I'm reading the details of the Big 3 automaker's recent request for a $25 billion bailout.  Specifically, I'm referring to high salaries for executives in the midst of multi-billion dollar losses.  It's not the amount of the pay that bothers me.  CEOs and executives of multi-billion dollar companies are entitled to compensation above and beyond what normal folk should get.  What really gets my goat is that the domestic automobile industry has been lagging behind foreign players for years now yet none of these CEOs really seemed to care.  Instead of innovating, they decided to ask for a handout.  And I'm afraid that the government will give them this bailout for fear that tens of thousands of rank and file employees will lose their jobs.  The problem is that it will continue to perpetuate a philosophy of mediocrity amoung the employees of the automakers.  Do you think if Yahoo was given a bailout that Jerry Yang would have stepped aside?  It took the dramatic act of Yang leaving Yahoo for that company to finally move forward.  I doubt any of these CEOs would do the same.

On a side note, Toyota's chief makes about $1 million a year and his company generated close to $15 billion in profits last year.  I guess I should be a little upset.

One of the worst feelings in the professional world is having to let people go not due to performance (that's easy) but due to financial constraints. I've been reading about the latest rounds of lay-offs in our sector and it's pretty sad.

It's times like this that I'm so glad we've decided to stay lean. Yeah, maybe a project gets delayed here and there but I'll take that over having to tell someone they lost their job not because it was their fault but because it was my fault for not planning properly ahead of time. It's just unfortunate that it took a soft investment market for companies to realize they should pay attention to pesky little things like revenues and/or profits. My personal philosophy has always been that if cash flow cannot support a full-time employee (salary, benefits, taxes, etc) PLUS at least 25%, then don't hire that person. If it's a revenue generating position, have the person work on commission until they generate enough cash flow per the last sentence. Maybe it's time start-ups began running their businesses like nearly all the other businesses out there (ie, make profits now) instead of waiting for that next round or the buy out.

I'm reading Jessica Livingston's "Founder at Work" book and one particular chapter is quite appropriate. It's about how Charles Geschke and John Warnock only needed about $50K to start Adobe and that shortly thereafter they got $1 million plus contracts from guys like Apple and others to license their printing software. Why don't entrepreneurs think like that any more? Build something, make more money than you spent building it, repeat. Maybe that's just too pedestrian for today's founders but that's one way to ensure your business is recession proof. Another great read is Paul Graham's article about starting a technology company during a recession.