I make less than half of what I made 2 years ago

One might think that is painful, but…

I made a ridiculous salary up until 2 years ago. At least, in my estimation. I was caught in the wave of fashionable layoffs, and it honestly was not unexpected. The writing had been on the wall for at least 6 months prior, but the talk was all of growth and positivity. The key facts just didn’t match up with the talk. The missteps at the levels above VP were visible, and the incongruence of first hand experience and story was growing. In the startup world, the VC funded world, the story told to employees and the one experienced by C-level is not the same. Probably in any world. While the story remains “we’re doing great, move along this path”, the story underneath is “this isn’t going to work, let’s start planning for our futures before this thing goes under”. To that company’s credit, a good portion of the workforce got a bonus about 6 months before the layoffs happened. It was strange because they staunchly upheld they didn’t pay bonuses, but instead compensated employees fairly in salary. Now, removed from the pain of being lied to about the company’s health, I believe that they did just that.

I am currently running my own business, and I see a bit better how this played out. When switches in strategy happened that didn’t seem to make sense, I now see that they were trying to tell a story that extended the runway. Some way, any way to keep investors placated and employees enthused. But none of the last year before private equity took over in a fire sale made actual sense. But it created a two-sided believable story to satisfy most of the stakeholders — investors who owned part of the risk and employees with stock options who dreamt of owning part of the reward. But, in the end, it didn’t make sense, and that was the part I was feeling for those last 6 months. Each of the executives who wasn’t let go collected at least $1 million during those failing 6 months. The CFO collected his $1 million bonus and quit within 2 weeks. That’s how I knew the plan all along was that failure was inevitable, but the inner circle figured out how they were going to profit from failing. It was a stark departure from the speeches they gave us rank and file, lower than C-level (plus a few favorite VPs). But that bonus was their conscious cleansor. It was the way in which they shared this profit from failure with at least some of us who were managers or higher. In the grand scheme of things, it was a paltry amount, but served its purpose. We were happy for the unexpected bump, and stayed to see through what we didn’t know was the end of a liquidation. In some sense, we were made fools of, but in another, we continued to collect in an era where that was a dwindling possibility. To some of us more sensitive folks, it was amiss. To others, it was a sign of strength. But we all ended up in the same state in the end, and only the degree to which we were surprised was the moral victory. In fact, when the CEO’s assistant, who had been the staunchest of staunch supporters and employed there for longer than I left 2 month before the layoff, the alarm bells began screaming for me. She, to her credit, would say nothing other than she wanted to spend more time with family which is code for I’ve been given enough money to leave without having anything lined up, and as a stipulation, must keep the real story to myself.

That’s the prelude. The aftermath started a week after layoffs were announced. We were given 2 months notice before our last day of employment. This is required by California law, not a severance or kindness in any way. I later found out that the COO wanted to stop paying all of us before the 2 months were up as they had stopped paying all of their bills, but legal heads prevailed. It was the natural inclination of diligent people brought up in this society’s middle class to actually provide value to the company for those two months, wrapping up current projects and passing on documentation. But that fallacy evaporated before the end of the first week, and I’m glad it did. I had ensured that my team was up to date with documentation along the way, and it became clear that none of these in-progress works would ever be completed. So, while still collecting a paycheck, I took a few days off before the first request for freelance work came in.

It was a small project, and less than half in hourly wage of what I made in salary, but I was convinced I needed some cushion. It came through someone I respected, and I gave it my all. Later, that company nearly folded and I would assume either completely refitted what I did for them to fit their new org or ignored it altogether. After that, I reached out to a contractor I had previously employed and began subcontracting for him. Then took another regular gig referred by him. In general, one thing led to another until I was, proverbially, riding the bike of self-employment. I formed a company, got a business bank account, accounting software, and I was off and running. But I was always halfway out, halfway in. I interviewed in spurts, I got bored, I got lonely. I always knew I HAD to go back at some point, after this mostly pleasant hiatus.

I began thinking of my own product line. I needed products to expand my earning potential at least back to my previous salary, though I covertly dreamed of it being far more than that. As soon as I had a viable idea, I set to work. But the way I worked was in the model I knew — a model that required VC funding to provide a runway for development. I had very available avenues for funding, but something nagged at me. Taking this funding was embarking down the same road I’d just seen fail, and open to the same major issue I fought against on that road to failure: building for investors instead of users. So I resigned myself to keep it bootstrapped. I had to learn what that actually meant, though. That meant grand plans were great, but couldn’t be added to a roadmap. Not yet. That meant a large platform needed to be broken into small services or products, because the reality of bootstrapping is that you need some fucking income to fund development. You absolutely cannot release the full vision. You can’t even release a reasonably stepped progression to the full vision. You need to release revenue generating products that are minuscule chunks of the full vision, or perhaps only tangentially related to the full vision. Because you need revenue to fund development. Your customers become the most important things to you, which is good.

What I also found was that products are not the only or best way to start. I accidentally started scaling my service offerings simply because I didn’t have enough time to do all the service work opportunities I came in contact with. I had to subcontract. And I found in doing that, I was collecting money on work I didn’t perform myself, which was the holy grail of developing products — to extend revenue beyond the hours in my day. I was not doing some of the hourly work, but I was still on the hook for the results, so I needed to make it efficient for subcontractors to contribute without ruining the timeline or final outcome. So my % of their labor went toward architecture of customer systems and development processes. The architecture and processes had to be sound for two important reasons:

• The work of many people fit into a sum greater than its parts
• Remove linear dependency between modules of the product such that simpler parts could be completed and validated while connecting pieces were in development.

Satisfying these needs came from necessity rather than ingenuity. These were needs that are only sometimes satisfied in VC funded efforts because they do take more work up front to move faster later, which is usually shunned in “lean” teams. And if not shunned, then abandoned for “speed” as pressure increases. But putting more thought into design systems, separating dependencies and reusing patterns between customers became critical necessities I couldn’t manage without. Every bit of work I completed for clients became something potentially productized for internal or external use. Real efficiency was more of what I thought it should be, but was pushed against by VC funded startup culture and corporate culture alike. I started to understand. Things that make sense, make sense, even if a crazy culture tries to convince you they don’t.

But, still, I was making about half (or less depending on which time of the year you asked) of what I was making as a startup or corporate employee. It didn’t feel painful in the least bit in my day to day. I was shocked, after the first year, to see how little tax I paid. That was a big part. I could make less, but keep much more of it. Even with that, though, the cash flow was lower. Why didn’t I feel it? My net worth and retirement funds were growing, albeit a bit less than before. I still dined with friends, though maybe I thought about how often more than before. I didn’t take international trips (more because I have an old dog who needs more care than she used to), but still enjoyed weekends or weeks away in the same types of places I was visiting before. Why was I not broke?

It hit me that I had been removed from “keeping up with the Joneses”. I wasn’t in an office everyday, subject to the basic state of what we all think we need to have or spend to be acceptable. I never was much of a clothes horse, but my spending on clothing along with commute travel, daily food and coffee and a bunch of other things had decreased. I was sort of aware of not needing these things, but was shocked at comparing my spending to my girlfriend who is still working a corporate job. It may have happened more organically for me because I didn’t value those things overly when employed full time, so the change happened more naturally. But it clearly illustrated how much even I, a natural minimalist, had been influenced quite unconsciously by my context to spend far more than I needed to. In addition to that, expenses that I incurred to improve my work performance magically became tax write offs. An extra monitor, a course on websockets, an office chair — things that I would have done anyway to make myself better and more efficient became instantly cheaper. The sum of all of this became that my actual preferred lifestyle wasn’t nearly as expensive as I thought it was, and did not require an employer.

The potential psychological pain of this was reduced because I already had a good nest egg and a good base of retirement savings. I haven’t needed to lean into them, though if my income had been reduced without these things, it wouldn’t change the amount I need to maintain the lifestyle that I want, but it would have come with a whole lot more fear of the future. That is crucial, because my primary fear is still being able to be even more free in old age than I am now. I think about it. It keeps my professional efforts grounded in practicality, and recenters them when they stray into idealism. My mental exploration still veers quite solidly in the realm of idealism, but with better tempering.

The more I work for myself, for my clients and employ people to work for me, the more I see how fortunate my previous employers were to have me working for them. I have attained a respect for good work that I don’t think I could have seen so clearly without leaving full time employment. Not hard work. The hard work we espouse, as a society, is bullshit. Good work may be hard sometimes, and it may not be at other times. It may require long hours sometimes and other times, long hours may mean you direly need to change something. One can’t be afraid of hard work to achieve what one wants, but one also can’t chase it as a goal to achieve what one wants. Far more important is to get ever increasing clarity on what it is you actually want, and then get ever increasingly more efficient at getting it. And those wants are not absolute or stable. They will change as you do.