I have a better understanding of what you mean, but I think we're talking about totally different things. You're talking about a few percentage points around a 'true' price (under or over), that account for whether someone is worth more like $80k or $95k.
I'm talking about who you'll pay $35k, who you'll pay $60k, who you'll pay $30k, and who you'll pay $80k when you first get funding, and whether you will pay anyone over $100k at all.
When market price of two of your employees are each 80-95k depending on how much information a potential employer in your geographic/other market (including you) has about them, then it is the worst possible result for you to justify a salary of $40 or $35 for either on some grounds of fairness. It's also wrong to pay one $95k and one $60k also alluding to internal factors, how much information you have about them.
You don't pay someone $60k who's worth $90k if you're being fair (it's different if you just don't have the money). We're talking about a 50% difference here, not the few percentage points that come from inefficiency of information.
I think if you had any idea what the average first employees of hackernews/yc type outfits get as initial offers, you would feel quite different about where the problem lies. (just my humble opinion).
your suggestion is not about such radical differences as compared with 'true' worth, but only smaller ones.
Most companies aren't startups, in the HN/YC sense of the word. I was addressing the majority scenario.
First employees in startups are playing a different game; a combination of risk and novelty. The employees are gambling on stock options and a payout (not a particularly rational gamble, of course); but they're also working on new technology, greenfield development, in an exciting environment, often with younger people who are less, shall we say, "conservative" in their career trajectory. All of this is utility to such first employees; and it compensates for salary, depending on their utility function.
As a company ages, the profile changes. Depending on how the employees have changed along with it, they may seek a different mix.
they may also get no stock or options. when they are young, recently educated, as you say they will jump on for the combination of novelty and a chance to grow and extend themselves.
when it comes time to pay them fairly, either after they have acquired the experience or simply you raise enough money to do so, fair becomes determined by what they get elsewhere.
I'm talking about who you'll pay $35k, who you'll pay $60k, who you'll pay $30k, and who you'll pay $80k when you first get funding, and whether you will pay anyone over $100k at all.
When market price of two of your employees are each 80-95k depending on how much information a potential employer in your geographic/other market (including you) has about them, then it is the worst possible result for you to justify a salary of $40 or $35 for either on some grounds of fairness. It's also wrong to pay one $95k and one $60k also alluding to internal factors, how much information you have about them.
You don't pay someone $60k who's worth $90k if you're being fair (it's different if you just don't have the money). We're talking about a 50% difference here, not the few percentage points that come from inefficiency of information.
I think if you had any idea what the average first employees of hackernews/yc type outfits get as initial offers, you would feel quite different about where the problem lies. (just my humble opinion).
your suggestion is not about such radical differences as compared with 'true' worth, but only smaller ones.