Comment by billjings
5 months ago
As described, it is a fair ways away from what RealPage is doing. Specifically:
* RealPage sells raising rents, not just market info.
* RealPage pressures clients into taking their higher rents.
* RealPage also pressure clients to refuse to rent at lower rates for their own narrow economic interest - in other words, they actively seek to circumvent competitive pressure to keep rents high. (edit: to clarify, I mean they discourage lowering rent to attract a renter)
Pave does sound like it gives businesses a leg up over employees in wage negotiations, but until it e.g. starts promising clients that they will be able to pay lower salaries, the critical element of coordination won't be in the mix. Pave gives you the data, but you can still choose to pay above market to attract talent.
What's the point of getting this data if it's not to pay less money? What is the value add?
It's almost certainly for the companies to pay less money, but with a more generous reading, I think it could be argued that that doesn't necessarily have to come out of employee salaries. That data could be used to:
- Set reasonable ranges to find the right candidates they are looking for faster and minimize hiring friction
- Standardize payment levels in a way that reduces legal liability in certain states like Colorado/California. Or the most generous reading of "reduces legal liability" would be "promoting fairness".
- Reduce the time spent by HR/other teams of negotiating or setting salaries, as they can simply target some target like "we want to pay more than 60% of companies like us"
- For budgeting/forecasting with new hires, this allows companies to have more confidence in their estimates as they plan hiring.
- Some companies now offer calculators even before you're hired with what your salary/compensation might look like, such as https://posthog.com/handbook/people/compensation
But yes, overall I do believe that most companies also expect a general reduction in salaries when they use these tools.
I routinely get emails like "we'd like to hire you as our CTO, and because we just got a bunch of VC money, we're prepared to offer you a generous comp package of up to $90,000 salary plus .05% equity! Must be onsite in San Francisco."
If they were aware of market rates, they could avoid making potential candidates laugh at them.
Founding engineer is the biggest ripoff in tech.
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> plus .05% equity!
"Dilution? What? Stop worrying about made-up words and let's go change the world!"
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Because it's just as much to pay more money and get the employees you want.
When you don't know what the market is paying, you're liable to lowball offers and refuse to raise them, and not get the employees you want.
If you know market rates, you can provide reasonable first offers, or have a more accurate idea of how high you should go.
Which would be perfectly fine if you made this completely transparent and made the same information available to your applicants. Them not knowing the market rates (at least not even remotely as accurately) puts them at a significant disadvantage and you can't expect that most company won't exploit because it would be irrational to do that.
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What I've heard from leadership at more than one company is that they choose a percentile of the market they want to pay and then set the compensation there. For example, they may say "we want to pay at the 75th percentile for SWEs with X experience in the Bay Area".
I certainly don't trust that this doesn't hold wages down overall, particularly in the boom hiring market we had until recently.
To pay more money.
The limit on pay is the amount of money they can budget to the position not what other people are paying.
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RealPage pressures clients
To be clear, they're not "pressuring" them, they simply drop clients as a rule who don't use their suggested rent prices at least 80% of the time.
Now that is interesting. I personally find the difference almost without meaning, BUT I am very curious. What is the incentive for them to do this? To they get a point off of the increase?
Yah, that's the main difference: RealPage pressured landlords (i.e. tracked then) if they did not raise rents based on its recommendations.
If they had limited themselves to simply reporting the numbers, and letting landlords make their own decisions they would probably be legal.