Money Lesson: The Winners Take All
Board: Macro Economics
I walked into Jeff's room- he was a lead programmer, and he had invited me in which made me feel good, as I had just started at the company. He held up a beer, "Care for a brewski?"
I looked around, not believing that at work, someone would be offering me a beer. But it was 8 o'clock on a Friday night, we were all staying late. In a few hours I would be out of there, but Jeff was going to be staying late, very late. It was "crunch time", when everyone in the 50 strong company would be working long hours to get the product out the door. This meant 80 to 100 hour weeks.
James came up to the door, wearing as usual a button down shirt and slacks that made him look like a sales guy. Jeff held up a beer, "Care for one James?"
"No thanks". he replied, and he smiled. He had brown hair that was well groomed. James looked at me and said "Go for it- after hours anything is game." Then he turned and went off to his office for some more work.
"James doesn't drink for religious reasons" said Jeff and he gave me a sly smile which acknowledged he had just offered James something forbidden. "During crunch time we all work hard- but it only lasts a few months. At least, it used to. Last year or two.. are you done with the intro fluff?"
"I am. And thanks, but I don't want a beer either." I said.
"Well, get out of here then. You can work on the cut scenes later." He took a big swig of his beer, and then settled in, to start cranking out some code. All of the projects had to be completed within about 45 days, or the market window would be closed until the next sales season.
A few days later I came into work early, as I lived close by and was trying to get a lot done. There were some hushed conversations outside my door. Walking into the hallway, a couple people looked at me, then looked away, as if ashamed, or keeping a secret. It didn't make sense, but there was an emotional undercurrent which was off. The vice president walked past, stating "There will be a general staff meeting at 9:00, when everyone has come in, in the central area". He was talking stiffly, when always before he had been genial.
The company consisted of a lot of small offices distributed around the top floor of essentially a strip mall. The central part of the office was open, with a few cubicles around the wall. After this announcement, it was difficult to concentrate. What was the fuss about? I had only been there a few days, but it was clear something was afoot.
An hour later, a mixture of sleepy and questioning individuals stood in the central area, crowded together, as we didn't fit. The president, who rarely made an appearance, came in, wearing a suit which was unusual as he normally wore jogging clothing when he ever made an appearance.
"I have unfortunate news for those of you who have not heard" he said. At that moment, I looked down at the ground and noticed the carpeting. The carpeting was old, worn out, and stained. As it is during most emotional events, particular details stick in the mind. That old carpeting came into focus, and I wondered, briefly, if it reflected the owners attitude towards his employees.
"James Alicia was killed last night driving home. Apparently, he hit some black ice, and lost control of his vehicle. He was a valued employee, and we will miss him." He paused, as if trying to word things properly in his mind. "I ask that you do not talk about this event to the press if they inquire, or speak of any details so that we can honor James memory, and we want to avoid any potential litigation which may damage the companies reputation as well."
What was that supposed to mean? I thought to myself, but I quickly dispelled the question as I listened to the mutterings around me. Someone burst into tears, and people started hugging each other.
I turned to share condolences, spoke to a few people, and went back to my office. I barely knew James, but felt terribly sad. Jeff came by later shaking his head "James didn't leave until 2:00 or 3:00 AM, I know. He was a great guy, it is really too bad. If they plowed the roads around here better, this sort of thing wouldn't happen."
That day slowly blended into the past as projects came and went, and I worked harder and harder to make my way up the corporate ladder, such as it was with only 50 people.
As a small company, we both created products to sell, and performed small contracts. One of our products had leaked, and was generating a lot of buzz. The biggest hitters in the company were called into work on it, to make it as good as possible. I was left out of this elite crew, and it stung, as I had worked my a$$ off to potentially be picked for one of the larger products.
The vice president came by my office a month later, and poked his head in my office- "You know project Red?" That was our code name for the premier project. "Yes" I replied, looking up from my work.
"You have been working on that low level byte code, and it is timing out better than anything else we have. Could you work on bringing that into Red?"
I was in. A bunch of low level routines I had written for a totally different product would be brought into Red, and they would server as a core part of the engine. It wasn't the same as being the lead, but it was a significant honor. Jeff was one of the lead developers, and we got along great. I was thrilled, and worked hard to get integrated with the team, and get the code in place. The team, working on the flagship product, was proud, and worked insane hours. And as the product came together, it looked fantastic. We all knew it was good.
On shipment, like on most products, the team broke up, and headed to smaller projects, those just ramping up, or needing extra help. It was a respite. The owner of the company did not tell us sales numbers as a matter of course, but we could look for them online.
And they were good. They were selling hundreds of thousands of units a day. Each sales release from the retailers showed unbelievable numbers. Millions of dollars were coming in. Tens of millions of dollars. Hundreds of millions of dollars. Red became the highest grossing consumer electronics products of all time (to that date). I couldn't believe it. I had taken a job at a small company, and had managed to make my way onto the best selling product that had ever been sold. Ever. Admittedly I had not put in as much sweat, creativity or tears as many of my colleagues- but my code was at its heart. I knew I had made it then, and we were all going to be fantastically wealthy.
For my ego, it was huge, as I had been unceremoniously fired from the previous position for not towing the line, for pursuing what I thought was right. Now though, everything was different. Our product, and indirectly, ourselves, ruled the market
The connection between ourselves as a team - ruling the market - translating into individual success was however a misunderstanding. Within two years every single person on the team, and every single person in the company was fired.
Unbelievable success does not come without acknowledgement. Larger companies began to woo us. We were all walking on air. We knew we would be getting fat raises, and large stock grants, when the right deal came through.
The right deal came through. The owner got an offer for $75 million dollars (in 2012 adjusted dollars) split between cash and stocks, and he took it. However, the buying company didn't want to see salaries rising, as they were buying a profit margin, which required salaries to stay still. We all were offered contracts with one year salary in stock options, and a flat salary. We either signed, or were fired.
This, in my mind, was an outrageous affront. I chose to be fired, as I perceived I was making below the market norms (I was). Also I thought that working on the best selling consumer electronics title would give me cache in the market (it did). But my dreams of success correlating with financial remuneration were dashed as I observed what was happening. For many of the employees had been putting 80 hour weeks for six month stretches. Getting a stock grant which basically turned all those hours into a minimum wage job was a laugh.
To make it even funnier, the stock options could not be exercised for six months. The stock itself took on a strike price at the time of transfer, which was high, and required taxes paid on this amount. Thus, anyone who signed held a lot of stock for which they owed taxes, and could not sell for six months.
The acquiring company had deliberately bought us up to improve their financial position, but it did not solve their internal problems at home camp, which was hemorrhaging money. The market took notice of this, and the stock price began a slide, terminally downwards. All of my friends who signed owed more money in taxes than the stock was worth when they could exercise it.
If you owned a company which had problems, what would you do? Lay off employees. Would you lay off your close by friends, or people you have never met?
Everyone I worked with, including the President, was fired. The Vice President had already taken off earlier to start his own thing. The products we had developed, the franchises, the market, in short the relationship between our products with the consumer public which we had all sacrificed heavily to create, had been bought lock stock and barrel and transferred to headquarters.
I got a call from Jeff
"Man, how is going?" he asked.
"It is going good" I replied. We exchanged chit chat for a few minutes, he talked about his four kids, and his house which he was thinking of selling.
"Are you guys hiring?" he asked.
"Honestly, I don't think so, but if you send me your resume I'll put in a good word for you"
He sent me his resume. I couldn't get him a job, but that is another money lesson. An eerily similar lesson.
All of that hard work, sweat, and effort had translated into one man dead, and one man incredibly wealthy. Everything else had vanished into thin air, as if none of it had ever happened.