At the last startup I worked for, the VCs sold the company for a loss, so I am just as well pleased that I took five years’ worth of salary instead of a commensurate portion of their loss.

Then again, my salary was somewhat below market rates, and the VCs would have collected a management fee in proportion to what they invested, so maybe the VCs did come out ahead.

"instead of a commensurate portion"

"commensurate."

...I'm an idiot. Today I learned how to spell commensurate!

> Isn't this more or less the case for any profits-go-to-owners business model?

Almost every industry out there manages to make good profits without their employees having to give up their lives.

I should have clarified. I was trying to make an observation on "employment" in general, whether you're treated with dignity as an employee or not. Even if you love your job, work <= 40 hours a week, have every weekend and holiday off, see your family every day, and life is going just swell, you're still probably never going to see _profits_ going to you, precisely because you're not considered an owner. You're a cost. And that deal may work out nicely. A six figure salary is nothing to sneeze at. But you're still not an owner. And in all likelyhood, you will never see past 7 figures.

I suppose I think there might be a model out there that better reflects ownership and the concepts of who earned what. More than anything, I don't believe the owner "earns" all of the profits of a company. The [owner + every last other employee in the organization] "earned" the profits. But while every other employee is more or less capped in their earnings, the owner gets the profit.

I understand the concept: take on a big risk, be rewarded for said risk with big gains. I suppose I just don't think anyone should be rewarded for winning a lottery of circumstance. If I owned a company, I don't think I'd see myself as having "earned" tens of millions of dollars and I don't think I'd be OK with taking home millions while the hundreds of staff beneath me did all of the brute work.

But then again, I've never owned a company. Maybe if I did I'd feel a whole lot differently about the whole thing.

"Almost every industry out there manages to make good profits without their employees having to give up their lives."

Medicine and law being two exceptions.

Note the pattern: medicine, law, and engineering are 3 industries where the employees carry significant human capital with them (finance is another one, and i-bankers also give up their lives).

I suspect the reason for this is because human capital makes the payoff for additional hours worked non-linear. One cashier working 80 hours a week should be just about as productive as two cashiers working 40 hours a week (a bit more even, because of fatigue). However, one engineer working 80 hours a week is significantly more productive than two engineers working 40 hours a week, because of the overhead required to get the second engineer up to speed and then the communication delays needed to make sure any information makes its way to both engineers.

Note that these professions are paid more as a result, too, because they're not fungible laborers. If that one engineer quits, you are a lot more hosed than if one of your cashiers quits.

The effect of both of this is that professional jobs tend to work longer hours, both because the worker himself is more productive doing so, and because they reap a greater percentage of the rewards for doing so. They have the option of deliberately short-circuiting these incentives, by eg. quitting and traveling the world for a year using savings. I know folks who've done this, and greatly enjoyed it. But it runs counter to societal expectations, so many don't.

> However, one engineer working 80 hours a week is significantly more productive than two engineers working 40 hours a week

Disagree! An engineer working 80 hours a week will make worse decisions, understand things more slowly, get more confused by bugs, and make poorer decisions overall. The net productivity will be lower. Some of the best programmers I know turn into terrible programmers after one long day. If you make that long day Friday, you might be able to squeeze 45 high-quality hours out of them in a week.

> However, one engineer working 80 hours a week is significantly more productive than two engineers working 40 hours a week

Only for short periods of time.

Every single piece of research on working hours for knowledge workers show that longer periods of overtime decrease productivity. These people work longer hours because the people that pay them are unable to measure productivity properly and instead pay them by hours worked. Good for your salary. Crap for your company's productivity.

Well, yes. I was mostly using the numbers for illustration's sake; substitute 1 40 hr/week employee vs. 2 20 hr/week employees if it makes the point clearer. (And it should make the point clearer: if you've ever had to manage volunteers, I bet you'd take one dedicated full-timer over a team of 10 half-time volunteers.)

I suspect there's an equilibrium point where the gains of human capital are offset by the losses of fatigue. My point is that you get declining efficiency in both directions; if you try to speed up work by adding more people, you incur costs in communication & learning overhead.

If I have the choice I want a rested doctor working less than 48 hours per week, even if that's "less productive" than the same doctor working 70 hour weeks.

Anyone working an 80 week is absolutely less productive than two people working 40 hour weeks, even taking "communication overhead" into account.

The reason an employer prefers a single "80 hour" employee is because either (a) an 80-hour employee costs less than 2 40-hour employees (worker willing to be abused), or (b) there is a labor shortage (either natural or artificial (lawyers, doctors, dealmakers with connections) so there are not enough qualified/capable staff.

"one engineer working 80 hours a week is significantly more productive than two engineers working 40 hours a week"

Similar in medicine doctors (hospitalists in particular) will work 12 hour shifts because of "continuity of care" which is better for the patient - to not be passed between two doctors.

>> What _is_ true is that for a VC's business model to work, it's necessary for _you_ to give up _your_ life in order for _him_ to become richer. > Isn't this more or less the case for any profits-go-to-owners business model?

Not necessarily. There are plenty of businesses where the principal owners are working just as hard as the "regular" employees, and don't just sit in on a board meeting once a month.

There's a difference between putting in 40 hr work-weeks doing solid work and putting in 80 hr work-weeks giving your entire life over to a project for years at a time. If you aren't compensated for the latter with the ability to retire or move up the salary ladder quite a few steps then you probably got screwed.

This might be applicable. A software co-operative:

http://www.plausible.coop/blog/?p=25

The biggest problem with the model is financing. You need capital to build something big, and the easiest way to raise a lot of capital is to sell partial ownership of your company.

We http://www.atomised.coop are a worker's co-operative too and a startup. There are ways to raise finance in the UK certainly because co-ops can have almost any legal structure. e.g we are a limited company with the ability to issue Class B shares (the class A ones are the worker/owner equity). You also get multi-stakeholder co-ops where equity can be divided between investors, workers, customers even. It's called the 'somerset rules' or more commonly multi-stakeholder co-operatives. See http://somerset.coop/somersetrules A firsthand example I know is a train company startup. They divided equity between investors 25%, workers 50% and consumers 25%. I've always thought co-ops could really marry well with open-source & startups but startups know nothing about coops and coops know little about startups.