For companies that are doing well, money isn’t a hard constraint. Founders would rather pay in equity because it’s cheaper than cash[1], but they can sell additional equity and pay cash if they really want to.
This is not obvioulsly true for the large AI labs, which pay their mid-level engineers/researchers something like 800-900k/year with ~2/3 of that being equity. If you have a thousand such employees, that’s an extra $600m/year in cash. It’s true that in practice the equity often ends up getting sold for cash later by the employees themselves (e.g. in tender offers/secondaries), but paying in equity is sort of like deferring the sale of that equity for cash. (Which also lets you bake in assumptions about growth in the value of that equity, etc...)
Oh, that’s true, I sort of lost track of the broader context of the thread. Though then the company needs to very clearly define who’s responsible for doing the risk evals, and making go/no-go/etc calls based on their results… and how much input do they accept from other employees?
I think this is important to define anyway! (and likely pretty obvious). This would create a lot more friction for someone to take on such a role though, or move out
It would be expensive, but it’s not a hard constraint. OpenAI could almost certainly raise another $600M per year if they wanted to (they’re allegedly already losing $5B per year now).
Also the post only suggests this pay structure for a subset of employees.
For companies that are doing well, money isn’t a hard constraint. Founders would rather pay in equity because it’s cheaper than cash[1], but they can sell additional equity and pay cash if they really want to.
Because they usually give their employees a bad deal.
This is not obvioulsly true for the large AI labs, which pay their mid-level engineers/researchers something like 800-900k/year with ~2/3 of that being equity. If you have a thousand such employees, that’s an extra $600m/year in cash. It’s true that in practice the equity often ends up getting sold for cash later by the employees themselves (e.g. in tender offers/secondaries), but paying in equity is sort of like deferring the sale of that equity for cash. (Which also lets you bake in assumptions about growth in the value of that equity, etc...)
But only a small fraction work on evaluations, so the increased cost is much smaller than you make out
Oh, that’s true, I sort of lost track of the broader context of the thread. Though then the company needs to very clearly define who’s responsible for doing the risk evals, and making go/no-go/etc calls based on their results… and how much input do they accept from other employees?
I think this is important to define anyway! (and likely pretty obvious). This would create a lot more friction for someone to take on such a role though, or move out
It would be expensive, but it’s not a hard constraint. OpenAI could almost certainly raise another $600M per year if they wanted to (they’re allegedly already losing $5B per year now).
Also the post only suggests this pay structure for a subset of employees.