.
Mature, successful employers do not waste their time on that. They're too busy making great products with their happy, motivated, tenured employees - or bidding polite farewell to those who should or want to move on.
This article is spot on. Startup executives are world-class dealers of dreams. They need to be more weary of selling to their own employees. Too many bright engineers work insanely hard for a year or two, then discover all they're getting is fairy dust, and quit. Why don't Suster and Calacanis write an article about that?
It's most striking when a top employee leaves for a company that's not a startup. Take that engineer that left Mahalo for Yahoo recently. Suster and Calacanis call him a flake, yet how much you want to bet he'll stay at Yahoo longer than a year?
And since when is it acceptable to attack an ex-employee that way, sleazily keeping his name out, when everyone on the internet knows who the epitaphs refer to?
These people are sore losers, and they'll keep losing until they figure out what that "dying company" is doing right that makes their best engineers "hop" there rather than labor at their own enterprises.
All they do right now is poison and taint an otherwise healthy, open and mature dialogue between employees and employers.
You're way off base.
- I haven't lost any employees so painting me with that brush is wrong
- I never made any commentary on the guy who left Mahalo - I wrote him a private email making it clear that my commentary had nothing to do with him (I didn't even know that story when I wrote my post)
- I never publicly insulted anybody
- I made a balanced argument that if people leave a few employers early in their careers it's fine. If they make a career out of changing jobs they'll find it hard in the long-run to wind up in senior positions.
And while we're on the topic of insulting posts or people on a rant, why don't you re-read your text and think about how IT sounds
> "In the case of Mahalo, it seems like they have a large asshattery factor (Calcanis is an overbearing idiot who will post nasty things about you on Twitter)"
Why anyone would willingly work for someone like that is beyond me. You're setting yourself up for abuse, ensuring other employees are abused in the process.
In my view, once you post something ugly about any of your employees, you lose your ability to hire any non-desperate (let alone loyal) employees forever.
A prior employer looked good on paper, and on Google; in fact, I went into the interviewing process very skeptical of their industry in general, and came away with a surprisingly positive vibe about the organization and what they were trying to do. The employees I spoke with were top-caliber folks; asked smart questions, and had good answers for me as well. The interview with the owners was fairly typical and high-level, nothing out of the ordinary.
So, I came aboard. The principals had just left for an extended sabbatical (they departed shortly after I interviewed with them). Morale seemed excellent when I started, and there was a great deal of interesting work to be done. When they returned, the mood changed very quickly, and it didn't take long to understand why.
I spent enough time there to do some interesting things, and help them over a knowledge slump during an infrastructure forklift, but it quickly became apparent that the owners and I had different ideas about how people should be treated, and how businesses should conduct themselves. My personal google-fu failed me on this one.
I showed myself the door to take a position that I would have never otherwise considered taking, knowing full well how that would look on a resume, but also knowing I didn't want to continue contributing to their bottom line.
(I have a few items on my resume I do not enjoy discussing in an interview, and I've had to add this one to the list: being vague or evasive suggests you're hiding something, but any real explanation just invites the idea that you're the kind of guy who doesn't work well with others. But, such is life.)
As much as I support job changing (see my other comments), it's perfectly fine to stay at the same job for 24 years (heck, why not 50?) if it's really good, you're constantly growing, and can demonstrate a rising skill curve throughout.
Your extreme suspicion of anyone who stays for so long reveals a more fundamental truth about the software industry: very few companies manage to keep employees happy and challenged for so many years.
Forget "dream jobs". This example is not just ridiculously inappropriate: it actually works against the authors point.
If you founded a startup, then quit abruptly at the first sign of real challenges, and now you're trying to found another startup - how would prospective investors look at you? (Even if the former investors aren't already suing you, which is entirely possible).
On the other hand, if you are an early startup hire, and you stick with what is obviously one of the vast majority of failed startups, so you get to be fired when they reduce their headcount to what they consider the best engineer (you, alas, happen to be considered the 2nd best) - how is an employer going to look at you, compared to someone who left two months before?
That's right - you were fired, and he quit. There's obviously something wrong with you.
Comparing employees to founders isn't only completely bogus - it also shows why the entire article is false, trying to explain why employees need to behave like founders while they are a very, very different thing.
You're wrong for doing what's best for you, instead of what's best for an unreasonable employer such as this author. At least, according to this author, that is.
Also, notice that the "Japanese Salaryman" model is not only completely unworkable for high productivity, highly creative projects such as tech startups - it doesn't really apply here. That model, and all models like it in Europe and elsewhere, has two sides - the employee doesn't leave, and the company doesn't (easily) let him go. Needless to say, nobody in his right mind would suggest implementing the latter part, least of all the author who comically insists on the former part.
In other words, what we have is an employer who insists on applying half of a completely irrelevant model to his particular line of business.
The local model (based on the European one) makes it very hard on the employer to fire a worker... it's more like it costs a lot for a company to let him go than that it doesn't want to.
It also makes job switching harder, for both sides - you lose all the benefits when you switch - for the first 3 months, you are on "trial" and can be fired at will, after that you lose the extra free days (we get 1 extra day of vacation every 4 years with the same company), and the firing money the company has to pay doubles every year (up to a maximum)
"Another thing which is crucial to the financial services industry is the concept of being too big to fail, which has been put to good use by Citigroup, Bear Stearns, and Goldman Sachs over the past few years in sucking money from American taxpayers."
While this may be true in some sense for Citigroup, applying that to Bear Stearns is dubious, and it's plain wrong for Goldman Sachs. Banks like Goldman and JP Morgan Chase were basically forced to take TARP investments:
http://www.businessinsider.com/uncovered-tarp-docs-reveal-ho...
Several of those banks didn't need the forced investment, didn't want it, and thus strove to repay it as soon as possible:
http://money.cnn.com/2009/03/27/news/economy/tarp_takeback/i...
Goldman in fact repaid the investment in full on June of last year, with a hefty 23% interest:
http://en.wikipedia.org/wiki/Goldman_Sachs#TARP_and_Berkshir...
In other words, Goldman didn't want or make any profit from the TARP investment - the American taxpayer did. GS didn't want that investment at all - it took it to comply with the wishes and policy of the American administration.
The current Abacus scandal is occurring not because, but despite the fact that GS collaborated with the administration and took the TARP investment. In fact, this scandal is mostly about how GS foresaw the collapse of the housing bubble, and set up positions to profit from it - thus absolving itself from any need for taxpayer assistance.
If anything, the American administration and public opinion seem more forgiving toward institutions that played the "too big to fail" card, taking too much risk and heavy loses as a consequence. Those institutions were bailed out, and are currently seeing nothing like the penalties and negative attention that GS is suffering. If the SEC's portrayal of the Abacus deal is accurate, GS should be punished - but the "too big to fail" approach is vastly more dangerous and damaging.
Either way, the discussion isn't served by over-generalizations and lumping everything together.