And that's not just limited to chefs either, try being a car mechanic for a couple of years (your back will be shot), a bricklayer or a person cleaning stuff.

We get comparatively large sums of money for relatively easy (in a physical sense) work.

You can see this at work in NYC right now: the relative ease at acquiring financing means there are a lot of really dumb startups here right now with stupid ideas and no real market that are tying up valuable engineering talent which makes recruiting harder for legitimate startups that are genuinely creating value. Imagine if all the engineers who worked at Google during the early days were instead tied up working for Pets.com and Webvan such that Google was never really able to get off the ground and folded. That would have been bad for everyone, because Google ended up creating a lot of real value and Pets.com did not.

This same reasoning, I think, applies to the question of why CEOs get paid such astronomical salaries. The answer is that the kind of people with the skills to run a large company are extremely few and far between. Sure, a lot of them do fail at their jobs despite getting paid so much money; but that's not a reason for a hew and cry about how much they’re paid—it’s (usually) simply a testament to how hard the job actually is to pull of successfully. (Incidentally, it’s a common lament that the people at the top get paid disproportionately more than everyone else. But that’s just because the scale doesn't increase linearly—it grows exponentially. I'm not sure what the outrage against such a fact is—if you’ve taken differential equations you’ll remember that myriad complex mechanical, electronic, chemical, astronomical, biological, economic, etc. systems have nonlinear characteristics.)

So the idea is that salaries for scarcer resources are generally higher such that only enterprises creating sufficient value (i.e., profits, or at least a general confidence in future profits) to pay for them are the ones who get them. It’s certainly arguable whether this is what occurs in practice; and—while there are always exceptions, transients, and outliers—I think by and large it’s a good approximation.

This is kind of tangential to @jacquesm’s point, I know, because he’s simply pointing out that we should be cognizant that we get paid more for arguably easier work—but all the same I think it’s important to keep in mind that making things more ostensibly ‘fair’ may not always be in everyone’s best interests in a larger sense.

That I'm much more skeptical of, especially seeing how things have transformed recently. I think a lot of it boils down towards a principal/agent problem, where top executive ranks have been captured by an in-group that hires each other. This is true even in universities; when a university is looking for a President, the search committee, made up of high-up university execs, looks at other university execs. This leads to an artificially restricted supply pool as execs hire each other (often, literally, since the execs are on each others' boards). Sometimes the pay is even formalized; they want to pay "competitive market rate", often defined as something like 10% above average, which leads inevitably to an upward wage spiral, since by definition everyone can't pay 10% above average. When political backlash results, they just quote the policy.

I don't think it's necessarily conscious nefariousness, either, but more of a cultural thing: they really do think that their social peers are the only people who could possibly do the job, regardless of whether they have evidence for that, and they really do think that they and their peers are worth the money that they're voting themselves.

At the very least, the opposite hypothesis---that they earn their pay by providing shareholder value---has been extremely hard to show empirically. There is, if anything, a slight negative correlation between CEO pay and shareholder returns. Tellingly, at closely held companies where a family or relatively few people personally control the company rather than diffuse set of shareholders, CEO pay tends to be much lower, after adjusting for the company's size. The hypothesis of what to make of that correlation is that when owners are vigilant, as in closely held firms, they don't pay CEOs as much, because they don't believe that the CEOs aren't worth that much. When owners are asleep at the wheel, though, you get the HP case--- pissing away tens of millions on ineffective CEOs' golden parachutes.

What you are describing is a bidding war for a scarce resource. This happens for all sorts of people, not just CEO's. See, for example, programmers.

...they really do think that their social peers are the only people who could possibly do the job...

What's the "social peer" of a CEO? Other CEO's and upper management?

I certainly think that only my "social peers" (read: other programmers) can do the job of programming.

At the very least, the opposite hypothesis---that they earn their pay by providing shareholder value---has been extremely hard to show empirically.

This is hard to show for most fields. When a job consists of building organizational capital (e.g., CEO, programmer, manager) rather than directly producing outputs (e.g., cook, assembly line worker, doctor), it's very difficult to empirically measure the contribution of any individual.

This is doubly true if you are trying to generate macro-level statistics (e.g., compare CEO performance across companies, or programmer performance across projects).

http://www.econtalk.org/archives/2011/11/kaplan_on_the_i.htm...

(The "gotcha" is hedge fund managers, which have skyrocketed past everyone else)

And, as somebody else pointed out, the chef's existence -- and the supreme quality of his work -- was one of the big draws for tech talent to come to Google.

And, furthermore, by freeing the tech talent from having to worry about food or leave work to get it, he contributed to the value they created.

Your argument is basically a straw man. You set up "line cook" or "brick layer" -- jobs everyone can agree are not special or meritorious. Then you shoot it down. Very impressive.

And, as somebody else pointed out, the chef's existence -- and the supreme quality of his work -- was one of the big draws for tech talent to come to Google. And, furthermore, by freeing the tech talent from having to worry about food or leave work to get it, he contributed to the value they created.

I didn’t set up a straw man, but I did draw some hyperbolic distinctions for the sake of exposition. (In fact, I worked as a line cook one summer and I wasn’t very good at it—so not everyone can even be a line cook.) There is obviously a spectrum, and if we’re going to point out fallacies then you’ve set up a false dichotomy: that there’s either things everyone can be or things few people can be. This isn’t true, and I’m simply saying that software engineers are a scarcer resource than chefs. I don’t disagree that the chef at Google legitimately contributed to the value the company created, but I think there are plenty more chefs that could have done so than there were software engineers who could have built the core technology the company was built on. My point is that the salaries are, broadly speaking, a reflection of supply and demand and not difficulty of work.

I work most of my life 2/3 stories above the ground with no safety equipment, generally because fastening the anchors in a workable place is 10 times more dangerous than just not using the safety equipment (generally because you're supposed to have the fall protection in place because we're just barely above the requirement, but to get it into place we have to essentially go double the requirement height or more to place the anchor - so we're talking the difference between a fall that might break your arm or leg to a fall that might put you in the ICU).

The part of my job I like is figuring out the solution simply to get set up to do the job. Just recently I had to figure out how to get our staging poles up in a 3ft gap between houses to do a dormer. The only problem is it was about 26ft in the air and at best I'm supposed to have the bottom of my ladder out 9 feet and I can only manage 2 to be able to get past the eave. In the end I had to use 2 ladders simply to get onto my ladder as you have to keep your weight past the centre of balance otherwise your ladder will pull back and then bad shit generally ensues.

I have the utmost respect for the keyboard cowboys because my brother is a developer and I've seen how hard he works. Back in the day I used to develop, but I didn't have the interest to pursue it. I know the jobs are hard, and I've seen my brother come home and spend a few hours working on his own code after he's already done 8 hours of company code.

I, however, don't have respect for the developers that think their job is the only "real job" out there or that they're the only ones who work hard.

In my experience I see people across the board who are extremely hard workers from people doing minimum wage jobs in walmart to doctors. I've also seen lazy people across the board from walmart to hospitals. People are people, some are hard workers and some are lazy fucks. It would be nice to see the hard workers in jobs rewarded far more than the lazy, regardless of what job they're doing.

It is that it is just factually wrong. How many great people joined Google when it was an up and coming start up who loved the emerging culture and the idea of having a great chef.

I'm not taking anything away from chefs, but Google is an engineering, product, and advertising company, so chef isn't a core skillset and should probably be compensated thusly.

You assume that because a person's job is not in the company's "core skillset" that their contribution must inherently be less than that of an employee whose job is in that "core skillset".

This is the incorrect perception that the author here is attempting to fix. From the sound of his experience at early day's in Google, your assumption is flat-out wrong.

based on what?

You are assuming something about an individual's contribution to a group of people based on nothing but the job title.

Based on actual evidence from an early Google employee, this guy's contribution was huge. Will all chefs at company's have similarly large contributions? Not likely. But it doesn't change what this guy contributed and to assume something like this seems really unfair and useless.

based on what?

Why do you think engineers get paid more than secretaries, on average? There's your answer.

But that does not mean that an engineer's contribution is inherently greater than that of a secretary based on nothing but their job title.

If you mean stock options, then employees aren't given stock options based on their skill sets. They are given options commensurate with the risk they undertook. That's why early employees have higher stock options.

The Google chef got $20 million worth of stock options not because of his cooking skills, it was compensation for the risk he took, by cooking for the engineers of a firm that might have folded in months.

Startup Economics 101.

There are a broad variety of roles within a company.

I used to work in the latter as a temp kitchen-hand, and most of the chefs there specifically quoted sane hours and working environment in general as reasons for preferring that over a restaurant.

Buying is is easier as you typically know fairly precisely how many mouths you have to feed. If you do end up with too much of something, then there's a stew on the buffet the next day. Said mouths are also less particular. If you arrive at the end of service and the lasagna is a bit dry, you don't send it back, you eat it anyway or pick something else.

One thing that bothered me about the article and your post, however, is the "google chef" comment is bugging you for the wrong reason.

You and the OP are in agreement with Pincus implicitly, if you believe that merit and contributions as an employee is what justifies the rewards of equity appreciation.

That's not how the world works. Warren Buffett did not lift a finger building railroads, soda pop, and newspapers. That's not why he is rich.

Pincus wants you to think of this portion of your compensation as an employee, instead of an investor. Charlie made money because he became an investor, not because he was a chef.

No they aren't. They're arguing independently of that. In fact, the OP explicitly mentions that he's not commenting on that. What the OP was arguing was that _if_ you were to give compensation to people based on their contribution to the company, it would be absolutely absurd, and insulting, to claim that the original Google Chef did not contribute substantially to the company.

But in economic terms (what I believe Pincus/Zynga meant), no, the chef did not contribute substantially to revenue/profits the way engineers and sales people did.

I don't think Pincus is saying chefs are not important in the qualitative sense (that their contributions don't matter as much as engineers) - I believe he's saying they do not contribute enough economic value to generate a 20 million dollar pay day. And he's right - the labor markets don't pay chefs anywhere near that much.

But he's wrong for lumping economic contributions as an employee (charlie the chef) and asset appreciation (charlie the investor) together.

I think you and Pincus are lumping together the typical market value of a chef, on average, with the specific contribution of this particular chef in this particular situation. Ron has argued pretty forcefully that Charlie did, in fact, contribute very substantially. His contribution was indirect, okay, but lots of people's contributions are indirect, including senior management's!

Look at the picture at the time Charlie was hired. It's true, Google could probably have hired any number of mediocre or even pretty good chefs without offering them stock options. But somehow they determined that Charlie was exceptional, and they decided it was worth offering him options to get him on board. There are, after all, some chefs in the world who own several restaurants and are fairly wealthy.

But he's wrong for lumping economic contributions as an employee (charlie the chef) and asset appreciation (charlie the investor) together.

This point I agree with.

It seems that this is the point that you disagree with the OP then. The OP's point was that what the Chef did to build the value Google was equal to that of any engineer of the company.

"As someone who was there in the early days I can tell you that Charlie Ayers contributed more to Google's success than I did, and I was a senior software engineer."

Well, they did at least once.

And how do we know that the Google Chef didn't contribute enough economic value to generate $20 million? You can't say that just because he's one level farther removed from the final product. If he helped enable the company to recruit talent and helped enable that talent to produce then he very easily could have been worth $20 million.

Indeed. It'd be like arguing that an engineer who goes into management is now contributing less to the company since they are no longer writing code.

There is an inherent disconnect between cooking and programming. In cooking; experimenting and throwing in an extra ingredient or leaving an ingredient out most likely won't cause anything bad to happen to the outcome and it will most likely still be edible.

In programming if the end user leaves out a line of code or doesn't have the correct logic the program will most likely do something it wasn't supposed to and could destroy the users files, could cause them to lose countless hours of work.

Burnt chicken can be thrown out, and you can try again, if your hard drive has been formatted it is going to take a while to get going again. Also, since when is programming, compiling, linking as easy as following a recipe?

So plenty of chefs are entrepreneurs too. Including Charlie Ayers, who has his own restaurant.