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Comment by patio11 | Hacker News Reader

I think financial industry programmers are at the leading edge of this phenomenon (much like quants were the leading edge of programmers being paid for value rather than for hours), because they're the programmers who can most easily demonstrate that their code directly made a company millions. They're not the end of it by a long shot.

Take A/B testing, analytics, conversion optimization, etc. If you are good at these, you can generate several million dollars of value over the course of a week. If you can credibly offer the prospect of results like that, some companies will pay you very well indeed.

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I'd actually love to see more jobs that offered the opportunity to work with a small base salary but increased compensation levels based on measurable results.

I'm really curious about non-startup work models that would encourage this. So far, the easiest path would seem to be via consulting, where you sold your services as business services that happened to be software-based rather than as a "warm body" to staff some open slot somewhere.

It seems that overall, startups are probably lower expected value to the early employees in pure financial terms than having compensation tied to measured results for work done for some other company.

I remember essays by both PG and Joel that mentioned the "value effect", PG talking about a "monster of productivity" hacker who added a bunch of value to Viaweb in a single day and in Joel's case, a summer intern who (I vaguely recall) suggested and then built the joelonsoftware jobs board.

I think fogcreek offered the intern some type of stock option bonus for joining fulltime. I don't remember if the Viaweb hacker got something or already had equity of some sort.

Surely you can just invest a large proportion of your salary in company stock and achieve the same end?

Usually company stock is offered on much better terms when it is part of your pay package.

Most corporations don't offer enough stock in their employee stock ownership plans for this to really be effective. You have vesting (which means you have to wait before it can be sold) and dilution.

You can also have situations in large corporations where your performance was incredible, and by every measurement you brought millions into the company. However, some guy in division X lost billions and the stock tanked.

There was an AIG employee who wrote to the NYTimes about how his bonus was retroactively taxed 95%, and he claimed it was because of this exact situation. He had nothing to do with AIG's collapse. He was part of a highly profitable division, and was asked to stay on to help turn AIG around faster. That people were upset that he got his contractual 1.2 million bonus was lost on him.

With stocks, if you can't have control over how the company is managed, you're just playing lottery.

With stocks you have to control the company management, of course proportionally to the the percentage of stocks you're owning. Too sad most investors forget that, you can see an example with BP.

>I'd actually love to see more jobs that offered the opportunity to work with a small base salary but increased compensation levels based on measurable results.

Many sales positions are like this (eg. Enterprise Software).

The key of such pay model is being easily measured down to the individual (which sales is). It doesn't apply to most cases because it is hard to accurately measure contributions of individual's performance of a product/result that is comprise of a team of peers.

The "body shop" biz model is also easily measured (sit on seat 1 hr = pay for 1 hr).

Right, but still sale is a job only certain people can do (it's the same for programming I think) - so switching to sale is not that easy for most developers. Also if you are a very good programmer, switching to a whole other job you will not be able to reuse your programming skills like you could for a better paid gig in a slightly similar programming topic.

"Sales" isn't that easy to measure. Sure, the sales person might have been the face to the other company, but were they the real reason the sale closed? I've written a bunch of small pieces of software for my current company and many new clients have said the only reason they picked my company over a competitor was my value add software. Did I see any of the sale commission? Nope.

The problem with performance-based pay is that there are quite a few variables outside your control. Say you're doing a simple A/B test that you've correctly deployed. Now imagine Big Boss Man (or Big Client Man) decides to change something else on the website that is likely to affect the results of your test. What do you do then?

Suppose the website goes down and the company doesn't make its millions and now they can measure no performance increase.

Then there is politics. Big Boss Man might go to his Big Big Boss Man and tell him that he deserves the pay rise because he hired you or brought you in as a consultant, and so you're just a tool to his genius. Good luck with that one.

My point is simple: if the bosses or clients don't want to pay you performance, they can find a million ways to do so. Tough contracts only go so far and my suggestion is to never enter such a relationship unless you're 100% trusting of the bosses or clients.

Well, in the case of these financial programmers, they negotiated a simple percentage of the daily take. In a sense, they've negotiated themselves into the "VISA" position. Use me, and life is much easier and you make more money over all -- but I get a cut out of every transaction I helped you with.

Again, for these programmers, who are literally in the business of making money, its a great approach.

> Take A/B testing, analytics, conversion optimization, etc. If you are good at these, you can generate several million dollars of value over the course of a week. If you can credibly offer the prospect of results like that, some companies will pay you very well indeed.

Given the above statement, which I think is accurate, and given that you're pretty good at those things, and given the following statement from your interview:

> You know what my revenue was for today? Nothing, because we’re in the dog days of summer, and sales slow to a crawl until school gets back in session.

Doesn't that mean that your time would be more valuable employed doing the "million dollars of value in a week" stuff?

I did some consulting over the summer, and will do some in the future. Speaking generally, clients pay me quite well but customers pay me quite well while I sleep. I'm probably not going to talk consulting on HN too often -- it might sound like advertising.

I suppose doing both is ideal; I just wonder if it's possible you'd end up with the consulting being so much more valuable than bingo cards that the logical thing would be to do more of the former. Something that makes $1 when you sleep is not competitive with something that makes you $1000 when you're awake, even if, ultimately, the former is a superior model.

Also, I don't think anyone minds if you mention that you do consulting; your feedback here is very valuable. One of the things I appreciate about this community is that self promotion is ok as long as it's not completely out of context or otherwise annoying.

Patrick, I have read a lot of your articles on A/B testing and what you do to optimize your order flow etc we do very similar things in trading. I think if you saw how we looked over our trades you would see it's very similar to how you go over your analytics to try to capture more market share. You are spot on, it is not the end of it by a long shot at all. It's all about applying the `conjecture - test - learn - adapt - repeat` process over and over. The faster you can make that cycle the more successful you will be, the more efficient / powerful any of those steps is where our edge comes in. A lot of firms in all parts of business still have yet to realize that is what they are, atleast in part, blindly doing when they are successful.

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