[andygcook]

For context, Drew Houston's total compensation for the year in 2023 was $1.5M:

> According to our data, Dropbox, Inc. ... paid its CEO total annual compensation worth US$1.5m over the year to December 2023. That's a notable increase of 34% on last year

via https://finance.yahoo.com/news/heres-why-dropbox-inc-nasdaq-...

Even if Drew took minimum wage, that would save ~15 jobs assuming $100K all-in comp (which seems low to me for a tech salary). 500 employees is more like $50M/year, and probably more.

Of course, Drew Houston's net worth is ~$2B and he could technically loan Dropbox Inc money personally to save the jobs, my guess is a lot of his net worth is actually Dropbox stock that he would have to liquidate and would affect the stock price materially. He would also need to follow insider trading laws too and can't just up and sell vast amounts of stock on a whim. Most executives are on pre-approved schedules to sell any stock to avoid triggering insider trading.

The severance package Dropbox is offering is pretty good - 16 weeks of pay + an additional week for each year of tenure, impacted employees get their Q4 equity vest & prorated bonuses, everyone keeps company devices, an offer for extra time + help for people on visas, and job placement help for everyone.

Dropbox is a public company that is profitable, but not really growing through their flagship product. No growth is more or less bad on Wall Street. They also haven't really had a major hit since their initial file-sharing product and missed some shots they probably should have hit (mainly vs. Notion with Dropbox Paper, Mailbox acquisition, etc). With many systems moving away from "files" and to "cloud objects" like Figma, Notion, etc, their workhorse product might be going away over time too. They need the time and focus to find that next S-growth curve.

Layoffs suck and no one wants to do it, but sometimes it's needed to save the ship.

[duped]

> Layoffs suck and no one wants to do it, but sometimes it's needed to save the ship.

Layoffs are the trolley problem but you get to pick how many people are lying down on each side of the track and if you want yourself to be one of them.

That said, if one reaches the conclusion that under their leadership they were forced to downsize by 20% (either due to over hiring, failure to reach revenue/growth targets, whatever) that should make that person one of the people on proverbial tracks. Compensation has little to do with it.

[Matticus_Rex]

>that should make that person one of the people on proverbial track

That's a satisfying thing to say, but as practical advice it's absolutely terrible.

Often that person's leadership wasn't the problem, but even when it was, that doesn't necessarily mean that the company will be better-off without them. And that's the question -- what will make the company most likely to be the most successful going forward? Even if the current trouble is because of some of that leader's mistakes, the answer is often to keep that leader. Sometimes it isn't.

[steveBK123]

Generally leaders are not going to fire each other.

So sometimes a doomed strategy will be pursued far longer than you'd expect, barring some board or activist intervention.

Some of it is self interest, some of it is hubris.. but also one can easily blame a bad run on some broader economic situation, specific competitor actions, or right strategy with wrong team (so fire the team) .. this works for a while until it doesn't.

[ericmcer]

Seriously, that severance is awesome. Of all the tech workers struggling, the ones from companies big enough to throw 4+ mo severance packages are not the ones I am worried about. Any smaller company your severance is a pat on the back.

[eweise]

Yep. last time I got laid off, I got paid through that day. nothing else.

[pjmlp]

In many countries severance package is guaranteed by law.

[giancarlostoro]

And all the debt you pile up while struggling to get hired.

[grepfru_it]

That’s actually a pretty low salary but I just looked up their revenue numbers and it’s not looking that hot. They are also hemorrhaging cash this year. His salary and the performance of the company were probably a good foreshadowing of the layoffs

[hn_throwaway_99]

> His salary and the performance of the company were probably a good foreshadowing of the layoffs

As is standard. My recommendation to anyone that works in a corporate environment is that if you want to know whether the company will be at risk of layoffs in the future, become good friends with someone in sales. When the sales leads and activity start to drop (or growth rate starts to slow), you can usually be assured that layoffs will eventually follow. In my experience the sales folks were always the first to clean up their resumes and start the job hunt because they knew what was coming.

[bravetraveler]

https://blog.dropbox.com/topics/company/a-message-from-drew

Drew is developing a habit. 16% last year

edit: 11% before that: https://dropbox.gcs-web.com/node/8916/html

[alberth]

It's less of a habit and more indication of a matured business.

Their revenue has only been growing ~5% (and slowing to just 1% most recent quarter).

When you aren't growing, you must focus on operation efficiencies.

Rule of 40, now being applied to margin.

[thrownaway561]

I still hate the fact that people can borrow money against a stock. Stock should be sold, period. That is how the market sets a price for stock, through the volume of it being sold and bought. By allowing people to borrow against a stock, let's them get the money for the stock while still holding it. That artificially increases the stock price and value.

[currymj]

probably whoever makes the loan will hedge, maybe by shorting the stock. or buying puts, but then whoever sells them the puts will hedge by shorting the stock.

if they decide not to hedge, then it must be because they don't think they're exposed to much risk, which basically means they like the stock and would be willing to own it. it feels like it mostly works out.

[trallnag]

Isn't this also the case with mortgages?

[insane_dreamer]

> No growth is more or less bad on Wall Street.

In other words, this is to satisfy Wall Street.

[johnnyanmac]

If this is "saving the ship", more companies need to remember what a shipwreck is.

[apwell23]

> $100K all-in comp (which seems low to me for a tech salary)

ic1 at dropbox is 175k and ic4 is near 500k, ic5 near 700k.

https://www.levels.fyi/companies/dropbox/salaries

Do they really need such highly paid engineers? Are they really doing anything that innovative, new or first on market.

They could probably save these jobs by adjusting the comps.

[johnnyanmac]

This is how Musk stripped 80% of twitter. Take that as you may.

Remember that Dropbox (like Twitter) is HQ'd in San Francicso.

[hiddencost]

Uh, drop box cost per employee is likely closer to $750k, not $100k.

[pclmulqdq]

That $1.5M comp package is about 2-4 employees being laid off. It's not very many people.

It's also insanely low for a CEO, but about right for the CEO of a company in decline (which dropbox is).

[carabiner]

Why is the CEO's TC relevant to layoffs?

[bhouston]

> Drew Houston's total compensation for the year in 2023 was $1.5M

That is insanely low for the CEO of a public company of Dropbox's size. But I suspect he owned a lot of shares in the company so when it went public, so he doesn't need salary, it is just a rounding error in terms of his wealth.

EDIT: Yeah, he is worth $2B according to Forbes: https://www.forbes.com/profile/drew-houston/

[echoangle]

I always wonder what gives these people the drive to continue. Maybe I’m lazy and lacking vision but if I were worth 2B, I don’t think I would go to the office every day just to get accused of mismanagement when I have to lay people off. I would take my yacht to the Caribbean and slack off.

[foobiekr]

It’s not “ridiculously low.” Before the layoff they were 2700 people. That’s like a VP2 at most large tech companies and 1.5M total comp is spot on for that level.

[BonoboIO]

I think even the Mozilla CEO made more … I looked it up as I wrote this.

Nope … the Mozilla CEO makes 6.9M a year which is insane.

In comparison Drew is underpaid by a factor of 50 or more.

[pjmlp]

Nope, MBAs have to learn exponential growth is impossible to accomplish forever.

Companies should be managed to be profitable, while paying employees and business expenses.

Anything other is a pipe dream that eventually blows up, but since only employees suffer while the MBA guys go to become CEO of yet another adventure, who cares. /s

[anon291]

The myth of exponential growth is not that companies can't grow exponentially forever (since that's the case for most companies) but rather that the valuation of these companies depends on exponential growth (it does not). Most public companies in the United states do not experience the exponential growth many tech startups do, but do perfectly well for themselves, their customers, and their employees.

No one is pushing for exponential growth. If a company wants to stop, declare a dividend, and be done with it, and let investors choose a new rodeo.

[otteromkram]

I have an MBA and am not a CEO. I'm probably better at developing software than you, too.

But, I do get a chuckle out of what you believe is a "diss," when you're actually stating that MBA holders will not only do better in life, but they'll also control your fate.

Keep that narrative alive; I love it!

[Workaccount2]

Public company CEO pay is almost always paid by shareholders not by the company itself.

It's so misleading that these "CEO compensation is 100x employee pay" stats always get kicked around like it is an apples to apples comparison. It's not.

CEO's get paid in stock which they need to redeem from shareholders. Employees get paid with cash which them redeem from the company's checking account. They are different sources of money.

It's so annoying that this keeps getting repeated, on and on and on. It's totally disingenuous.

[pjc50]

The company's checking account also belongs to the shareholders, albeit indirectly.

The remarkable thing is how readily shareholders will accept narratives which give the CEO very large amounts of compensation. The notorious $50bn is a high mark: https://www.forbes.com/sites/antoniopequenoiv/2024/06/13/tes... - but that is very much taking value away from shareholders and handing it to the CEO in huge amounts.

[JohnMakin]

Yes, but we can all agree that stock/$ is pretty fungible and can be exchanged for goods and services in pretty much the same way. So effectively, it is apples to apples.

[runako]

Can pretty quickly see that the CEO comp # in question is not the stock. Houston sold many times more than $1.5m in stock in 2023. The $1.5m is likely direct cash and services.

[amelius]

> Layoffs suck and no one wants to do it, but sometimes it's needed to save the ship.

But they always fire the weak employees, not the ones that can easily help themselves.

Maybe we should have some laws that randomize the layoffs ...

[onion2k]

they always fire the weak employees

This is definitely not the case. Companies use a lot of different mechanisms to choose who to lay off, and it's rarely entirely performance based.

[infamouscow]

When layoffs are random, it engenders a profound sense of betrayal among those who have diligently gone the extra mile. It severs ties and creates a chilling effect, dampening the morale of those who remain.

Employees, acutely aware that their efforts might be disregarded in the next round of cuts, become increasingly disincentivized to exceed expectations. The result is a workforce more focused on survival than excellence, fostering an environment where mediocrity thrives.

[JAlexoid]

Why would you fire your best and brightest? That would be like throwing out good fruit, when there are spoiled ones.

No, it's a very poor idea to force companies to lay off at random.

[Clubber]

>But they always fire the weak employees

What you are referring to is called rightsizing and it's taught in business schools, but almost never implemented well. I would guess it's because it takes to long to figure out who's weak and who's not and they are in a hurry to cut costs.

[heyjamesknight]

This is a joke, right? If a company is underperforming, then the underperformers are the first to go. Market economies require efficiency. Capital flows in the direction of success. Impeding this flow with regulation is a great way to create a malfunctioning economy.

[indy]

Isn't firing the weak employees the correct long term strategy? Especially with regards to ensuring that the remaining employees stay employed

[s1artibartfast]

Im not sure if you are sarcastic or not.

If not, I think you have a highly unrealistic opinion of who the company operates for.

[gcr]

The severance packages suck.

COBRA is the single largest expense for departing employees. Industry standard is to offer 18 months, not 6.

Many job searches take longer than 6 months, so employees will be left high and dry right when they need it most.

[nop_slide]

> COBRA is the single largest expense for departing employees. Industry standard is to offer 18 months, not 6.

Are we in the same industry, where are you based? I got 2 months when I was laid off last year.

I also know many tech people who got just 1 month.

[cruffle_duffle]

> COBRA is the single largest expense for departing employees.

Life pro tip: Do not use COBRA!!!!! It is almost always much, much cheaper to find an ACA compliant healthcare plan on your state's health insurance market. For one thing the plans will often be cheaper (though with fewer features). For another ACA plans qualify for tax credits, etc and COBRA doesn't.

When I got laid off I made one of the worst financial mistakes of my life keeping my employer's high-deductible plan via COBRA. I stupidly figured it had to somehow still work out to be cheaper than shopping for private insurance. Boy was I wrong! Between the "high deductible" part and the fact the plan wasn't able to qualify for tax credits I overpaid my medical expenses by about $10,000 over the course of a year. Had I gone with even a "bronze" level ACA compliant plan that would have been cash in my pocket that would have helped out a lot while I was looking for work.

The big reason was my medication was like $800/mo. And on my employer's plan once I hit my $3500 deductible it went to $0/mo. This wasn't a problem when my former employer picked up most of the insurance premium for my high deductible plan but with COBRA you are paying the entire premium! And for my use case, medication was my top medical expense so I was paying a hefty premium for a fancy health plan that didn't actually cover my expenses.

A "regular deductible" ACA plan would have made much more sense in my unemployed scenario as the premium was not only lower but the medication was generic and would have only been like a $23 copay!

Always, always bust out Excel and compare the full cost of healthcare on different plans. Compute the total cost of your medications, how & when you'll hit things like your deductible, what tax credits & deductions apply, etc. What made rational financial sense while employed might not make sense when unemployed or buying your own health plan. But you have to find out for yourself. Rarely does it make sense to continue paying your employers health plan via COBRA. After loosing your job you have like a 30 day window to switch plans before you will be locked into your COBRA plan for the remainder of the year -- do not dilly dally around, figure it out now!

[anon291]

My advice is to simply go on Medicaid.

When I was laid off in 2023, my mom and aunt told me to go on Medicaid. I thought it was a bit ridiculous since I had already made well above the poverty line, and was planning on still pulling in a substantial amount in the same year despite the lay off (I was laid off in January). I was going to pay several thousand a month for COBRA, and I thought my mom and aunt were crazy, since they are the sort to claim everyone's using welfare (my aunt retired early and is on medicaid, since her income is zero, so I guess she has some evidence to support her claim).

Anyway, so I did look into it mainly for the 'I told you so' aspect, to 'prove' to her that the social safety net did not exist as she imagined it.

However, to my surprise, it did, and within an hour of filling in the form online, I got free medicaid for my kids, and highly subsidized marketplace plans for my wife and I. In my state, medicaid eligibility is based on expected income / week. According to the man on the line from the state, even if I did end up making more, since my expected income was $0 (being unemployed), I still qualified! My wife's premium / month was like $100 (she was pregnant so qualified for more).

I did tell several colleagues about this, but they didn't believe me and forked over thousands of dollars.

In my state, medicaid is superior to my old PPO plan. For one, there is no co-pay and my daughter ended up needing major orthopedic intervention (severed finger) and we paid $0 out of a total cost of $150k. Although you're assigned a doctor, it's still essentially a PPO plan (you can see whomever you want whenever you wanted, so we stuck with our old doctors).

So, please avail yourself of the very safety net you pay for. COBRA is basically always a bad deal. There is almost certainly a subsidized plan out there for you. There's a pervasive myth that the social safety net doesn't exist in the USA and I almost lost $10k (or more with my daughter's incident) because I didn't do the obvious. I also learned that should I ever want to leave my job to start a business, I honestly really don't need to worry about health insurance.