TruthWorks Rethinking Compensation with Bill Gurley
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Oct 29, 2024 
Bill Gurley, a veteran venture capitalist known for his investments in Uber and Zillow, joins the hosts for a deep dive into rethinking compensation models. They challenge the conventional wisdom of copying tech giants and advocate for first-principles thinking to design effective compensation plans. The discussion highlights the drawbacks of traditional bonus structures in startups and emphasizes the need for performance clarity. Additionally, they explore the evolving expectations of employees and encourage independent, innovative HR practices to foster a more adaptable workplace.
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Compensation Committees Follow The Herd
- Compensation committees often copy survey-driven norms and ISS guidance instead of thinking from first principles.
- That mimicry produces mediocre, non-performance-aligned pay practices that hurt companies and shareholders.
How RSUs Became The Default
- Bill traces the RSU experiment back to Amazon and buy-side influence after the dot-com backlash against options.
- He links ISS's lagging, buy-side-driven methodology to the compensation shifts companies copied.
RSU Shift Increased Dilution
- The shift from options to RSUs was driven by buy-side sentiment, not shareholder-first thinking.
- That change increased dilution and created guaranteed downside dilution that options avoided.