The hunt for the programmer: how to make its employees millionaires

To fell or not to fell

The problem of retaining and motivating valuable employees is important in any field, but in the it environment it is more relevant than ever. Two years ago the pay of a programmer in Russia and in the West practically did not differ. The difference in 30-40% of “on hand” barely compensated for the costs of relocation and a high cost of living in a new place. Abroad went mainly those who there like. In 2015, the situation has changed radically. Boom “unicorns” (start-up companies, estimated at more than $ 1 billion) and an unprecedented flow of venture investments in the USA significantly inflated salaries to foreign programmers, but the devaluation of the ruble dropped the revenues of Russian software developers in dollar terms by almost 2 times.

Today the salary of a programmer in leading American corporations reaches $250-300 thousand per year. After taxes, this amount is equivalent to revenue in 1-1,5 million rubles a month. But now even large Russian companies are not able to pay programmers more than 200-250 thousand rubles a month. This, coupled with the unstable situation in Russia and beautiful picture of life in the West reinforces the popular programmers desire to leave.

12 our Russian startups in the portfolio on the West lured 7 specialists. These were key employees, which kept the development of products. It’s a shame to lose such. When novice developers become free swimming, they are easy to replace, but the lead developer sometimes have to look for six months. In our practice, most of the losses — conversions: the developers themselves rarely looking for moving. But the hunters attract them with interesting tasks, incomparable level of income and brand. And even if the person for some reason does not see the feasibility to relocate and move in completely different conditions, he always has advisers and public opinion, which insists that “got to go”. To contrast this with something difficult, but worth a try.

How to become a millionaire

As is well known, distinguished professionals are motivated primarily by “interesting” problem that they solve. Therefore, the ideological component of the hold I put on the first place. Strong startups can significantly reduce the chance of loss leading developers.

Also effective way to keep the programmer at my options. But developers often do not understand the value of the shares and treat them as “pieces of paper”. With this attitude they have to work to show the growth prospects and exit opportunities.

In my opinion, only at the beginning of the first employees to transfer shares at nominal value, i.e., virtually for free. In the future, better to sell them and the sale price should be discounted relative to the rounds and to increase over time. It is useful each year, at the time of the translation of the parts of options in the campaign to organize the buyback at the request of the specialists.

For example, the company’s shares were distributed between the founders and the first employees at a nominal price of $0.01 per share. After 1 year the investor bought additional shares at $10 per share, with employees selling options, buying shares at $1. And selling them already for $3, and the very first employees, and even those who bought them only that. Thus, the investor gives a fair assessment of the shares at $10, while demonstrating faith in good prospects of the company. Typically, investors provide the expected level of profitability in 10X, hoping in 3-5 years to sell each share for $100.

Thus, the task of the founders to convince the lead programmer to believe in the reality of the sale of the company at a price per share of $100. For example, the lead programmer received 10 000 shares in the form of an implemented option. They can sell them back to the company for $30 thousand, the latter even advantageous to redeem them, and the investor will generally buy shares with great pleasure, he paid for them $100. $30 thousand is already a good addition to the ruble salary. The programmer understands that the shares have value today. But the task of holding the developer will be solved only then, when he decides to hold the stock, thereby showing faith in the prospects of the company. After 4 years they can cost $1 million, i.e. his expected return will be quite commensurate with potential revenue in Western corporations.

Options are a great anchor for developers who are not very eager to leave in any way. Moreover, that $250 thousand in the USA at high prices for accommodation in Silicon valley don’t seem like such a fabulous sum.

The problem is that options still working only in startups is designed as an international company, the Russian legal field such instrument no. Companies have to come up with quasi-optional program, but they are based on trust.

Lawyers FRÍA now actively seek to create such a tool within the framework of the Russian legislation and supporting amendments to the Ministry of communications for option programs for employees. If we want to keep the country’s key specialists, without options do not.

The point of view of the authors, whose article published in the “Opinions” section, may not coincide with editorial opinion.