Have you considered cutting salaries in half? According to the table you share in the comments, you spend 1.4 million on the salary for the 6 of you, which is $230k per person. If the org was in a better shape, I would consider this a reasonable salary, but I feel that if I was in the situation you guys are in, I would request my salary to be at least halved.
We have! Indeed, we have considered it so hard that we did in fact do it. For roughly the last 6-8 months our salaries have on-average been halved (and I have completely forfeited my salary, and donated ~$300k to Lightcone at the end of last year myself to keep us afloat).
I don’t think this is a sustainable situation and I expect that in the long run I would end up losing staff over this, or I would actively encourage people to make 3x[1] their salary somewhere else (and maybe donating it, or not) since I don’t think donating 70% of your counterfactual salary is a particularly healthy default for people working on these kinds of projects. I currently think I wouldn’t feel comfortable running Lightcone at salaries that low in the long run, or would at least want to very seriously rearchitect how Lightcone operates to make that more OK.
(Also, just to clarify, the $230k is total cost associated with an employee, which includes office space, food, laptops, insurance, payroll taxes, etc. Average salaries are ~20% lower than that.)
Relatedly, I don’t know if it’s possible for you to run with fewer employees than you currently have. I can imagine that 6 people is the minimum that is necessary to run this org, but I had the impression that at least one of you is working on creating new rationality and cognitive trainings, which might be nice in the long-term (though I’m pretty skeptical of the project altogether), but I would guess you don’t have the slack for this kind of thing now if you are struggling for survival.
We are generally relatively low on slack, and mostly put in long hours. Ray has been working on new rationality and cognitive training projects, but not actually on his work time, and when he has been spending work time on it, he basically bought himself out with revenue from programs he ran (for example, he ran some recent weekend workshops for which he took 2 days off from work, and in-exchange made ~$1.5k of profit from the workshops which went to Lightcone to pay for his salary).
I currently would like to hire 1-2 more people in the next year. I definitely think we can make good use of them, including for projects that more directly bring in revenue (though I think the projects that don’t would end up a bunch more valuable for the world).
On the other side of the coin, can you extract more money out of your customers? The negotiation strategy you describe in the post (50-50ing the surplus) is very nice and gentlemanly, and makes sense if you are both making profit. But if there is a real chance of Lightcone going bankrupt and needing to sell Lighthaven, then your regular customers would need to fall back to their second best option, losing all their surplus. So I think in this situation it would be reasonable to try to charge your regular costumers practically the maximum they are willing to pay.
I think doing the negotiation strategy we did was very helpful for getting estimates of the value we provide to people, but I agree that it was quite generous, and given the tightness have moved towards a somewhat more standard negotiation strategy. I am not actually sure that this has resulted in us getting more of the surplus, I think people have pretty strong fairness instincts around not giving up that much of the surplus, and negotiations are hard.
We do expect to raise prices in the coming year, mostly as demand is outstripping supply for Lighthaven event slots, which means we have more credible BATNAs in our negotiations. I do hope this will increase both the total surplus, and the fraction of the surplus we receive (in as much as getting that much will indeed be fair, which I think it currently is, but it does depend on things being overall sustainable).
Our historical salary policy was roughly “we will pay you 70% of what we are pretty confident you could make in a similar-ish industry job in compensation”. So cutting that 70% in half leaves you with ~1/3rd of what you would make in industry, so the 3x is a relatively robust estimate, and probably a bit of an underestimate as we haven’t increased salaries in 2-3 years, despite inflation and it doesn’t take into account tail outcomes like founding a successful company (though also engineering salaries have gone down somewhat in that time, though not as much in more AI-adjacent spaces, so it’s not totally obvious)
I have completely forfeited my salary, and donated ~$300k to Lightcone at the end of last year myself to keep us afloat
If you had known you were going to do this, couldn’t you have instead reduced your salary by ~60k/year for your first 5 years at Lightcone and avoided paying a large sum in income taxes to the government?
(I’m assuming that your after-tax salary from Lightcone from your first 5-6 years at Lightcone totaled more than ~$300k, and that you paid ~$50k-100k in income taxes on that marginal ~$350k-$400k of pre-tax salary from Lightcone.)
I’m curious if the answer is “roughly, yes” in which case it just seems unfortunately sad that that much money had to be unnecessarily wasted on income taxes.
I could have saved a bit of money with better tax planning, but not as much as one might think.
The money I was able to donate came from appreciated crypto, and was mostly unrelated to my employment at Lightcone (and also as an appreciated asset was therefore particularly tax-advantageous to donate).
I have generally taken relatively low salaries for most of my time working at Lightcone. My rough guess is that my average salary has been around $70k/yr[1]. Lightcone only started paying more competetive salaries in 2022 when we expanded beyond some of our initial founding staff, and I felt like it didn’t really make cultural or institutional sense to have extremely low salaries. The only year in which I got paid closer to any competetive Bay Area salary was 2023, and in that year I also got to deduct most of that since I donated in the same year.
(My salary has always been among the lowest in the organization, mostly as a costly signal to employees and donors that I am serious about doing this for impact reasons)
I don’t have convenient tax records for years before 2019, but my income post-federal-tax (but before state tax) for the last 6 years was $59,800 (2019), $71,473 (2020), $83,995 (2021), $36,949 (2022), $125,175 (2023), ~$70,000 (2024).
(My salary has always been among the lowest in the organization, mostly as a costly signal to employees and donors that I am serious about doing this for impact reasons)
We have! Indeed, we have considered it so hard that we did in fact do it. For roughly the last 6-8 months our salaries have on-average been halved (and I have completely forfeited my salary, and donated ~$300k to Lightcone at the end of last year myself to keep us afloat).
I don’t think this is a sustainable situation and I expect that in the long run I would end up losing staff over this, or I would actively encourage people to make 3x[1] their salary somewhere else (and maybe donating it, or not) since I don’t think donating 70% of your counterfactual salary is a particularly healthy default for people working on these kinds of projects. I currently think I wouldn’t feel comfortable running Lightcone at salaries that low in the long run, or would at least want to very seriously rearchitect how Lightcone operates to make that more OK.
(Also, just to clarify, the $230k is total cost associated with an employee, which includes office space, food, laptops, insurance, payroll taxes, etc. Average salaries are ~20% lower than that.)
We are generally relatively low on slack, and mostly put in long hours. Ray has been working on new rationality and cognitive training projects, but not actually on his work time, and when he has been spending work time on it, he basically bought himself out with revenue from programs he ran (for example, he ran some recent weekend workshops for which he took 2 days off from work, and in-exchange made ~$1.5k of profit from the workshops which went to Lightcone to pay for his salary).
I currently would like to hire 1-2 more people in the next year. I definitely think we can make good use of them, including for projects that more directly bring in revenue (though I think the projects that don’t would end up a bunch more valuable for the world).
I think doing the negotiation strategy we did was very helpful for getting estimates of the value we provide to people, but I agree that it was quite generous, and given the tightness have moved towards a somewhat more standard negotiation strategy. I am not actually sure that this has resulted in us getting more of the surplus, I think people have pretty strong fairness instincts around not giving up that much of the surplus, and negotiations are hard.
We do expect to raise prices in the coming year, mostly as demand is outstripping supply for Lighthaven event slots, which means we have more credible BATNAs in our negotiations. I do hope this will increase both the total surplus, and the fraction of the surplus we receive (in as much as getting that much will indeed be fair, which I think it currently is, but it does depend on things being overall sustainable).
Our historical salary policy was roughly “we will pay you 70% of what we are pretty confident you could make in a similar-ish industry job in compensation”. So cutting that 70% in half leaves you with ~1/3rd of what you would make in industry, so the 3x is a relatively robust estimate, and probably a bit of an underestimate as we haven’t increased salaries in 2-3 years, despite inflation and it doesn’t take into account tail outcomes like founding a successful company (though also engineering salaries have gone down somewhat in that time, though not as much in more AI-adjacent spaces, so it’s not totally obvious)
Thanks for the answers. I appreciate the team’s sacrifices and will probably donate some good money to Lightcone.
If you had known you were going to do this, couldn’t you have instead reduced your salary by ~60k/year for your first 5 years at Lightcone and avoided paying a large sum in income taxes to the government?
(I’m assuming that your after-tax salary from Lightcone from your first 5-6 years at Lightcone totaled more than ~$300k, and that you paid ~$50k-100k in income taxes on that marginal ~$350k-$400k of pre-tax salary from Lightcone.)
I’m curious if the answer is “roughly, yes” in which case it just seems unfortunately sad that that much money had to be unnecessarily wasted on income taxes.
I could have saved a bit of money with better tax planning, but not as much as one might think.
The money I was able to donate came from appreciated crypto, and was mostly unrelated to my employment at Lightcone (and also as an appreciated asset was therefore particularly tax-advantageous to donate).
I have generally taken relatively low salaries for most of my time working at Lightcone. My rough guess is that my average salary has been around $70k/yr[1]. Lightcone only started paying more competetive salaries in 2022 when we expanded beyond some of our initial founding staff, and I felt like it didn’t really make cultural or institutional sense to have extremely low salaries. The only year in which I got paid closer to any competetive Bay Area salary was 2023, and in that year I also got to deduct most of that since I donated in the same year.
(My salary has always been among the lowest in the organization, mostly as a costly signal to employees and donors that I am serious about doing this for impact reasons)
I don’t have convenient tax records for years before 2019, but my income post-federal-tax (but before state tax) for the last 6 years was $59,800 (2019), $71,473 (2020), $83,995 (2021), $36,949 (2022), $125,175 (2023), ~$70,000 (2024).
Very helpful reply, thank you!
I appreciate that!