What exactly in the article suggest the author understands the pressure of competition on incentives?
The author states that Snowflake are not incentivized to increase performance due to short term revenue concerns but doesn't mention they are also incentivized to do the opposite from a competitive perspective. The result is incomplete enough that it ends up being flat wrong with respect to the behavior that the company actually engages in.
The author missed the fact Snowflake did the very thing he/she suggested they were incentivized not to do, recently, at a cost of $97 million. The CEO explained why they are doing it and how they are actually incentivized. I don't know how the article could miss the mark by more than it has. The company literally does the opposite of what he/she suggested.It's not like they are the only one either, AWS has a history of reducing prices. Why? Once again, competition.
> The CEO explained why they are doing it and how they are actually incentivized.
The CEO explained why he thinks it's a good long term plan... but for now, they get money i.e. are actually incentivized by slow code. The CEO's incentives are theoretical ones.
And the market, which ultimately control whether the CEO gets to continue that plan or not, did not seem to agree it was a good plan.
By this reasoning, everyone would shirk at work. If you think incentives only act over short time horizons, I don't know how you explain an enormous amount of human behavior.
The market didn't even understand it. Most of the people trading equities, especially around earnings announcements, don't know what a data warehouse is or what matters in that market. All they saw was "miss".
I didn't say the CEO was wrong or that long-term thinking is bad! I said the actual incentives are still misaligned. (I mean, a lot of people do shirk at work, and it even works out well for them.)
I think you have a weird and probably not useful definition of "actual" if "monthly revenue" is not actual but "projected monthly revenue two years from now" is actual. (Or maybe I've just lived in Germany too long.)
You are right, I've used the word "actual" incorrectly. What I should have said was "net". Ie, both short term and long term revenue incentivize behavior and in this case the net result was increasing performance, ie long term incentive > short term incentive.
I think you’re providing a false dichotomy here. The structure may provide an opportunity to maximize short term profits but there is no reason to believe they, or any one, has to follow that opportunity especially if they rationally believe investing energy and money now has a much higher NPV.
When I read these comments about incentives to screw customers and a naked belief everyone must be, I really wonder who traumatized the authors. There are tons of excellent engineering cultures that prioritize excellence for long term gain. Find a better job.
The author states that Snowflake are not incentivized to increase performance due to short term revenue concerns but doesn't mention they are also incentivized to do the opposite from a competitive perspective. The result is incomplete enough that it ends up being flat wrong with respect to the behavior that the company actually engages in.
The author missed the fact Snowflake did the very thing he/she suggested they were incentivized not to do, recently, at a cost of $97 million. The CEO explained why they are doing it and how they are actually incentivized. I don't know how the article could miss the mark by more than it has. The company literally does the opposite of what he/she suggested.It's not like they are the only one either, AWS has a history of reducing prices. Why? Once again, competition.