Mercenaries

A frequent theme you hear among a certain set of tech VC and executive is distinguishing between so-called “mercenary” and “missionary” employees. The latter joins a firm because they just believe so strongly in your “mission,” and find their self-actualization in helping you evangelize it; the former’s interests are merely base, pedestrian concerns like compensation. You want those “missionaries,” they say, and should avoid “mercenary” employees at all costs.

Frankly, this kind of greed-shaming of frontline employees is garbage. It is insulting and hypocritical for wealthy investors to complain about employees demanding a bigger share of the pie. (I considered pasting in relevant tweet quotes here, but skewering individuals isn’t my goal.) Instead, let me lay out an alternative case: tech workers should be more “mercenary.” Much more.

Let me pause and make a charitable concession: I’m sure that most of the VCs who say this stuff don’t actually mean it to be as insulting as it sounds. What they mean is: hire people who believe in the potential of your business, especially early in a company’s life. If your people believe in the fundamental promise of a company and have a stake in that success, they’re more likely to do their best work and put in the effort required. That much is common sense.

But even people who believe in a company’s potential need to be paid. You can’t eat, support a family or pay rent or student loans with options. When investors and executives make company equity a big part of their standard compensation package, they’re asking employees to take a big leap of faith in order to make the cash flow statement look better. If you work for Amazon, perhaps this isn’t such a big deal. But if you work for a no-name small or mid-sized firm, it’s a big concession for employees to make. And if you’re at a startup? Well, startup options are like lottery tickets – they are usually worthless. This doesn’t stop some slimy founders (and VCs) from hyping their potential value to younger and less-experienced job candidates. That’s life in the big city, I guess.

The tech industry has no shortage of investment capital, but a distinct and well-remarked-upon shortage of people with experience and know-how. (Note: this is different from an overall “talent shortage,” which is a myth I don’t put much stock in.) Good employees are really valuable, and as good capitalists, should accordingly demand a bigger share of the wealth that they are relied upon to create. This will sometimes entail pushing back on what executives and even investors are initially offering, because no matter how well-intentioned those parties are, they are counterparties, not your friends, and your interests are not fully aligned. All big boys and girls should clearly understand this.

It is, of course, highly ironic for venture capitalists to accuse employees who actually do the work of being greedy. VCs certainly aren’t “missionaries” – they’re out to make a buck. The whole VC business model is premised on seeking out outlier mega-returns, which results in pressuring many companies to pursue growth at all costs. Always remember: investors and executives routinely ensure that employees are the very last ones in line when a big exit arrives. Preferred stock classes, ratchet clauses, and various other accounting tricks that non-specialists aren’t privy to make sure of that. So the irony of venture capitalists shaming tech employees for negotiating for better compensation is pretty… rich. (See what I did there? 😄)

Look – I want to underline that I’m not demonizing all VCs here. There are many, especially outside the SV bubble, who have developed great reputations as being fair, helpful and trustworthy partners who look out for us frontline guys. I know several. But accounts to the contrary are also legion, and like it or not, the VC industry has developed a bad reputation for good reason. Tech employees need to be careful, and they also shouldn’t be afraid to exercise their own market power.

I won’t name the specific VC(s) whose recent mercenary/missionary nonsense elicited this rant, but I checked into his recent investments. They include a photo stickers app, yet another social media spam tool and call center software. Not exactly inspiring, world-changing stuff, but probably worthwhile investments. I wonder if this VC would have us believe that early employees in these firms signed on because they saw themselves as evangelists for these companies’ “missions.” Frankly, I doubt it. I’m guessing they got paid, in cash and well, and hopefully got a great options package too.

Tech workers of the world, unite! You have nothing to lose but your upside.