Based on what I've seen/heard, they seem to follow a similar comp philosophy to Netflix -- pay top of market to get the best people.
But it's also important to note that only $300K of that is in cash. The other $600K is in profit participation, which could take years (maybe even a decade!) to be realized. It could also be worth $6M a year when it's realized.
But ultimately it's an investment of your time. Or to think of it another way, you're getting paid $900K a year but you're also investing $600K a year in OpenAI, which may end up being an amazing return or nothing at all, just like any startup investment.
Although with Sam at the helm, my guess is it will probably be worth more than $600K a year.
To be realistic ... 300K in the bay is barely livable if you're targeting a middle class life with kids and targeting retiring at 65.
First, ~46% of it is gone in taxes including federal tax (~25%), state tax (~8%), FICA (~4%), and sales tax on everything you eventually use the money for (~9%).
So that's 162K left. Not a lot to pay sky-high rents, car payments, insane medical bills despite insurance, lawyers to fight said bills, save up money for parental elderly care, save up money for yourself for retirement, etc.
And yeah, having kids on that money? Very difficult.
If you're not in the bay area, different story, it's a very nice income. But they probably won't give you that package if you're remote.
And if you're in the bay and not planning on having kids, it's an okay salary.
I guess the first part of that is like netflix, but as you know the second part is not since netflix is 100% cash unless you want to participate some portion of that in the employee stock plan.
Yes, the first part of the philosophy, pay top of market. Not the second part, where they employee gets to choose their level of exposure to investment risk. But Netflix is a public company, and OpenAI is not.
No, Netflix pays top of market like you said “in cash”. Paying “profit sharing” in a company that isn’t profitable isn’t nearly as valuable.
Edit:
I love this analogy
> Or to think of it another way, you're getting paid $900K a year but you're also investing $600K a year in OpenAI, which may end up being an amazing return or nothing at all, just like any startup investment.
Would someone invest 2/3rds of their compensation in one company? I know I diversify my RSUs within six months after getting them.
I feel like person you're replying to specifically implied that OpenAI does it differently in that aspect, and they were also high up at Netflix so is likely very familiar :)
> Would someone invest 2/3rds of their compensation in one company? I know I diversify my RSUs within six months after getting them.
I also sell my RSUs right away. But you're forgetting one thing -- if I make $600K somewhere else, I can't invest it in OpenAI. It's the opportunity to invest in a startup that you wouldn't get otherwise that is most valuable, if you think the startup will be valuable.
Beware of taxes though. If you leave the company before it's public, and the stock has increased in value, you have to pay capital gains taxes when exercising and there's the possibility that stock may end up worthless.
There have been many startup employees that have paid hundreds of thousands of dollars in taxes only to see their paper gains eventually disappear.
I recall a story someone told me a while ago. Software business that did local CoL/prevailing wages. Hired an intern one summer that was just running around in circles around the other, more senior devs. Useless to say they loved him and the next summer they tried to get him back, even offering a signing bonus for an internship (something they considered unheard of) but he was already at a large search engine company down in the Bay. You can guess the comp was probably already 3x what his previous job was offering. Of course, he wouldn't return.
There's a whole class of engineers were completely invisible to most companies, even if they are in the same "local market" [0][1] (Some use the term "dark matter devs" but I know it has another meaning [2]). These guys tend to fly under the radar quite a bit. If you are in a tier 2 market or company, your chances of attracting one are close to nil. Because they are extremely valuable, they don't interview a lot and tend to hop between companies where they know people (or get fast tracked internally).
FAANG companies have internship pipelines, with bonus for returning interns. These guys are off the market years before they even graduate.
I don't understand why people think sam has magic powers. He started one failed company and has no technical ability to make openai into anything more than it is.
yeah, Netflix is almost all cash in comparison. No clue what kind of liquidity OpenAI provides to cash out. Since it's "profit based" it actually seems even riskier, Microsoft could prevent OpenAI from showing any profit if they really want to
and if the info about the actual architecture of GPT-4 is legit, OpenAI might not have as much of an edge on the competition as they'd like people to believe. So that equity might not be worth quite as much as they think and explains why they so cagey about it in their paper on it. And why Sam Altman is calling for restrictions on research to slow down competitors
even if there was, while it might take a decade before IPO and market price discovery, it's almost expected that they would make a private tender offer sometime before that, letting employees realize some value of their shares long before 10 years is up.
It's always interesting to think about how someone somewhere is earning as much as you earn in a decade or lifetime in a single year. Also that you are that person for someone else.
A sole proprietor landscaper making $45-50K a year in California is paying $675 a year in annual registration fees just to keep his newish pickup truck on the road. Why newish? Because the people he's servicing trust a guy with a nicer work vehicle than a beaten down 30 year old Tacoma.
A $900k developer with the same pickup is also paying $675 a year.
Extrapolate this seemingly trivial example across literally EVERYTHING in life.
I do not find that interesting. If the goal is wealth redistribution, then either a marginal income/wealth (property)/sales tax accomplishes that.
We do not have marginal sales tax rates because it is not feasible.
Marginal income tax is feasible, and so it does exist in most places.
Marginal property/wealth tax is somewhere in the middle, given the difficulties in valuing thinly traded assets, and the tremendous effort required to appraise them all the time, over and over.
Don't forget, however, that the $45K landscaper probably pays zero in Federal taxes, while the 900K dev (assuming it was all cash, which it isn't) is losing a third of that to Fed taxes alone, and tons more to State and local.
I'm not saying the highly-paid developer is hurting, but the better question is why does it cost $675/year to register a vehicle in CA? Our income tax system is already highly progressive, so why do we have all these other stealth taxes that hurt low incomes the most.
I don't think that's a fair example. I'm not sure what it's like to run a small business in California. But the answer to that situation is progressive taxation, and California has one of the most progressive tax systems in the US. https://taxfoundation.org/which-states-have-most-progressive...
I am that person for myself, for my first year in the workforce.
I am also that person for myself when I was studying in college.
I think it is only interesting in the case when you are performing the exact same job, and yet the compensation varies by an order of magnitude or more.
I think the point is people earning $8/hr 40 hrs/wk 40 years = $665k total for a lifetime's work. Of course most people in the world earn much less than this.
One of the most compelling lyrics I've ever heard, that has stuck with me for about a decade now, is Chris Brown's, "I get what you get in 10 years in 2 days."
For people not living there but curious about trying it out: What's a reasonable range for "very well paid job in France"? Is it all cash or is there equity?
Other companies nickel and diming engineers think they are somehow getting something for free. All the highest performing companies in the world pay insane amounts to their programmers
Paying someone a lot doesn't magically make them a good engineer. You have to actually hire the best people, and there's only so many of them to go around.
I'm sympathetic to this argument, because I know both low-quality and high-quality engineers at most FAANGs, but in principle isn't offering a lot of money a good way to attract talent?
In the case of OpenAI you also have interesting tech and a brand that will massively accelerate your career if you want to stay in that field. So while yeah, you have to hire the best people; and OpenAI like everyone else will be paying $LOTS to a few useless engineers in the mix, I think "$900K and everyone knows it" is a pretty good substitute for talent-spotting, which anyway can't be bought.
Paying someone more also doesn’t mean you can charge your customers more. A budget is a budget. There’s a reason McDonald’s pays employees differently in India vs NYC, the work maybe the same but the market is different
Meta cut back on everything: microkitchens, wellness cash, assigned->shared desks, WfH->RTO, and looking for excuses to lay people off. I wouldn't take a job at Google, Amazon, Apple, or Meta. Netflix and Microsoft seem doable. Target and Costco are also decent non-tech companies.
I think this is often, but not always true. I think it's not true (and rational for employers) if they:
* have a set of interview questions that help clarify they have the "right" kind of person
* have a performance review process that ensures that hired individuals continue to engage in ways that are understood to be most useful to the company; i.e. that validate (or invalidate, as the case may be) hiring practices
The unfortunate reality is that those elite circles usually do have the best among them. And having worked in FAANGs, there is some aspect of meritocracy, the code doesnt lie
Hmm I’ve worked at “elite” startups and “elite” big cos, all jobs of which I’ve gotten by directly applying. At several points have exceeded 7 figures too.
Talent is not universal though. A great product/team/workplace can turn unmotivated middling knowledge people into heroes. Not only is massively more worth to raise talent in-house, heterogenous teams are way more healthy. Early Googlers wrote litanies on this.
They can pay it, it sounds good for investors/general public, but if you take away the brand/hype fapping on "we only have the best" would sounds like a red flag to an experienced engineer.
Can we define talent. Also context matters. Some companies have lower "talent density" because their size requires some level of operational headcount.
I know more than half a dozen extremely top of their field for sure engineers who work there. Even having them would be an insane concentration of talent imo.
> The tax filings also reveal previously unreported details about one of the most valuable and well-known technology ventures operating today, including the level of investment by Reid Hoffman, free Teslas for early OpenAI engineers and the skyrocketing computing bill that may have prompted it to take a $1 billion investment from Microsoft.
New hires' comp is much higher than existing employees', especially if you've hit your cliff. 7 figures for E6 can happen if you joined recently, have good counter-offers, and negotiate. It's not super uncommon but it's also not the median E6 comp.
Some made up new equity class that isn't actually equity, and caps your upside? Are we seeing a new level of startup management greed? That smells pretty scammy.
Common advice is to value earlier stage equity at zero anyway, so how the heck are people credibly calling that worth 600k...
There are a handful of unicorns / decacorns that went poof and the BS equity turned out to indeed be BS. That’s why they have to do $300k base salary, because that’s low end of total comp at competing mega caps, without it they couldn’t sign anybody from there.
OpenAI will probably end up like UberATG where Microsoft bails out a handful of $10m-plus equity packages, some engineers transfer into MS and get partial recognition, and a bunch of engineers get laid off or sent to a competitor for basically zero. Good chance of this happening when sama has to scale up aggressively and flops.
Unpopular opinion: Paying more does not get you better code, or faster code, or cleaner code. It does get you valuable things, but they're unrelated to code. I'll get to that.
Some of the best all-around programmers I've met, and also the best programmers at some specific metric (rapid development, good at unraveling complex problems, good at big-picture stuff, good at architecture, good at maths/algorithms, etc.) make market rate or below market rate. Probably because they either (A) don't know their value (B) didn't go to a top CS school (C) value things other than raw income (D) aren't good at playing the political game at work (E) aren't good at self-promotion.
What paying high salaries does get you is... the widely-publicized knowledge that you pay high salaries. Sites like levels.fyi and HN will viralize this knowledge. Like your neighbor who has a shiny new BMW M3 in their driveway, you assume that they must be doing well, and must be a good investment.
Readit News
But it's also important to note that only $300K of that is in cash. The other $600K is in profit participation, which could take years (maybe even a decade!) to be realized. It could also be worth $6M a year when it's realized.
But ultimately it's an investment of your time. Or to think of it another way, you're getting paid $900K a year but you're also investing $600K a year in OpenAI, which may end up being an amazing return or nothing at all, just like any startup investment.
Although with Sam at the helm, my guess is it will probably be worth more than $600K a year.
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First, ~46% of it is gone in taxes including federal tax (~25%), state tax (~8%), FICA (~4%), and sales tax on everything you eventually use the money for (~9%).
So that's 162K left. Not a lot to pay sky-high rents, car payments, insane medical bills despite insurance, lawyers to fight said bills, save up money for parental elderly care, save up money for yourself for retirement, etc.
And yeah, having kids on that money? Very difficult.
If you're not in the bay area, different story, it's a very nice income. But they probably won't give you that package if you're remote.
And if you're in the bay and not planning on having kids, it's an okay salary.
Edit:
I love this analogy
> Or to think of it another way, you're getting paid $900K a year but you're also investing $600K a year in OpenAI, which may end up being an amazing return or nothing at all, just like any startup investment.
Would someone invest 2/3rds of their compensation in one company? I know I diversify my RSUs within six months after getting them.
I also sell my RSUs right away. But you're forgetting one thing -- if I make $600K somewhere else, I can't invest it in OpenAI. It's the opportunity to invest in a startup that you wouldn't get otherwise that is most valuable, if you think the startup will be valuable.
There have been many startup employees that have paid hundreds of thousands of dollars in taxes only to see their paper gains eventually disappear.
There's a whole class of engineers were completely invisible to most companies, even if they are in the same "local market" [0][1] (Some use the term "dark matter devs" but I know it has another meaning [2]). These guys tend to fly under the radar quite a bit. If you are in a tier 2 market or company, your chances of attracting one are close to nil. Because they are extremely valuable, they don't interview a lot and tend to hop between companies where they know people (or get fast tracked internally).
FAANG companies have internship pipelines, with bonus for returning interns. These guys are off the market years before they even graduate.
[0] https://blog.pragmaticengineer.com/software-engineering-sala...
[1] http://danluu.com/bimodal-compensation/
[2] https://www.hanselman.com/blog/dark-matter-developers-the-un...
All this money spent, yet if the open source world can catch up, it'll all be for naught.
They need a world where everyone sits atop OpenAI, not a thousand different startups with their own models.
OpenAI might pay its engineers $900k, but an AI startup founder can easily get to a $5M, $10M valuation in under a year.
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It might sound simple, but I've never viewed startup equity like that; thanks for the slightly different perspective.
and if the info about the actual architecture of GPT-4 is legit, OpenAI might not have as much of an edge on the competition as they'd like people to believe. So that equity might not be worth quite as much as they think and explains why they so cagey about it in their paper on it. And why Sam Altman is calling for restrictions on research to slow down competitors
https://twitter.com/soumithchintala/status/16712671501017210...
Although with Sam at the helm, my guess is it will probably be worth more than $600K a year.
or not . I would rather work for facebook with profit participation. zuck seems to know how to make a profit.
no "right to first refusal" or some transfer restriction?
A sole proprietor landscaper making $45-50K a year in California is paying $675 a year in annual registration fees just to keep his newish pickup truck on the road. Why newish? Because the people he's servicing trust a guy with a nicer work vehicle than a beaten down 30 year old Tacoma.
A $900k developer with the same pickup is also paying $675 a year.
Extrapolate this seemingly trivial example across literally EVERYTHING in life.
We do not have marginal sales tax rates because it is not feasible.
Marginal income tax is feasible, and so it does exist in most places.
Marginal property/wealth tax is somewhere in the middle, given the difficulties in valuing thinly traded assets, and the tremendous effort required to appraise them all the time, over and over.
I'm not saying the highly-paid developer is hurting, but the better question is why does it cost $675/year to register a vehicle in CA? Our income tax system is already highly progressive, so why do we have all these other stealth taxes that hurt low incomes the most.
Extrapolate this to literally anyone making less than a developer.
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I am that person for myself, for my first year in the workforce.
I am also that person for myself when I was studying in college.
I think it is only interesting in the case when you are performing the exact same job, and yet the compensation varies by an order of magnitude or more.
(I jest. I just really like that song's beat & Busta's verse in terms of sheer speed & enunciation & crispness in staying on beat.)
Especially if you're American. Gallup [1] reports:
> The median annual household income worldwide is $9,733, and the median per-capita household income is $2,920
Even among developed nations, Americans get paid more.
[1] https://news.gallup.com/poll/166211/worldwide-median-househo...
I look at 900k$ and think wow from the perspective of my very well paid job in France.
Getting 900k$ a year would bring great things to me and probably make me retire earlier. This will not be life-changing though.
And then I think about people who earn 5% of what I do and for them multiplying their income by two would probably be truly life changing for them.
And then these 900k$ do not look that wow anymore.
In the case of OpenAI you also have interesting tech and a brand that will massively accelerate your career if you want to stay in that field. So while yeah, you have to hire the best people; and OpenAI like everyone else will be paying $LOTS to a few useless engineers in the mix, I think "$900K and everyone knows it" is a pretty good substitute for talent-spotting, which anyway can't be bought.
* have a set of interview questions that help clarify they have the "right" kind of person
* have a performance review process that ensures that hired individuals continue to engage in ways that are understood to be most useful to the company; i.e. that validate (or invalidate, as the case may be) hiring practices
At that point, they are not hiring you, me or anyone who directly applies themselves via the job form.
They are hiring their friends from elite circles.
OpenAI is modest in employee count and extreme in employee talent, with its employees rewarded commensurately.
They can pay it, it sounds good for investors/general public, but if you take away the brand/hype fapping on "we only have the best" would sounds like a red flag to an experienced engineer.
https://techcrunch.com/2023/05/17/elon-musk-used-to-say-he-p...
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Common advice is to value earlier stage equity at zero anyway, so how the heck are people credibly calling that worth 600k...
OpenAI will probably end up like UberATG where Microsoft bails out a handful of $10m-plus equity packages, some engineers transfer into MS and get partial recognition, and a bunch of engineers get laid off or sent to a competitor for basically zero. Good chance of this happening when sama has to scale up aggressively and flops.
Some of the best all-around programmers I've met, and also the best programmers at some specific metric (rapid development, good at unraveling complex problems, good at big-picture stuff, good at architecture, good at maths/algorithms, etc.) make market rate or below market rate. Probably because they either (A) don't know their value (B) didn't go to a top CS school (C) value things other than raw income (D) aren't good at playing the political game at work (E) aren't good at self-promotion.
What paying high salaries does get you is... the widely-publicized knowledge that you pay high salaries. Sites like levels.fyi and HN will viralize this knowledge. Like your neighbor who has a shiny new BMW M3 in their driveway, you assume that they must be doing well, and must be a good investment.