This is valid point, but its implications are limited: you're basically saying that if AIG collapsed, it would lead to further collapses (due to "the state of the financial markets at the time") and that could very well lead to GS suffering as well.
This is true, not just for GS, but for almost any other financial firm and bank in the United States. In that sense, we all, including end consumers, enjoyed the benefits of TARP bailouts - assuming that without them and policies related to them, the entire financial system would collapse and drop the US to something like the great depression or worse.
Reserving judgment about the other merits of this article - it's sad to witness again how simplistic, shallow generalizations are the norm when discussing financial matters:
"Another thing which is crucial to the financial services industry is the concept of being too big to fail, which has been put to good use by Citigroup, Bear Stearns, and Goldman Sachs over the past few years in sucking money from American taxpayers."
While this may be true in some sense for Citigroup, applying that to Bear Stearns is dubious, and it's plain wrong for Goldman Sachs. Banks like Goldman and JP Morgan Chase were basically forced to take TARP investments:
In other words, Goldman didn't want or make any profit from the TARP investment - the American taxpayer did. GS didn't want that investment at all - it took it to comply with the wishes and policy of the American administration.
The current Abacus scandal is occurring not because, but despite the fact that GS collaborated with the administration and took the TARP investment. In fact, this scandal is mostly about how GS foresaw the collapse of the housing bubble, and set up positions to profit from it - thus absolving itself from any need for taxpayer assistance.
If anything, the American administration and public opinion seem more forgiving toward institutions that played the "too big to fail" card, taking too much risk and heavy loses as a consequence. Those institutions were bailed out, and are currently seeing nothing like the penalties and negative attention that GS is suffering. If the SEC's portrayal of the Abacus deal is accurate, GS should be punished - but the "too big to fail" approach is vastly more dangerous and damaging.
Either way, the discussion isn't served by over-generalizations and lumping everything together.
Startup execs fully realize that their pitches and figures are incredibly optimistic (read: improbable). The prime recipients of such pitches - investors - are well versed in tuning them down and seeking the grain of truth within the hype.
Candidates, especially young or recent graduates, are not. If you, an exec, hone a pitch on a jaded 40-something VC manager with 20 years of industry experience, and then use it umodified on a 20-something candidate with 0-1 years of industry experience - you are not being truly fair and honest.
And yes, the candidate is likely to discover that a year later, feel cheated and abandon you. Tweet about him being a "flake" if that makes you feel good; the blame lies solely with you.
First of all, "high" is relative. The exit may be high, but still not cover the funding, so all the proceeds go to the funding entities (the VCs) and maybe a few top executives / founders. That happens in countless startups that sell for $50m after raising $30-40m. Even "senior" employees get basically nothing.
Another common issue is dilution. Your vested shares can and will be severely diluted. Again, the VCs and maybe the founders are the only ones with any control or protection over this.
A lot of other interesting things can happen at or around that all important payday. You may want to read about how things like IPO and other liquidity events are actually handled by law. Surprisingly few startup employees do, and this stuff is far from trivial - there's a reason why Goldman et al pay the best and brightest to figure this stuff out.
All of this is doubly true if the founders / execs are untrustworthy / morally indifferent and actually strive to dilute or otherwise deprive you.
"short tenures could also signify a rapidly growing company"
Sure, but if everyone interviewing you are less than a year in, where are all the people who worked here before?
And why are you being interviewed mostly or exclusively by junior team members who haven't proved themselves yet? Is the company entrusting the selection of successful employees to newbies who haven't yet proved they can be such?
An interviewer for a company in the middle of a growth spurt should be able to explain that, quote some enticing growth figures, and mention that "almost all of the original team members are now project leaders and executives... in fact, if this goes well, you'll meet some of them shortly".
This whole discussion about "job hoppers" is so bogus.
Employment is a relationship. It has two sides. When one party decides to end it, the most common reasons are:
1) Other party's chronic inability to respond and satisfy the breaker-upper's needs.
2) A competitor coming along who satisfies those needs much better.
Employers regularly break up employment relations for those two reasons. But now some CEOs and VC managers will have us believe that it's wrong for employees to do the same to them.
Employers are expected - nay, obligated! - to fire employees who fail to meet performance expectations. But if an employer fails to meet your compensation expectations, and you leave, the Susters and Calacanises shall publicly insult you and announce they will not hire you, and nobody else should either.
It is telling that only very specific employers and very specific dream-dealing businessmen are among the mob shouting indignantly about loyalty and morality. When was the last time Google or Palantir blogged petulantly about "Generation Y" and "trophy kids"?
Suster, Calacanis et al are reacting to their own failing at keeping employees, with all the grace, maturity and effectiveness of that girl you dumped, who went out on the street and shouted about what a terrible person you are to leave her, and how nobody else should ever trust or date you.
Mature, successful employers do not waste their time on that. They're too busy making great products with their happy, motivated, tenured employees - or bidding polite farewell to those who should or want to move on.
This article is spot on. Startup executives are world-class dealers of dreams. They need to be more weary of selling to their own employees. Too many bright engineers work insanely hard for a year or two, then discover all they're getting is fairy dust, and quit. Why don't Suster and Calacanis write an article about that?
It's most striking when a top employee leaves for a company that's not a startup. Take that engineer that left Mahalo for Yahoo recently. Suster and Calacanis call him a flake, yet how much you want to bet he'll stay at Yahoo longer than a year?
And since when is it acceptable to attack an ex-employee that way, sleazily keeping his name out, when everyone on the internet knows who the epitaphs refer to?
These people are sore losers, and they'll keep losing until they figure out what that "dying company" is doing right that makes their best engineers "hop" there rather than labor at their own enterprises.
All they do right now is poison and taint an otherwise healthy, open and mature dialogue between employees and employers.
> "In the case of Mahalo, it seems like they have a large asshattery factor (Calcanis is an overbearing idiot who will post nasty things about you on Twitter)"
Why anyone would willingly work for someone like that is beyond me. You're setting yourself up for abuse, ensuring other employees are abused in the process.
In my view, once you post something ugly about any of your employees, you lose your ability to hire any non-desperate (let alone loyal) employees forever.
I won't really argue with that - although reality is that the vast majority of startups need to launch fast, or have the entire market move away from them, guaranteeing failure.
If you're developing an innovative product for the iPhone market, you can be sure that it won't be "innovative" in a year, especially if it was a good idea to begin with. Not to mention that in a year, such a fast market will move so far, that your original business model will be outdated in significant ways, because your price point, features, and target audience analysis are now all obsolete.
Even without that, though - you realize that VC-backed startups are a huge chunk of the startup sphere? In fact, the author of this article is a VC, and probably most of this article was written with VC-backed startups in mind.
Sure, if my senior developer had something horrible happen to him, I should allow him to work 0-2 hour weeks, keep him in the same position and payroll, and let my startup go down and hurt the lives of the other 9 employees who worked hard on it.
"Respect and care" means among other things, that you keep your business running so it can respect and care for the majority of employees. If you're going to take things to extreme, why then I need to "respect" every candidate by hiring, and "care" for any employee who just feels like taking a 20-month meditation trip to Tibet, since the woes of this modern world are depressing him.
The fact remains the same: a lean, highly leveraged startup can't allow developers to go off on vacations for 3-6+ months, no matter how badly they need it. Hell, if you're that kind of startup, those 3-6 months may very well be your entire product (or life!) cycle.
If you read my other comments in this discussion, you will surely see that I am in fact very pro-employee.
I also am, however, very pro truth.
Anyone who tells you he can have employees with low or zero productivity, for whatever reason, as select members of a small, highly leveraged startup - is either lying to you, or will fail unless he's extremely lucky not to have such employees.
If your team consists of 3 senior developers, and one of them stops producing, your project will likely be pushed back a third or more over schedule. This can easily kill a startup, since if your idea has any merit at all (which is your only chance of success anyway), then you have ten other teams competing against you to launch first.
I totally agree that employees should be respected and cared for, and that a key employee leaving a startup is generally the startup's fault. However, if someone doesn't work out, he will be let go. Not just by the employer - his co-workers will call for his head, since his problems (whether he's to blame for them, or not) endanger the entire team.
As much as I support job changing (see my other comments), it's perfectly fine to stay at the same job for 24 years (heck, why not 50?) if it's really good, you're constantly growing, and can demonstrate a rising skill curve throughout.
Your extreme suspicion of anyone who stays for so long reveals a more fundamental truth about the software industry: very few companies manage to keep employees happy and challenged for so many years.
Forget "dream jobs". This example is not just ridiculously inappropriate: it actually works against the authors point.
If you founded a startup, then quit abruptly at the first sign of real challenges, and now you're trying to found another startup - how would prospective investors look at you? (Even if the former investors aren't already suing you, which is entirely possible).
On the other hand, if you are an early startup hire, and you stick with what is obviously one of the vast majority of failed startups, so you get to be fired when they reduce their headcount to what they consider the best engineer (you, alas, happen to be considered the 2nd best) - how is an employer going to look at you, compared to someone who left two months before?
That's right - you were fired, and he quit. There's obviously something wrong with you.
Comparing employees to founders isn't only completely bogus - it also shows why the entire article is false, trying to explain why employees need to behave like founders while they are a very, very different thing.
You're wrong for doing what's best for you, instead of what's best for an unreasonable employer such as this author. At least, according to this author, that is.
Also, notice that the "Japanese Salaryman" model is not only completely unworkable for high productivity, highly creative projects such as tech startups - it doesn't really apply here. That model, and all models like it in Europe and elsewhere, has two sides - the employee doesn't leave, and the company doesn't (easily) let him go. Needless to say, nobody in his right mind would suggest implementing the latter part, least of all the author who comically insists on the former part.
In other words, what we have is an employer who insists on applying half of a completely irrelevant model to his particular line of business.
If I need to launch a complex product in 6 months or die, I don't care whether my senior developer had his entire family die from serial dysentery. You're either working as hard as you can getting us to the milestone, or you're not a developer here.
The truth is that being "loyal" will kill a startup.
The few successful startups I've known actually didn't have many "lows", and certainly not "dreadful" ones. They had a lot of stress, insane work hours, no life/work balance at all (since "life" was removed from the equation), but not too many of the kind of "omg we're actually failing" type of lows.
The cruel truth is that this business is so competitive, that if you make too many mistakes you're going to lose to those 1 or 2 among your hundreds of competitors that were lucky and competent enough never to have these kinds of failures.
In any case, I agree about the failure to distinguish fundamental (and very different) motivations here. Certainly you don't want someone crumbling under stress, but these kinds of people are easy to identify. Did that person had a very long vacation after leaving (for whatever reason) a startup? Does he seem to shy away from risk, stress, and high pressure positions?
If so, and you're hiring for such a position, it probably shows obliviousness and lack of self recognition and maturity for him to even apply.
The author talks about "generations", so we may mention this funny "generation" of 20-something entrepreneurs that try to hire people for little or no money (see the recent "chief intern" postings) to make the entrepreneur - ofter only a couple of years older than them - rich and themselves poor.
The good news is that these clever entrepreneurs tend to get what they pay for. But then they have more time than successful ones to wax poetic about this "generation" and its many misgivings.
This is very true. Good job pointing out how the author rambles about "generations" and what's wrong with them, trying to explain why an employee leaving a job he doesn't like is somehow evil and sinful.
The article at part reads like the vague "get off my lawn" ramblings of a bitter elderly man. Good luck attracting top young talent with this attitude.
Another important point is that most startups aren't a good place to stay long term, simply because (duh!) most of them do not succeed. Curious, isn't it?
Statistically, over a 3-4 year period, your startup is 90%+ likely to fail. Why would the best and the brightest stay in a failing project? The captain may be expected to sink with the ship (he often doesn't, and especially his first officers don't), but when you realize that this isn't your company, your "stock" isn't going to be worth a nickel since any meager sale profit will go to the series A investors, and if you don't start sending out resume you're going to be fired in a couple of months - why again are you expected to stay?
Also, many of the best engineers I've known have periods where they changed jobs, and then periods where they stayed at the same job for 2-3+ years. That just makes sense. If you can get hired anywhere, and since you can't really gauge the merit of a company from a few hours of visiting it pre-hire, you're likely to shop around and try to find a place that you like.
Ultimately, as you correctly pointed out, if an employee is truly happy in his current position, s/he will not leave. And it's your job as employer is to keep the employees you want happy and productive in your company (what other task does a manager have, really?). How anyone can ignore this simple fact is beyond my grasp.
I find the use of the term "loyalty" here not only immature, but dishonest and hypocritical. The plain truth is that tech startups, and especially the more cutting edge and fast paced among them, are some of the least loyal employers to ever inhabit any job market.
It's not even an idealogical, but plain economical observation: take two companies. One is low-stress, slow, steady money. The other is a crazy fast, big money. Angels or VCs give you tons of cash, you can afford to pay top employees almost any amount of money, with any kind of crazy benefits you can think of (including those freshly baked blueberry muffins in the lobby, which nobody ever eats) but if you don't get that product out before your competitor, you lose it all.
Which company will be faster shedding an unproductive employee?
I can't count the amount of VC funded startups I've known to fire entire teams just because the product vision changed a bit. The main client is going to be an iPhone app instead of a web widget? Immediately fire with no notice or compensation all 5 "star" web developers who left permanent positions at Google, Amazon, Facebook etc to come and help your realize your dream.
I'm not even talking about non-productivity, incompetence, or engineering mistakes that would get you fired from a trail-blazing startup in about 5 minutes.
To expect "loyalty" under these kind of terms is sheer delusion. The only "loyal" employee you're going to get is someone entirely unfamiliar with the above realities - aka a clueless newbie on his first startup job.
There's not much point explaining how the notion of "job hopping" being an employee's "fault" is entirely baseless in this context. This is an important discussion, but so much beyond the grasp of this curious article, that purports to apply to the reality of startups while ignoring the elephant in that particular room.
This is true, not just for GS, but for almost any other financial firm and bank in the United States. In that sense, we all, including end consumers, enjoyed the benefits of TARP bailouts - assuming that without them and policies related to them, the entire financial system would collapse and drop the US to something like the great depression or worse.