What you may not understand about your compensation...

There was a small wave of excitement on twitter this week about employee benefits.  Specifically, FullContact announced Paid Paid vacation.  Essentially, not only do they provide you with vacation time (ie Paid time off), but they will pay for your vacation itself, in the form of $7,500 'bonus' in salary (taxable of course).

This is a great marketing, as it drove a lot of social media traffic to their business yesterday.  I'm sure they yielded a lot of new applicants, and probably some new sales leads as well.  Nicely done.

However, I will take a skeptics view of this and share how I see this from the business side.

1. At the end of the day, the business looks at the total cost of an employee.  This includes salary, taxes, medical coverage, training, paid time off, and misc benefits as a whole number.
2. Businesses are run on margins.  You must take in more revenue than you pay out in expenses.
3. Employees are an expense.

Ok, so #2 assumes you are running a profitable business.  It seems that FullContact also announced an additional 7M in funding this week as well, so the whole margin part can be set aside as they are not profitable, or at least are in 'growth mode' where profits are sacrificed for market share.  This doesn't mean that they can't make it all work, but let's agree that their model is not YET stable.

So at the end of the day, a company can afford to set aside a certain amount of its income to employee compensation.  Some companies set out more money than others.  Companies then choose how to allocate this money.  For example, a theoretical competitor to FullContact may choose to simply pay every employee a higher salary instead of offering a Paid Paid Vacation benefit.

My point is simply that the allocation of money within the benefits package is essentially a 0 sum game.  A company may choose to offer more vacation, more cash, better health coverage, etc.  But these decisions are mostly done separately from determining how much the company can afford (and chooses) to spend on its employees.

I don't think there is anything wrong with FullContact's announcement, plan or structure.  I think they did a great job of garnering a lot of attention for their business, well timed with a new round of funding.  Nice work.

My point is simply that when you evaluate a company or package, realize that everything costs money, and look for a company that has their compensation package well aligned with what you value.

I believe the most transparent approach to compensation packages is a flexible 'points' model.  Essentially, employees get a certain number of points, and can use them to buy the benefits that are important to them.  If you want more vacation, use your points on that.  If you want more salary, apply your points to your salary, etc.  While this is really an ideal plan as it enables the employer to get the most employee value for each dollar it spends, it is more costly to setup and administer, which may be prohibitive for smaller firms.

Predictions: The Future of Amazon

As a customer and fan of Amazon, I've been watching the company grow and develop for a while.  Based on my experiences and observations, I've come up with a picture of the not-so-distant future that I believe will (mostly) come to pass.


Setting aside their thriving Cloud Computing business, Amazon primarily sells consumer goods and digital entertainment (E-Books, Songs, Movies, TV Shows, and Android Applications).

Amazon has created a strong incentive to purchase digital contents through their store.  They offer hardware dedicated for e-books (the Kindle line) as well as a 7" Android tablet for apps, music, e-books, and video.  However, they do not lock you into their platform.  You can read an Amazon e-book on Android devices, iOS devices, and your computer.  You can stream Amazon shows and movies to various set-top boxes.  Compared to Apple or Google's online offering, they have the most complete and consumable content available, usually for the lowest price.

For physical goods, they have created a similar draw.  Their Amazon Prime program is a genius approach to lock in customers.  For $79 a year, your entire household can have everything they order from Amazon* delivered 2nd day, FOR FREE.  Couple this with the lack of Sales Tax, ordering something from Amazon is almost always cheaper, and usually more convenient than going to a retail store.  If you are really in a hurry, you can pay $3.99 per item to have it delivered overnight.

This eliminates most comparison shopping by Amazon Prime customers.  If you've paid the $79, and are ordering it online, you will almost always start with Amazon, and usually will not spent time and effort comparison shopping.

* As long as Amazon fulfills the order.  When another store uses Amazon as a retail front but handles their own order processing, the Prime shipping is not available.


Amazon has been very careful about where it establishes a physical presence.  It does this to avoid having to collect state and local sales taxes in most states.  It has engaged in very public fights with states when they attempt to force Amazon to collect sales tax.  This has primarily manifested itself in battles over its affiliate programs, with Amazon discontinuing the programs in any states that pass laws that cause affiliates to be considered a physical presence in the state.

However, the writing is on the wall.  Amazon will end up collecting sales taxes in most states.  As this Fortune article states, Amazon already collects taxes in 5 states, and has agreed to add 8 more starting this year, through 2016.  It is obvious at this point that they will eventually have to collect taxes in nearly every state.

The incentive to avoid a physical presences in states is disappearing, and I expect within 5 years will be gone completely.  That opens up a host of new opportunities for Amazon.

The Future

In a future where physical location is irrelevant, Amazon is free to open up Stores, Warehouses, and Distribution Centers anywhere they like.

But as I write this, I see I've already been preempted.  In fact, instead of describing what these will be, Slate has an article talking about same day delivery.  Go read the article at Slate. (thanks DaringFireball).

In short, Amazon is building a massive and advanced distribution center.  They will put these in all major metropolitan areas, and will be able to fulfill orders same day.

I'm curious to see whether they maintain their shipper relationships (UPS), buy one, or build their own local courier/delivery service.  But we will see a day within 5 years where you order an item on Amazon and it is delivered to your home the same day in a number of major cities.

I also expect that Amazon will open up retail centers.  As they drive all the big-box stores out of business, there will be plenty of retail locations for them to snap up cheaply.  The centers will be show rooms for their massive online catalog, with convenient in person support and return.  I envision a modern day Service Merchandise style store.

For those folks concerned about big ticket purchases online, they can walk into the Amazon showroom, pick out a TV or other item, and have it delivered to their home that afternoon.

If Amazon can pull this off, they will be THE major retailer, online or otherwise.