
Ask HN: Stay or Leave? SoundCloud has deferred salary reviews - throwaway-sc
SoundCloud has deferred salary reviews until the next funding round is complete.<p>Over the last few years, travel between offices has been restricted to business critical travel only.
More expensive food items have started disappearing from our kitchen.<p>Employees used to get a small bottle of champagne on their birthdays &amp; employment anniversaries.
This doesn&#x27;t happen anymore.<p>All of the above feels reasonable.<p>However, they recently announced that the July 1 salary review that everyone was promised will be deferred.
There is no information about back pay or a date about when the next salary review will happen.<p>Salary increases are predicated on the next round of funding.
They anticipate that the round will close over the next couple of months, if not weeks.<p>I&#x27;m sure that everyone here will have been in similar situations before.<p>What did you do? And, how did you decide whether to continue working or start looking for other opportunities.<p>Also, what other arrangements, we, as employees should consider putting forward.<p>Example: I&#x27;d be okay working 4 days weeks, until the salary review is complete.<p>What questions should we ask our founders that&#x27;ll help us build confidence that the company&#x27;s financials are in a reasonable shape?
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bspn
> _However, they recently announced that the July 1 salary review that
> everyone was promised will be deferred._

The company is obviously facing a cash crunch, but to me this is the key bit
and why I would start shopping my resume if I were in your shoes. Management
will have known about the cash crunch or should at least have anticipated it
was a possibility for a while now, and should not have set expectations that
they were unlikely to meet. The rest of the actions look like prudent cost-
cutting measures, but if you can't trust that management will honor their
promises today what guarantees do you have that they will do so in the future?

As a non-founder (i.e. very low equity upside), it's not for you to make
compromises to keep their high-upside baby alive. Put your own interests first
and find an employer that doesn't require you to subsidize their growth.

Also, if I had a dollar for every time a founder has told me that funding is
coming in "months, if not weeks" .... well, you can guess the rest.

~~~
confluence
Key aspect of becoming a manager is making promises you may or may not keep.
They cost you nothing, and when they come due it's the employees who suffer.

~~~
tedmiston
A good manager manages expectations when reality changes.

~~~
confluence
A great manager doesn't make promises he can't keep.

~~~
flyinglizard
Sometimes, a great manager needs to speculate and do things at uncertainty and
risk, while motivating their subordinates. They are clearly working to save
the company in OPs case.

~~~
confluence
Ah yes, with a late June notification.

Maybe communicate earlier hmmm?

That would be better management rather than hold my beer I'll probably close
this round while I risk the livelihoods and futures of my rank and file.

~~~
tedmiston
But alas, communicating earlier is when things have the most uncertainty. I
have had great managers that set expectations around how much uncertainty and
change is built-in to what they're communicating, but in general, the earlier
they share something, the more likely it is to not be certain yet, still it's
often useful information to have.

(I'm only speaking in general, not specific to this situation.)

------
phamilton
There's a quote: "If you owe the bank $100, you've got a problem. If you owe
the bank $100M, the bank has a problem."

Here's a tweaked version. If you can't get a raise, you have a problem. If a
company can't pay its employees market rate, the company has a problem.

I pretty firmly believe that if money is tight at a company, paying fewer
people more money (and setting higher expectations around performance) is the
way to go. Otherwise you end up with top talent leaving and those left feel
entitled to not give 100% (because they aren't being paid 100%).

------
benjaminwootton
Posting this with the company name is a little indiscreet.

If it was my company and I was having a bump in the road with funding I would
hope for it not to immediately hit the front page of HN for the sake of a few
weeks.

Soundcloud actually have a good reputation as an employer so maybe they
deserve a small benefit of the doubt? I get the mercenary attitude but it's
only potentially a few weeks or months for an incremental pay rise, not as if
they are going under....

I suspect this won't be a popular point of view but I like to think company
and employee owe each other at least a modicum of loyalty.

~~~
_e
The OP is anonymous. Are there any other SoundCloud employees willing to stand
up and confirm these accusations?

~~~
babo
That would make it even worse.

------
viraptor
You don't lose anything by starting to look at alternatives. You don't have to
do that full time either. But if you're uncertain about the future, while
still holding a paying job, this is the perfect time to refresh the CV,
request old references, subscribe to some job ad feeds.

You can easily send an application a week or two to places you find really
interesting without the "need money for food" feeling.

~~~
confluence
Strongly concur.

Also make this a yearly habit, so you stay on the ball, know where the market
is at, and become comfortable leaving at a moment's notice to avoid this life
changing anxiety you might be feeling.

Once you do it regularly, it's no big deal. Companies hire and fire dozens of
people a year, it shouldn't be that different for you.

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tcmb
Maybe this makes me the devil's advocate here, but why would you suddenly only
work 4 days a week?

I assume you have a valid contract that says you work X hours for Y amount,
what makes you think you're not bound to that just because you don't get to
talk about a possible (!) raise?

It's up to you if you interpret the company's behaviour as a red flag and
leave, but reducing your working hours because you don't get your regular fix
of more money seems like a sense of entitlement to me.

As a side note, your post would have worked just as well without publicly
shaming your employer.

(I am not affiliated with SoundCloud, except for the coincidence that one of
my previous companies used to share an office with them.)

~~~
gus_massa
I think he is not considering working only 4 days a week unliterary. He is
considering negotiating working only 4 days a week instead of a pay rise.

He can try to negotiate whatever he wants, for example working only 4 hours
per day, or 3 days a week, or ... but the employer is not forced to agree.

~~~
Someone
I think they are thinking of getting the pay rise, then work a four day week
(and getting paid 80% of his increased salary) until the company can afford to
pay them five days a week at the increased salary again.

------
sunir
Well, businesses come and go. Start ups come and go faster. Nothing tragic
will happen if you accept that. I am sure you will find a job if you keep
things in perspective. It is just business.

However there is no reason to panic yet. It is likely they will raise again.

Meanwhile you can use your energy to prepare yourself. Get your resume and
LinkedIn put together. Make sure your personal finances are secure and can
handle 3-6 months with no income (standard advice for everyone). Start
inquiring about what other companies would be worth working for.

If you have a plan to handle the downside risk, this will be less terrifying
and more of a business like decision of the merits of staying or going.

Once you can feel safe walking away then you can negotiate a better structure
if you want the extra time. It is important to have the walk away plan as your
BATNA when negotiating.

~~~
confluence
This is the crux of negotiating. The person with more options has more power.
There's really only one way to get a raise: pay me X or I walk. If yay, good,
if nay, walk.

~~~
semi-extrinsic
A subtle way to reinforce your words is drawing on the famous million-dollar
Amdahl coffee cup:

[http://dealwhisperers.blogspot.com/2015/07/a-million-
dollar-...](http://dealwhisperers.blogspot.com/2015/07/a-million-dollar-
coffee-cup.html)

In this case, find a friend at Google/Apple/whatever and ask them if you can
have some employee-only branded stuff.

------
dood
You don't have to make a big decision right away, but those are certainly
signals that the decision may be made for you in the next few months if you
are unlucky.

I'd certainly start the usual job-hunting process: updating my CV, mentioning
to friends that I may be open to a new position, breaking out the ol'
whiteboard for algorithm interview practice, going to meetups etc.

Also, prepare yourself for being laid-off, financially and mentally. It sucks,
but it's the reality of startup life.

Don't worry about questioning the founders - it's their job to be upbeat and
optimistic to get the best result for their startup, but it's your
responsibility to look after your career. But that doesn't necessarily mean
giving up the day job - hope for the best, prepare for the worst.

------
TheRealmccoy
This happens in a lot of companies, there are moments like this.

Also, nothing in your contract or offer letter would have said that the
company would do a salary review every year.

When such a decision is made, companies are aware that what could happen, the
way salary review is important for an employee, in equal measure it is
important for the company too.

So if such a decision is made, they weighed in every thing, may be the fact
also that, people might leave or they would look for another option.

And the company also knows that people who would have options are the good
people, and no one wants to let go the good people and being left with average
or above average people later, when the finances are sorted.

If you love what you do, stick with SoundCloud, it's just part of life and
could happen anywhere.

PS: I have been through this once.

------
antr
I'm sorry to hear this. However...

 _> What questions should we ask our founders that'll help us build confidence
that the company's financials are in a reasonable shape?_

... there is no question you can ask anyone that will help SoundCloud from
burning money. Building confidence is just an act of faith, but this won't
solve the underlying issue that SoundCloud does not have a viable business
model, at least, with it's current corporate structure and business model.
Don't get fooled by cheerleading VCs and CEOs, it's the oldest trick in the
book. Always at the expense of employees and other stakeholders.

Many people join startup-land with the impression that these multi-(b)million,
VC-funded companies are as safe as joining other old-school corporate
companies which apparently are going to be disrupted by those very startups.
Some other people joining startup-land are aware of this issue, and they will
be the first to jump ship. All I can suggest is that you start looking for
other opportunities, just in case. Do not get fixated on the back pay date,
etc... just move on.

------
jhowell
The company is not profitable. Compensation is based on raising money. The
financials are not in "good shape".You say they haven't received their next
raise so consequently you either. If that concerns you, you should seek
employment elsewhere.

------
ryandrake
I went though a similar situation as an employee of a struggling start-up in
the late 90s (dot com bubble 1.0). The founders (who by the way were wonderful
people trying to make the best of a bad situation) decided that rather than
start firing people, we'd all be taking half pay until we got funded, with
promises to square everyone up eventually. I was young and dumb at the time so
I, along with most, accepted this. A few months later, it went down to 1/4
pay, and we lost a few people but many stayed. Then, no more health insurance,
at which point I finally bailed, and ended up unemployed for close to 6
months. I'm not sure what additional sacrifices the remaining employees had to
accept, but I know it was much better for you the earlier you got out.

There's no way I'd make the same mistake today. No pay, no work. If I want to
do work without being paid for it I'll get a hobby. While I might enjoy what
I'm working on for you, YOUR dream is not my hobby. If I was a founder and the
company went through tough times, I'd gladly work it for free because of the
upside potential, but not as employee number 5 with 0.1% equity. No way, no
how.

------
fecak
Whether to stay or leave is obviously an important decision that can impact
your career, and you may not want to base it on something as simple as the
things you've mentioned here.

Of the things you mention, there seem to be two primary concerns.

One is that you definitely won't get a raise until a new round of funding
comes in, and even if that funding does arrive I assume a raise is not a
guarantee. We obviously aren't aware of your status or current and past
performance. We also aren't aware of how much you are making now, and whether
that amount is perhaps at the higher end or lower end of market rate already.

Two is that the company seems to be having at least some financial concerns.

You've also told us "they anticipate that the round will close over the next
couple of months, if not weeks". That sounds optimistic. Being that the next
salary review isn't for a couple weeks, it sounds as if this entire thing
could be about nothing.

If you like your job enough where not getting a raise is OK for at least a few
months, you should stay.

Beyond liking your job, are you still learning? Are you becoming better at
what you do year after year by staying there? If the answer is "no" to either
of those questions, you should probably leave regardless of salary raises and
free champagne.

You should always be prepared for the worst, of course, so if an event
(layoff, closure) were to happen you should always want to be in a position to
start looking for work quickly.

I don't think suggesting a 4 day work week due to an incomplete salary review
is a good option. That suggests that you may have anticipated a 20% raise,
which isn't all that realistic. Making unrealistic demands of a cash-strapped
company could be a quick way to a layoff.

I'm not sure at this point it's even relevant to ask the founders any
questions. They seem to be forthcoming about things - it's not like they told
you there will be no salary reviews the day before they were scheduled to
happen, and if they have been trustworthy in the past you should have no
reason to doubt their honesty now about their expected timeline for the next
round to close.

When should one start looking for jobs? There are lots of reasons. If you are
not fairly compensated for what you do and there are no other 'upsides' to
your employment that make staying a good option. When you aren't learning or
challenged by what you do. When you feel work is having a consistent negative
impact on other parts of your life. When your company clearly makes decisions
that do not consider the best interests of their employees.

Good luck to you.

~~~
Adams472
This seems like the most thoughtful response. Salary cuts and freezes, while
painful and unfortunate, do happen.

If you're financially stable, enjoying your time and continuing to learn,
stick around. It may be an informative experience for the future. Plus, you
may have opportunities to take on new projects if other employees leave.

In the background, it can't hurt to sharpen your resume and start talking to
friends about their companies in the event that you do have to depart
SoundCloud.

------
mrleiter
>Management will have known about the cash crunch or should at least have
anticipated it was a possibility for a while now, and should not have set
expectations that they were unlikely to meet.

As user bspn has said before, this is a bad sign. If the company has good
financial management, they have seen this coming and chose to inform its
employees very late (which is bad). If the company did not see it coming, they
have bad financial management (which is also bad).

So yes, from an objective point of view it surely cannot hurt to start looking
somewhere else.

------
dunkelsten
Soundcloud is out there for several years raising rounds with great
expectations (meaning high valuations) and still hasn't found a business model
yet. They've lost a lot of high class tech talent such as Peter Bourgon. Users
stay stagnant, no exit in sight. If you have equity, count it as zero, as
latest at the next round, liq prefs will be so high there won't be much left
for employees. If I were you, I'd start looking in any case.

------
AngeloAnolin
This may sound too self-serving, but at the end of the day, you need to ensure
your bottomline and well-being as well. You have responsibilities and the
necessity to feed yourself (and those who may depend upon you) which involves
in some ways some financial means, which would be perfectly alright that you
start looking for places that may well use your skills/talent and compensate
you accordingly.

------
umanwizard
> I'm sure that everyone here will have been in similar situations before.

No, because I've only worked for businesses that make money.

~~~
confluence
Not the time or place.

~~~
umanwizard
What? Why not? The OP is explicitly asking for advice. My advice is to work
for a business that makes money.

~~~
adventured
That's not the advice you gave. In fact you gave no advice, you simply
proclaimed your superiority when it comes to past decision making, in that you
only worked for companies that make money.

Your reply was intentionally snarky at best; obnoxiously insulting, demeaning
and entirely non-useful at worst.

------
joeevans1000
I think this might be evidence of the trend that is already occurring of IT
companies (including startups) becoming more like companies in other
industries. Which is to say, no champagne on your birthdays. I've noticed less
lavishness. It was only a matter of time for the excitement of a whole new
industry to begin to wear off. Many components of what is necessary to create
a startup are becoming commodified by so called cloud offerings. There is less
need to exert the same level of effort to retain your developers and a failure
to do so has less consequence.

------
Adam89
If you're in London there's a cool company called FutureLearn, they are not
actively advertising for new employees but you should check them out.

------
richardknop
I would probably send my resume over to recruiters and started looking at
possible new opportunity while keeping your job.

It won't hurt to get a sense about the current job market, what interesting
companies are hiring and what are salaries for positions with your level of
experience.

You will find out whether you are underpaid or not (working for a startup you
very likely are) and then decide based on that.

------
christopherslee
tl;dr - if you believe in the company future and are willing to make that
sacrifice, stay. if you don't, leave.

all startups have risks. i think that's something people overlook and they
tend to think about the non-corporate atmosphere. anyways, that being said, i
think it boils down to if you believe in the future of the company.

if you believe in the company's plan and you're willing to stick it out,
great! imo, you should expect to hear an explanation of a company/product
strategy _you_ believe has a chance.

if you don't believe it has a chance, well, i imagine you are sticking around
for other personal or professional reasons. that could be because the
opportunity you are getting (with specific tech, roles, etc) that you believe
will help get you to where you want to be. it doesn't have to be about money.

if genuine promises were broken, that makes it tough to trust the folks that
you are likely looking to for said strategy and plan.

------
cmcginty
If you've been there a while it sounds like a good time to explore your
options. You don't have to accept a new offer, but my experience is that it's
probably going to get worse before it gets better. By the time they turn
things around you could be making 20-30% more in a new role somewhere else.

------
LindaSonntag
As a SoundCloud employee myself, I seriously wonder why you had to post the
company name in your question. Also, I have not yet heard any official
announcement of the regular salary review being deferred (which I would also
consider a company habit more so than a made "promise").

------
scarface74
_What questions should we ask our founders that 'll help us build confidence
that the company's financials are in reasonable shape?_

They aren't profitable and trying to get another round of funding. Only in the
world of tech would that even be a question.

------
dmh2000
One consideration is that is easier to get another job when you are still
employed. So you have to weigh that against the other factors.

------
throwawaymanbot
They are keeping the machine running with "funding". Not actual profit?

so understand they have to be mindful/careful on frivolities.

If you gave a 100 million to the company, would you be annoyed if you found
out about people getting small champagne bottles on their birthday? Would you
be worried about your investment?

The days of these companies building floor to floor slides, and pampering
adult children was never going to last. Whats there to worry about?

Saying all this of course, if the Mgmt are still getting these perks (wasting
money), while the employees are not, id leave.

That ship will hit the rocks very soon, and hard. And of course, it wont be
the first company to get done under with high budget pay/perks for low budget
mgmt.

------
kull
As a founder of a startup, reading posts like that make me sad. In the
imaginary world I live in , tough times a company is going through are
triggering employees to give up their benefits and work harder to help the
company recover.

Before my entrepreneurial journey I was working for a startup as a developer ,
I sticked there around for 5 years. For the last 3 years of the company
existence I voluntarily gave up 20% of my salary and worked my ass off, simply
because of being loyal and caring for the organization.

I work hard to create a sense of commitment and loyalty in my current start
up, and during the recruiting process we pay a super attention to don't hire
people who are looking for just money and are easy to abandon a ship during a
crisis.

~~~
confluence
As an employee of a company, I'm paid salary for my time.

I'll take a pay cut for more equity if I want it, not for nothing.

If I take risk, I get rewarded with ownership, but if I'm paid cash, why do I
honestly care what happens to a company.

This isn't some fairytale, we're all here to get paid, and employees​ aren't
your buffer for bad cash flow management, that's the responsibility of owners
and management.

~~~
brianwawok
Blaming management make it sound like you have never owned a company.

When cash is getting low two choices. Paycuts or firings. Pros and cons to
both.

In the OP sounds like they arent that drastic yet. Just no raises. Seems not
that dire all things considered.

~~~
confluence
Not holding management responsible makes me think you might have owned a
company.

Let me spell out the compact that undergirds capitalism: employees don't take
risks and are paid a constant stream of cash, owner's do take risk, and it is
up to them to ensure there is enough capital buffer to meet their constant
stream obligations. Employees do the work, management/owners ensure they get
paid.

~~~
sokoloff
From what I read, throwaway-sc is being paid 100% of salary. They're just not
being paid 103.5% of salary after a raise that's been deferred.

While there are certainly things to worry about, this is not a case of
employees not being paid.

~~~
confluence
Funny thing is that salary changes with a raise, so technically they'd be <
100% of their promised benefits after July, and past that, who knows?

