Let’s pretend we’re Founders of a new high tech company. Competition is fierce, but we’ve raised money from some Venture Capitalists to pay for equipment, marketing, and personnel.
We are looking for hungry recent college graduates in engineering, marketing, and sales who are willing to work hard and accept a “below market” rate salary of $30,000. In exchange, they will each get $25,000 worth of options struck at $1/share with a three year vest.
We believe our company will grow by 50% a year for the next 5 years. In other words, a new hire’s $25,000 worth of options will be worth $200,000 in five years, and if the company keeps growing by 50% for another 5 years, the options will be worth $1.45 million, 58X the original amount. Finally, employees get options every single year they work at a discounted price, meaning one could potentially earn multiple millions of dollars in 10 years.
Of course, we also realize that execution is key because ideas are a dime a dozen. All our stock and options could expire worthless if we don’t property execute. People are what will make our company successful. Because we aren’t paying the market rate of $60-70,000 for recent graduates + options, we don’t have the pick of the litter. If only everyone believed in our company as much as we did, they would be lining up to work for us.
One of your favorite posts is, “How Much Do The Top Income Earners Make” which makes a statement that “the rich will always pay more than their fair share” as the top 1% earn 20% of all income but pay almost double their share of taxes at 38%. 38% is 18% more than 20% no matter how much you think the rich should pay.
You then come across this one recent graduate who is looking for a job. She leaves this comment as a retort to the post. Obviously she’s brighter than most because she reads personal finance sites and spends the time to comment. She’s available for hire and is willing to relocate anywhere to get the job. However, nobody has hired her, she may have a difficult time working more than 40 hours a week, and she didn’t go to a great school. Do you go for it? You’re in desperate need of people to build your company!
READY FOR WORK, HIRE ME
Wow.. You really, truly do spew an insane amount of ignorance here.. First of all, if you are working more than 40 hours a week, then you either do not have a family of your own at all or you severely neglect any wife and/or kids that you do have (and they, with 99% certainty, WILL hate you for this for the rest of their lives). In fact, working at that rate.. Despite however much money you might bring in, you will likely only find a wife who is with you for your money (what else do you have to offer when she never sees you?), infidelity on her part, children who feel as though they are bastards, and a likely divorce as soon as the wife can claim that she has become acclimated to this style of living and is deserving of 50% of everything you own =]
Beyond this, I can tell you.. I am a recent graduate from Miami University (in Ohio). No, this is not a Harvard, Stanford, Cornell, Princeton, Dartmouth, or anything of that sort, but it is openly recognized as being one of the top 50 universities in the nation. I received a bachelor degree after completing two majors, Psychology and Sociology. No, these are not Business, Engineering, or Computer Science degrees, but they are respectable nonetheless. I was deeply involved in a few student organizations and involved in the leadership of two and the creation of one throughout my college career. I was also involved in research, and I worked full-time through all of my summers and 20 hours/week each of the school years while taking an average of 18-20 credit hours per semester. I graduated with Latin Honors: Cum Laude and a GPA of 3.67, which, in my opinion, is pretty good.
While all of this admittedly might not have prepared me for many jobs that are available in today’s economy, I believe that it does show that I am driven, committed, and capable of learning. However, over the past 6 months (before and after graduating), I have applied for and either been completely ignored or denied from over 100 jobs. I will admit that I began applying for jobs that offer around 50k/yr in salary, but, over time, I learned to reduce my expectations significantly. I began to apply for jobs that pay only 25-30k/yr and would have been more than happy, but found that I was not wanted there either. In fact, I have even reduced myself to applying to places like Best Buy, local factories, Wal-Mart, Kroger etc. and have still found that there is no job to be had.
Now, tell me, does this make me lazy? I can’t even receive unemployment, because I have not ever had any official employment that was not ended on my own volition. Where am I supposed to be working these two jobs when I can’t even find one? I can’t even find a place that will give me part-time work, much less those 40 hours. Even when I was working full-time over my summers, I was still only getting 30-35 hours in a week, and I’m supposed to be working more than 40 hours a week now? I would honestly prefer a job that pays me 35k to work 40 hours in a week, because I actually do have friends and a life…
So.. Again. Where are these two jobs coming from? Are you going to hire me? If anyone on here wants to hire me, then I will gladly relocate to wherever it is that you need me to be =D But.. I don’t see that one happening. All I see is people saying that the rich create jobs. I don’t see any of them actually doing it. And, by the way.. It’s obvious that many of you on here are rich. Just saying…
THE DECISION IS YOURS
As the CEO of your new start-up, do you or do you not interview this person to work for you? You’re dedicating your life and your savings to your start-up and need to hire people now. If you don’t hire within the next month, you risk losing your head-start advantage and having your competitors gain tremendous amount of market share and pull away from you.
Do you believe you can find someone better with your below market rate compensation in a month’s time? Do you believe the above person will be willing to work weekends at your start-up to get the job done? Can you see the person stay hungry for the next five years? The difference between success and failure is depending on you, Mr or Mrs CEO.
Start your own business: If you feel you’re not getting paid what you’re worth, start your own business online on the side! It used to cost a fortune and a lot of employees to start your business. Now you can start it for next to nothing with a hosting company like Bluehost for under $4/month and they’ll give you a free domain for a year to boot.
Brand yourself online, connect with like-minded people, find new consulting gigs, and potentially make a good amount of income online one day by selling your product or recommending other great products. Not a day goes by where I’m not thankful for starting Financial Samurai in 2009.
Updated for 2017 and beyond.