My old CTO is adding more developers to increase his power (and pay) in the company

[Philip J. Fry]

Not sure where this goes but I'll write these stories as a case study.

==background==

I had an LLC who was the SEO department for a tech company. It was an SEO agency who had only one client. Then we merged.

The CTO also had an LLC and he was also the development department of the tech company. He had also one client and he and his employees merged too.

==My case==

I had a percentage of revenue contract and they wanted to turn me salary. I balked and argued and they eventually kicked me out.

==The CTOs case==

This dude is a developer with an MBA. He played ball and became an employee. I could hear the regret in his voice when I talked to him on the phone about this. I didn't want it and pursued entrepreneurship and keeping my market exposure. I started another company.

I checked with another former employee today and the tech company has an OKR to increase the amount of developers in their dev team. I get what the CTO is doing. Instead of asking for more sales or increasing the contract cost for the company -- which he can no longer do as an employee -- he is increasing the head count in his department so that he can manage more people and be paid a higher salary because of the people he is managing.

He switched from selling hours as an agency to selling reasons for a raise due to increase management duties.

==Conclusion==

So, if you're ever at the point where your startup is going so well that there's a merger and you're forced into a cushy salary position, you can play a new game and just hire more people and "solve problems" by hiring someone to solve the problem. Then you can tell the company that your number of reports increase, which is more responsibility and an increased salary.

New game, new rules, new strategy.

Good move on his part but I can earn more with a new company than I could in that company. This has more risk and he picked a safe route, since he has two kids. I am still young. Plus, the company is burdened by high development costs. They think that is their biggest asset but it isn't. They can't sell the development. The old CTO is a genius. Well play A..

If you don't know, I'm starting a competing company and my dev costs is $100/month or so whereas that is just 1 hour of A. breathing. I'm going to out manurer them so good as my company is light and agile. They're the behemoth now. I took out a few to make them the behemoth, now they are on my sights.

 

[Philip J. Fry]

I thought about it and if you want to do this in SEO, here is how you do it.

Let's say you start at a startup and are the only SEO. As time goes by and there is more SEO sales, you can expand the SEO department from just you to a team of people. So, you can have a technical SEO person handle all the technical SEO stuff. You can have an on-page SEO person handle all on-page stuff. You can have designated link builders. Rome2Rio.com has an SEO team of 7 or so people, for example. Autodoc.co.uk has an SEO team of 40.

So, instead of climbing the ladder by going from SEO to head of growth to CMO, you can just go from SEO to SEO manager to head of SEO to director of SEO. You're increasing your pay as you increase your responsibility and number of reports. The cool thing is that you solve problems by hiring people to solve those problems and doing this adds to your pay as it adds to your direct reports

There was a study where they gave monkeys art equipment. The monkeys then painted abstract, cool things. Then, they gave another group of monkeys art equipment and gave them a reward for their painting. Those monkeys painted shit. The lesson is that, once you reward something, you'll get what you're rewarding. My old company is rewarding people for managing more people, so they get what they're rewarding. This also makes them the slow behemoth they are today that has a high staff count and redundant team members.

My new client is already on page 1 for their exact same keywords and it is only December. I was fired in March. It only took 9 months.

Also, I'm already at 160 published articles. I'm going to take them on in the long tail. God damn this is good!

 

[Sutra]

If each of those new employees generate more revenue than the cost to employ them, then, yeah, works out great for everyone. The company makes more profit, grows, and the manager should be rewarded with more pay/incentives/perks/growth opportunity/ etc. But if those employee aren't pulling their weight, and it's costing more money to employ them than what they generate, then it is going to fall on the manager's shoulders - as they are the one responsible for their department. And when taking a deeper look at it if it turns out the manager was hiring based on their own personal agenda, rather than the values and goals of the company, then it would be time to fire that manager. And fire all those new employees that are dead weight.

The manager would not only be responsible for getting himself fired, they would also be indirectly responsible for the suffering of those new employees who shouldn't have been hired.

Would also be a time to review the hiring processes, because how was a person like that (the manager) hired in the first place?

In saying that, I realize it all depends on the culture/values/goals of the company and what they choose to incentivize. If a company doesn't base pay/rewards on performance, and then incentivizes hiring without any thought to the consequences (both beneficial and harmful), and how to encourage/prevent those consequences through additional checks and balances, then you can end up in situation where people take advantage to the detriment of the company. Bloated departments, processes, low morale, degradation, and a huge waste of resources. No bueno.

 

[Philip J. Fry]

If each of those new employees generate more revenue than the cost to employ them, then, yeah, works out great for everyone. The company makes more profit, grows, and the manager should be rewarded with more pay/incentives/perks/growth opportunity/ etc. But if those employee aren't pulling their weight, and it's costing more money to employ them than what they generate, then it is going to fall on the manager's shoulders - as they are the one responsible for their department. And when taking a deeper look at it if it turns out the manager was hiring based on their own personal agenda, rather than the values and goals of the company, then it would be time to fire that manager. And fire all those new employees that are dead weight.

The manager would not only be responsible for getting himself fired, they would also be indirectly responsible for the suffering of those new employees who shouldn't have been hired.

Would also be a time to review the hiring processes, because how was a person like that (the manager) hired in the first place?

In saying that, I realize it all depends on the culture/values/goals of the company and what they choose to incentivize. If a company doesn't base pay/rewards on performance, and then incentivizes hiring without any thought to the consequences (both beneficial and harmful), and how to encourage/prevent those consequences through additional checks and balances, then you can end up in situation where people take advantage to the detriment of the company. Bloated departments, processes, low morale, degradation, and a huge waste of resources. No bueno.

But how would the manager’s manager (in this case the two co founders) know how much an employee is generating in revenue? They don’t. It is totally subjective. Unless they are salesmen, there’s no way to know exactly an employees direct contribution to the company’s bottom line. It isn’t a clear metric.

Once you have buy in and the numbers are good, adding a few extra staff to boost your head count isn’t hard. You can just take a task that used to go to one person and make it a new employees whole responsibility. Then you can say it is scaling and increased capabilities.

the marxists did this since they used the labor theory of value. They had a guy in the bus sell the ticket, another collects the ticket, and another drives the bus. You can do the same thing with your department. As long as the 20% that generates results get results, there can be an 80% “padding” to boost your own salary.

let’s say the difference between senior SEO manager and head of SEO is €40,000 (€80,000 vs €120,000), wouldn’t you do it to pad your responsibilities, title, and pay? You can just hire the 80% padding employees based upon likability so you have a pleasant day at work. You’ll be surrounded by them all workday anyways.

im not saying to hire all BS roles but hire more than absolutely needed just to give yourself a raise. Making an argument for your next raise is always a good idea

 

[Sutra]

Some positions aren't directly tied to generating revenue like a salesman, however, in some form, every position is either growing revenue, protecting it, or both. All positions should have goals to hit, that are in alignment with department/company goals, and they should be tracked with quantifiable metrics. If any position is lacking metrics to hit, that is a failure of leadership.

If the goal is hit xx revenue for the year, you figure out what specific things can you track that will lead to that revenue goal. What processes are needed to get you there. While you can't actually know how much money you will be making by Dec 2023, you CAN know that you're hitting the metrics and milestones needed - executing on the processes that lead to that revenue goal.

Thus, when reviewing monthly numbers it will be easy to see that these metrics are not being hit, who is not hitting them, and who is responsible.

But anyway, really, if a manager is hiring people to pad their pay, and it's an ongoing thing without being caught, that's a failure of leadership to begin with. That means there's a lack of values, vision, metrics, direction, incentives, accountability, morality, and so on. In essence, it's a shitty company due to shitty leadership, that's hiring shitty employees.

A company that values performance will not increase a managers pay just for hiring more people. You have more responsibilities? Ok, great. That's what you're supposed to be doing, taking on more responsibilities. But are you performing? Are you hitting the goals and metrics that were established beforehand? Is your department hitting them? Are the employees in that department hitting them? If not, not only are you, the manager, failing but now you just reduced the company profitability, and wasted tons of resources (time hiring, training, managing, and money) by hiring all the employees that weren't actually needed. And now more time will be spent on firing them, the exit process, and so on.

However, hah, if working for a company that lacks the things I mentioned above, and they don't value performance, then yes, you could do what you're talking about in order to increase your pay.

I will say this though, and perhaps it may help, but you're going through a bunch of mental hoops in order to find some way to "cheat" the system. As if you feel compelled to cause hurt. Not only will that trait not serve you, it will hinder your progress. I believe your worldview is going to cause you to hire the type of employees you don't want, and will cause you you to distrust any good employees you have - as you will suspect them of doing the very things you might do.

It's time to level up man. You need to let the bullshit go and grow up. You say you want to create a serious company, so get serious.

That darkness though, that desire for revenge in you is useful. Use that as fuel. Use it to dominate. But don't allow it to consume you. Keep it under your control. Embrace it, shape it, direct it.

 

[eliquid]

But how would the manager’s manager (in this case the two co founders) know how much an employee is generating in revenue? They don’t. It is totally subjective. Unless they are salesmen, there’s no way to know exactly an employees direct contribution to the company’s bottom line. It isn’t a clear metric.

Once you have buy in and the numbers are good, adding a few extra staff to boost your head count isn’t hard. You can just take a task that used to go to one person and make it a new employees whole responsibility. Then you can say it is scaling and increased capabilities.

the marxists did this since they used the labor theory of value. They had a guy in the bus sell the ticket, another collects the ticket, and another drives the bus. You can do the same thing with your department. As long as the 20% that generates results get results, there can be an 80% “padding” to boost your own salary.

let’s say the difference between senior SEO manager and head of SEO is €40,000 (€80,000 vs €120,000), wouldn’t you do it to pad your responsibilities, title, and pay? You can just hire the 80% padding employees based upon likability so you have a pleasant day at work. You’ll be surrounded by them all workday anyways.

im not saying to hire all BS roles but hire more than absolutely needed just to give yourself a raise. Making an argument for your next raise is always a good idea

Depends on the company and how it is ran.

For example, I've worked in many companies prior where it was a "sales organization", meaning the owners were all sales-focused, so they looked at everything as sales/numbers.. even the departments and employees that were not "sales".

Even past that, most companies will do this:

Assign a value to a department. Say they track SEO is responsible for 37% of sales revenue ( gathered from UTMs in Analytics and other ways ). They won't be assigning anything for "branding" though.

If it's an org that does 5m a year, then SEO is responsible for 1.85m.

They then divide the number of employees in SEO by 1.85m. If 10 employees, then each is counted as 185,000. Now take total payroll and benefits and add some margin ( bc the company doesn't want to be breaking even on payroll ) and if over/under, decide if hiring or firing is needed.

That's how ALMOST all companies work that have more than 50 employees.

Is it right or wrong? Ehhh... but it's reality.

Not many companies are pegging direct revenue to 1 employee, so they don't need to know how profitable each indiv employee is. They just know they need to cut back or hire more in general and other factors decide who gets fired past that. Like, how well liked someone is or culture fit they are... etc.

 

[Philip J. Fry]

Some positions aren't directly tied to generating revenue like a salesman, however, in some form, every position is either growing revenue, protecting it, or both. All positions should have goals to hit, that are in alignment with department/company goals, and they should be tracked with quantifiable metrics. If any position is lacking metrics to hit, that is a failure of leadership.

If the goal is hit xx revenue for the year, you figure out what specific things can you track that will lead to that revenue goal. What processes are needed to get you there. While you can't actually know how much money you will be making by Dec 2023, you CAN know that you're hitting the metrics and milestones needed - executing on the processes that lead to that revenue goal.

Thus, when reviewing monthly numbers it will be easy to see that these metrics are not being hit, who is not hitting them, and who is responsible.

But anyway, really, if a manager is hiring people to pad their pay, and it's an ongoing thing without being caught, that's a failure of leadership to begin with. That means there's a lack of values, vision, metrics, direction, incentives, accountability, morality, and so on. In essence, it's a shitty company due to shitty leadership, that's hiring shitty employees.

A company that values performance will not increase a managers pay just for hiring more people. You have more responsibilities? Ok, great. That's what you're supposed to be doing, taking on more responsibilities. But are you performing? Are you hitting the goals and metrics that were established beforehand? Is your department hitting them? Are the employees in that department hitting them? If not, not only are you, the manager, failing but now you just reduced the company profitability, and wasted tons of resources (time hiring, training, managing, and money) by hiring all the employees that weren't actually needed. And now more time will be spent on firing them, the exit process, and so on.

However, hah, if working for a company that lacks the things I mentioned above, and they don't value performance, then yes, you could do what you're talking about in order to increase your pay.

I will say this though, and perhaps it may help, but you're going through a bunch of mental hoops in order to find some way to "cheat" the system. As if you feel compelled to cause hurt. Not only will that trait not serve you, it will hinder your progress. I believe your worldview is going to cause you to hire the type of employees you don't want, and will cause you you to distrust any good employees you have - as you will suspect them of doing the very things you might do.

It's time to level up man. You need to let the bullshit go and grow up. You say you want to create a serious company, so get serious.

That darkness though, that desire for revenge in you is useful. Use that as fuel. Use it to dominate. But don't allow it to consume you. Keep it under your control. Embrace it, shape it, direct it.

Dude, from here https://www.buildersociety.com/thre...king-a-startup-from-36-000-to-6-000-000.6435/ it is obvious that the company I was in was toxic and under bad management. They even under-paid my bonus and gave me a non-disclosure statement during the bonus payment. Of course anyone under a broken system would cheat the system. Fuck those owners. I'm glad a work for the competitor now and my new boss/client is awesome. He actually appreciates me. Plus, no meetings

And yes, revenge is a motivation for me but it can't be the main pursuit I'm saving up for financial independence and early retirement! It is just an added bonus that working for the competition takes money away from my old bosses. Very sweet.

They also fired half of my department after they fired me. Now parts of the fired crew work for me for the competitor to make revenge too. Plus, the employees in the company are giving us data to help us out as they might be fired any day and want to make a safety net with me in my new company. Smart of them!

As they say, if you buy cheap, you buy expensive! Old bosses were being cheap as fuck when they replaced me! Now they're being expensive

Also, yes, I'm well aware that the old company was toxic. What I learned from it is to give employees what they really want, which is financial security. In an era where companies replace people left and right, I offer long term employment and financial security and peace of mind. My guys have been with me since 2017. It has been 5 years. Some even worked a few hours here and there for free, to help me out. Two even meet IRL and had a talk and both agreed that I was an awesome boss they even told me they'd leave their new jobs to work for me again Totally agree that the old company was toxic AF.

Depends on the company and how it is ran.

For example, I've worked in many companies prior where it was a "sales organization", meaning the owners were all sales-focused, so they looked at everything as sales/numbers.. even the departments and employees that were not "sales".

Even past that, most companies will do this:

Assign a value to a department. Say they track SEO is responsible for 37% of sales revenue ( gathered from UTMs in Analytics and other ways ). They won't be assigning anything for "branding" though.

If it's an org that does 5m a year, then SEO is responsible for 1.85m.

They then divide the number of employees in SEO by 1.85m. If 10 employees, then each is counted as 185,000. Now take total payroll and benefits and add some margin ( bc the company doesn't want to be breaking even on payroll ) and if over/under, decide if hiring or firing is needed.

That's how ALMOST all companies work that have more than 50 employees.

Is it right or wrong? Ehhh... but it's reality.

Not many companies are pegging direct revenue to 1 employee, so they don't need to know how profitable each indiv employee is. They just know they need to cut back or hire more in general and other factors decide who gets fired past that. Like, how well liked someone is or culture fit they are... etc.

So, yes, if your department is way high on the $/headcount ratio, just hire padder employees

Also, the guy that replaced me hired 3 other people to do my job. Dude's lazy as fuck and the company is just spinning its wheels now. My department was seriously super high $/employee.

 

[Philip J. Fry]

Some positions aren't directly tied to generating revenue like a salesman, however, in some form, every position is either growing revenue, protecting it, or both. All positions should have goals to hit, that are in alignment with department/company goals, and they should be tracked with quantifiable metrics. If any position is lacking metrics to hit, that is a failure of leadership.

If the goal is hit xx revenue for the year, you figure out what specific things can you track that will lead to that revenue goal. What processes are needed to get you there. While you can't actually know how much money you will be making by Dec 2023, you CAN know that you're hitting the metrics and milestones needed - executing on the processes that lead to that revenue goal.

Thus, when reviewing monthly numbers it will be easy to see that these metrics are not being hit, who is not hitting them, and who is responsible.

But anyway, really, if a manager is hiring people to pad their pay, and it's an ongoing thing without being caught, that's a failure of leadership to begin with. That means there's a lack of values, vision, metrics, direction, incentives, accountability, morality, and so on. In essence, it's a shitty company due to shitty leadership, that's hiring shitty employees.

A company that values performance will not increase a managers pay just for hiring more people. You have more responsibilities? Ok, great. That's what you're supposed to be doing, taking on more responsibilities. But are you performing? Are you hitting the goals and metrics that were established beforehand? Is your department hitting them? Are the employees in that department hitting them? If not, not only are you, the manager, failing but now you just reduced the company profitability, and wasted tons of resources (time hiring, training, managing, and money) by hiring all the employees that weren't actually needed. And now more time will be spent on firing them, the exit process, and so on.

However, hah, if working for a company that lacks the things I mentioned above, and they don't value performance, then yes, you could do what you're talking about in order to increase your pay.

I will say this though, and perhaps it may help, but you're going through a bunch of mental hoops in order to find some way to "cheat" the system. As if you feel compelled to cause hurt. Not only will that trait not serve you, it will hinder your progress. I believe your worldview is going to cause you to hire the type of employees you don't want, and will cause you you to distrust any good employees you have - as you will suspect them of doing the very things you might do.

It's time to level up man. You need to let the bullshit go and grow up. You say you want to create a serious company, so get serious.

That darkness though, that desire for revenge in you is useful. Use that as fuel. Use it to dominate. But don't allow it to consume you. Keep it under your control. Embrace it, shape it, direct it.

I re-read this and the premise that is off is that we were hitting out metrics. The company reached record highs when I was fired. What my post is about is finding ways to argue for a raise, when the company is doing well. I know my old bosses. They would not want to give me a raise out of the goodness of their hearts and if they did, it was cents on the dollar for the value I was creating. I got better raises when I was proactive about it instead of waiting for them to give me one.

Also, I'm reading The Worldly Philosphers by Robert Heilbroner right now. In chapter 8 he covers Thorstein Veblen. Veblen argues that the engineer is the one who creates the system that produces industry and the businessman is the one who sabotages it to create a profit. If a product takes $10 to produce, the businessman would sell it for $20 and take $10 for himself. This in itself is waste and is counter-productive as it reduces the amount of people who will obtain the product.

In defence of my post, it wasn't me being a bad manager. It was me being a good businessman. It was also my bosses being a good businessman and saving themselves $300,000 a year on just my salary. It then is also me being a good businessman and going where my skill is most valuable: to their competitor.

This is just how capitalism is. They are not toxic and I wasn't a bad manager. Capitalism is what is toxic, counter-productive, and wasteful. I'm just playing by the rules.

 

[Ryuzaki]

This is just how capitalism is. They are not toxic and I wasn't a bad manager. Capitalism is what is toxic, counter-productive, and wasteful. I'm just playing by the rules.

It sounds like you're reading some commie nonsense. A product isn't worth what it costed to produce. It's worth what the person who deems it valuable to them is willing to pay. Capitalism (the free market) solves for THAT.

Saying the businessman adds no value to the chain is silly. The businessman has people test the product, runs the studies, improves the product. They're the ones that let people know the product exists. They're the one that pushes papers and makes the entire pipeline from producer to customer possible. They're the ones that optimize everything to make the entire endeavor monetarily sound. To imply that they shouldn't be paid (or even exist) is kind of stupid, which I know you're not. Not every idea in a book is sensible.

Having an industry without profit means no economy, which means communism, which still extracts additional value from industry, though it goes to a different set of corrupt fat cats (the government).

Thankfully nothing is a zero sum game and we continue to produce more and more value for less and less labor and resources. If anything will sabotage that (future progress) it's the whole crowd that thinks labor is separated from value and that we should only take what we need and not expand this entire enterprise of Spaceship Earth. They'd rather kill 75% of the population and live in harmony as an agricultural / hunting & gathering society than expand to Mars with fuel sources.

 

[Philip J. Fry]

It sounds like you're reading some commie nonsense. A product isn't worth what it costed to produce. It's worth what the person who deems it valuable to them is willing to pay. Capitalism (the free market) solves for THAT.

Saying the businessman adds no value to the chain is silly. The businessman has people test the product, runs the studies, improves the product. They're the ones that let people know the product exists. They're the one that pushes papers and makes the entire pipeline from producer to customer possible. They're the ones that optimize everything to make the entire endeavor monetarily sound. To imply that they shouldn't be paid (or even exist) is kind of stupid, which I know you're not. Not every idea in a book is sensible.

Having an industry without profit means no economy, which means communism, which still extracts additional value from industry, though it goes to a different set of corrupt fat cats (the government).

Thankfully nothing is a zero sum game and we continue to produce more and more value for less and less labor and resources. If anything will sabotage that (future progress) it's the whole crowd that thinks labor is separated from value and that we should only take what we need and not expand this entire enterprise of Spaceship Earth. They'd rather kill 75% of the population and live in harmony as an agricultural / hunting & gathering society than expand to Mars with fuel sources.

So you're misunderstanding Veblen as a communist but Veblen is not a communist and you're actually agreeing with him. Let me explain.

He is a critic of capitalism but is not a marxist or a communist (https://en.wikipedia.org/wiki/Thorstein_Veblen). He doesn't advocate for communism. Not every critique of capitalism is communism.

Veblen argues that it is the engineer who makes the system that makes products, not the businessman. The businessman just profits from the system that the engineer built.

To give you an example, the engineer is the one who builds the railroad tracks and goods are transported on it. The customer buys the transportation. However, it is the owner of the railroad track that profits from the railroad track's sales. It is also the owner of the railroad track who profits from the increase in valuation of the railroad track, which has nothing to do with the actual sales of the railroad but the railroad's perceived value in society.

So Veblen would be fine with most solo-entrepreneurs here, as he views them as engineers. He is against financial traders who short stocks and profits from that, as they don't produce anything.

The key takeaway from Veblen is that the machine ("the system") that the engineer builds is the key to creating value. Or, as my operations professor said it, "operations is what creates value". It is not the businessman who pitches the business operations that creates value.

So, for Fedex, it is the business operation of shipping packages that creates value. Not the businessmen running ads or the businessmen gaining investors.

The biggest takeaway for me is that systematising things is what allows for growth and profits and wealth. It was by me systematising content writing and off-page SEO that my old company became an $8,000,000 company. It wasn't me being an artisan SEO working on one site by myself. Veblen agrees with this and says that the engineer who makes the system is the valuable one, not the businessman who profits from the system.

Veblen goes on to say that there will be a future war between engineers and businessmen but that's too extreme.

So, with your examples, it is the engineer who produces products, tests them, and makes the supply chain. It is also the engineer that optimises things. It is not the engineer that is lowering the engineer's wages (lol) it is the engineer's boss who wants to take the profits for himself (lol).

 

[Ryuzaki]

I get what you're saying. You're enveloping Engineer & Businessman (as I defined it) into one category: Engineer. Then you're extracting people like stock traders (who I agree add zero value) and calling them the businessmen to the exclusion of all other types of business. It's much clearer now.

This quote is tricky: Or, as my operations professor said it, "operations is what creates value".. We all agree and know that an idea with zero action is worthless. And that an idea with incredible action is very valuable. But nowhere can you find "action without idea" producing any value any where. Those are things we do for fun, like seeing how deep of a hole we can dig at the beach. All the labor in the world won't make that hole worth anything to anyone but the hobbyist.

There is value in ephemeral things, an example being that we have Intellectual Property rights. There's no added value produced by skimming 5% off the top of something (day trading stocks, shaving affiliate leads, etc.) But that's not the sum of capitalism, which seems (and I don't want to put words in your mouth) to be the essence of your argument, and that toxicity is definitely a gross thing to be doing, which then justifies this whole "how can I trick my boss into giving me a raise when they won't do it when they should" kind of thinking, which is equally toxic. And it's not capitalism, it's just toxicity.

Two wrongs don't make a right, and drinking a vial of poison with the expectation that it will kill your enemy is silly, too.