“The Elves Leave Middle Earth: Sodas Are No Longer Free”, 2009-12-21 (; backlinks):
Sometimes financial decisions that are seemingly rational on their face can precipitate mass exodus of your best engineers…“Do you know how much our company is spending on free sodas and snacks?” And to answer her own question she presented the spreadsheet totaling it all up. There were some experienced VC’s in the room and I was waiting for them to “educate” her about startup culture.
But my jaw dropped when the board agreed that the “free stuff” had to go… I had lived through this same conversation four times in my career, and each time it ended as an example of unintended consequences. No one on the board or the executive staff was trying to be stupid. But to save $25,390.74$10,0001990 or so, they unintentionally launched an exodus of their best engineers.
The Elves Leave Middle Earth—Sodas Are No Longer Free: One day the engineering team was clustered in the snack room looking at the soda machine. The sign said, “Soda now 50 cents.” The uproar began. Engineers started complaining about the price of the soda. Someone noticed that instead of the informal reimbursement system for dinners when they were working late, there was now a formal expense report system. Some had already been irritated when “professional” managers had been hired over their teams with reportedly more stock than the early engineers had. Lots of email was exchanged about “how things were changing for the worse.” A few engineers went to the see the CEO.
But the damage had been done. The most talented and senior engineers looked up from their desks and noticed the company was no longer the one they loved. It had changed. And not in a way they were happy with.
The best engineers quietly put the word out that they were available, and in less than month the best and the brightest began to drift away…The engineers focused on building product never noticed when the company had grown into something different than what they first joined.
The sodas were just the wake-up call.