I see that Garmin still does not treat its engineers well.
For a number of years my father was the business manager for a group of microwave engineers in Olathe, Kansas, strangely enough (only a few hours north from SW Missouri). After that team failed to win a contract for some sort of JDAM precursor (I think, my father is not a techie) they broke up and their top dog was one of the first hired by the founders.
Let's just say that the founders weren't terribly generous with employee stock allocation....
You lost me. The founders of Garmin had a killer idea, well ahead of its time, and they're terrible people for not lavishing the resulting riches on some lucky schmo who happened to be a talented electrical engineer living in Kansas at the time? You fail to appreciate that, while many people could have done the same job as your father's friend, it took a singular amount of vision and balls to build a company around a satellite network which wouldn't even be functional for another 4 years. If GPS failed, got axed by the gov, whatever, those guys would have been ruined while said friend would have walked away scot-free. People always seem to forget these points when bemoaning how undercompensated engineers--who after all, do all the "real" work--are.
You forget that their "singular vision and balls" would be useless if no engineers every actually implemented it. The point of stock allocation is to get people to do the work that needs to be done, and it's risky because at the time of hire the engineer doesn't know if the idea will be successful. Generous stock allocation, in my mind, is a token of good-will to the engineer and a recognition of the importance of the engineering phase of the project.
The problem is that as an engineer, he's depending upon his track record of past products to make sure he can get his next job. If the company fails, he suddenly has 2-5 years on his resume at a company that nobody's ever heard of, with a product that nobody uses, and the only thing people know about it is that it failed. Not exactly the best recommendation.
And even if your bosses give you a great recommendation, it can sometimes still hurt your career. After all, the company failed. Maybe these bozos recommending you were idiots too, and the fact that you were working for them means that you were also an idiot.
This attitude is thankfully pretty rare in Silicon Valley, but it can be quite common in other parts of the world. Early employees actually run more resume risk than founders do, because if the company fails, the founders can at least put "Founder & CEO" on their resume, but the engineers can only put "Software Engineer, company you've never heard of."
it can sometimes still hurt your career. After all, the company failed.
So? Every for-profit company I worked for from early 2001 through 2008 failed. Who blames the programmers for the failure of a company? In my experience, virtually no one.
Company you've never heard of - doesn't that apply for most companies? I still don't think that risk is comparable to losing the family fortune.
Anyway, it is all in the upfront negotiation. If engineer is unhappy with the conditions (ie not enough stock options), he should leave. To complain afterwards is lame (oh, they made a shitload of money - if only I had negotiated for more stock options...).
All I can say is that he knew it was a bad deal and he nonetheless took it.
One aspect was that he was having trouble finding interesting projects to work on. The JDAM precursor where he teamed with a major aerospace firm was I think lost due to politics. Simple GPS systems were a step or three down from that but were nonetheless more interesting than the other work he had been able to find for some years previous to that (losing the JDAM precursor contract was a last straw sort of thing).
ruined, really? my understanding is that usually venture-backed companies like that are not started by loans co-signed by the founders, but instead started by investors. If that was the case, the founders/managers running the place would have walked just as free as the Engineer would have; the investors would have just lost the money they invested.
(the entire system is biased towards letting people 'just walk' - unless you are so small that you need to personally co-sign your loans/leases/etc... like I do.)
I mean, I'm not saying a employer who pays people salary instead of stock options is evil; I mean, as long as everyone knows the score ahead of time, that's fine. (In fact, that's what I do with my employees. The downside of this is that as you can't attract people who are as experienced or otherwise desirable as you could with options, and people leave you for better paying gigs as they gain experience sooner than they would if they had stock options.)
I'm just saying, the way most (not small-time) corps are structured, the founders have an opportunity to protect their personal assets in case of corporate bankruptcy. And even in the case of small companies like mine (I have a corp, but the protection means nothing; nobody gives me jack without a personal co-sign. I'm tiny.) American bankruptcy laws are pretty liberal, assuming it's business debit, and not tax debit, so sometimes you can still walk. (I do know several people who were 'ruined' by screwing up their taxes enough to get a giant, long-term debit.)
I agree, but I think you're still conceding too much to "fairness". I'm all for minimum wage being livable and basic working condition standards, but beyond that I don't believe anyone in the professional class is overcompensated or undercompensated. A person is only worth as much as A) someone is willing to pay them, or B) the amount of money they can make from starting their own business.
People can cry 'til their blue in the face about how undercompensated they are, but if that's really true they should take their skills and build a profitable business. I say this because engineers do create tons of value, but we need to put our money where our mouth is and do it ourselves to increase our market value rather than whining about history.
The founder (or any employer) has a responsibility to shareholders to pay employees as little as possible. An employee has responsibility to themselves (and their family) to ask for as much pay as possible. Negotiation is about finding a middle ground between those interests. Holding an employer responsible for figuring out what a given employee will be happy with is strange, to say the least.
And as little equity as possible, for identical reasons.
An employee is responsible for making sure the terms agreed on are ones they're happy with, not an employer. An employer has a legal obligation to shareholders to minimize the costs of her business, one in direct conflict with "being generous in compensation" to her employees.
Although in this case we have an engineer who was all three of employer, shareholder and employee....
And you're wrong about "minimize costs" per se. The employer has a obligation to maximize shareholder returns, for which a simplistic application of the "minimize costs" principle is seldom a solution.
Being any more generous than you need to be to attract good people and get them to work hard is being too generous, hence, not a good business decision, hence, the founders would not be "good" founders.
"felt (mostly) left out of the party" is perhaps accurate, although the engineer in question was one of the four founders (see my longer recent item in this thread).
Based on what happened to him I'd have to wonder if later employees got much more than beer money.
Just finished lunch with my father and got quite a few more details, with some more possibly to follow:
Paul Shumaker was one of the founders of Garmin: he and others had worked together at King Radio before Paul split off with one of them to do microwave system design and development. He eventually became one of the four founders of Garmin (so says Google and my father, e.g. Paul was a part of the team before incorporation and got a minuscule piece of the action). He was their microwave engineering leader, with 23 engineers under him when he retired for medical reasons in 2004.
So contrary to my vague description above and the interpretations in this thread he was there from the very beginning and was a key to their success. (In fact, the superior GPS reception of the specialist companies like Garmin and I assume Tom-Tom would appear to be their key lasting advantage in this market (well, along with incumbency)).
As for Garmin's top dog, my father's opinion of him cannot be published in a family newspaper such as Hacker News ^_^.
For a number of years my father was the business manager for a group of microwave engineers in Olathe, Kansas, strangely enough (only a few hours north from SW Missouri). After that team failed to win a contract for some sort of JDAM precursor (I think, my father is not a techie) they broke up and their top dog was one of the first hired by the founders.
Let's just say that the founders weren't terribly generous with employee stock allocation....