Why “The Number Is Never the Problem”: Matt McFarlane, Founder of FNDN

Most companies treat compensation as a math problem: get the number right and the rest takes care of itself. Matt McFarlane says that’s backwards, and it’s the reason so many pay conversations go sideways even when the number itself is fair.

In this episode of Building Tech Teams, James MacDonald sits down with Matt McFarlane, founder of FNDN, the compensation consultancy he built after years running People Operations inside fast scaling startups. They get into why counteroffers rarely work, the exact headcount where pay problems start to bite, why equity has stopped doing its job as a retention lever in Australia, and how the AI hiring market has quietly made token costs a bigger line item than payroll.

It’s a straight shooting take on pay from someone who builds comp systems for a living, not a general HR overview. They cover the AI engineer bidding wars pushing offers past half a million dollars, why “the raise is too big” is almost always the wrong read on the situation, what Gen Z is actually asking for when they push back on proving themselves for free, and how Matt turned a newsletter into a business that clears half a million dollars a year almost by accident.

ABOUT THE GUEST

Matt McFarlane is the Founder and Director of FNDN, a compensation consultancy helping startups and scaling tech companies build pay practices that are clear, fair and competitive. He previously led People Operations functions at companies including Oyster, a global employment platform, where he was Senior Director of People Experience. Matt also publishes the FNDN Series newsletter and podcast, co-founded the Startup People Summit, and was named to the 2026 HR Influence Awards Top 12 for ANZ and LinkedIn’s Top Voices Australia.

Building Tech Teams is produced by DayOne.

Listen to the episode

Transcript

Auto-transcribed with AI.

James MacDonald [0:00]: What is the biggest problem that you see in building a technology team when it comes to compensation?

Matt McFarlane [0:04]: I think for me, it’s that the number’s only half the story. A lot of people think that there’s this kind of perfect number out there with respect to hiring, retaining, engaging, motivating, all those sorts of things.

But if you come to someone and say, hey, we’ve just hired someone in a similar role, we’ve realised the market for your role has increased, and we’ve given you a pay bump as a result of it — that is so impactful. And the jump between what they’re on now and what we think they’re worth is too big. And it’s like, yeah, because you’ve been underpaying them against what you’re saying you should be paying within the market. I think it was this week, actually, I saw something about Commbank with, you know, they’ve got some sort of AI tool that tracks how long people are in the toilet for. And it’s like, really? Are we really there?

James MacDonald [0:44]: That was Matt McFarlane. He designs compensation for startups and scale-ups for a living, through his business Foundation. Previously to that, he ran the people function at Oyster, where he went from 250 to 650 people in a single year. He understands tech companies, and he understands compensation in technology, as deeply as anyone I know in Australia.

And you can’t have a podcast about building tech teams without talking about salary and compensation. Matt’s got some really sharp takes. He thinks that equity in Australia stopped doing the job that founders actually think it’s doing. He thinks the number that you’re arguing about is the least important number of the offer. And today we get into what Australian tech salaries actually pay — what does it look like right now? And where does the token budget start eating into the people budget? Here’s the conversation.

Welcome to another episode of Building Tech Teams. Building Tech Teams in the age of AI. And on today’s episode, I have Matt McFarlane from Foundation. Welcome, Matt.

Matt McFarlane [1:38]: Thank you, man. Good to be here.

James MacDonald [1:38]: You know compensation, you know compensation in tech, compensation in startups, better than anyone else in Australia. Let’s go straight into that. What is the biggest problem that you see in building a technology team when it comes to compensation?

Matt McFarlane [1:56]: I think for me, it’s that the number’s only half the story. A lot of people think that there’s this kind of perfect number out there with respect to hiring, retaining, engaging, motivating, all those sorts of things. And actually, what I find is that obviously the number is important, and it’s going to be the right number, but as important — often more important, especially when someone comes on board — is what’s behind the number. How did you get to it? How do they understand it? How does it make sense to them?

I think there’s so much inherent mistrust with respect to compensation. And so the thing I often find companies stumble on when it comes to pay is, there’s no rationale for the number. Someone’s negotiated for it, or they’ve plucked it out of thin air, or a mate in the ecosystem has said that this is what the role’s worth, but there’s no fundamental underlying basis to it. It becomes hard to explain. Which, when you’re starting to build a team, things like pay equity come into play, people want to understand why the number, how do they grow the number, how do they move within the pay system at your company. And so that’s where I see a lot of companies fumble the ball.

James MacDonald [3:08]: I want to get your advice and break it down from go to woe, but you just mentioned mistrust there. New person comes in, they’ve negotiated well, they come in on a higher salary than somebody else doing the same job or the same title. It’s already there, providing value for the company. How do you see this play out? What’s your advice around that? Because if this new person joining is the person they really need, valuable in the market, they want them, they need to pay what that person is — do I then just go and bump the salaries of everyone internally? How do I play this out?

Matt McFarlane [3:45]: Yeah, the first half of it definitely always plays out the same way. Like, it always comes to — everyone talks about pay. Australia was late to the game in banning pay secrecy clauses, which was your ability as a company to put something in the contract that says, James, don’t talk about your pay to anyone else. So it’s a free-for-all, people can have a conversation, you can’t penalise them in any respect. But it was happening anyway.

So this new person coming in on a higher salary they’ve negotiated is now creating what is termed pay inversion. So you’ve got your incumbent person who’s been there for a couple of years, knows the ins and outs of the business, the product, has a relationship, has the context. Invariably, you would say that they’re worth more to you than that person who’s just come in off the street and joined the business, and yet they have got a higher salary. So it always comes to a head. It always does.

And so, yeah, I always encourage companies to get ahead of that. If you’re in the market for a role and you’re finding that the salary that you’re paying for someone who’s doing the same job internally has shifted, the value of that person internally has shifted as well. And there’s this concept called replacement value, which is that all of that context, those relationships, the familiarity that that person who’s been there for two years has, is worth more. And so theoretically, if you value that, you should bump that person even higher than the one you’ve just brought in.

But this is the name of the game. I think a lot of companies think, oh, let’s just see if we can bank that upside until it becomes an issue. But by that time, the trust’s gone. And you have so much of an opportunity to have someone think, hey, you care about me, you’ve thought about this, you’ve got my back. I’ve had this happen to myself personally, and I’ve been fortunate to be in a business where I’ve had the chance to do this as well for people. But if you come to someone and say, hey, we’ve just hired someone in a similar role, we’ve realised the market for your role has increased, and we’ve given you a pay bump as a result of it — that is so impactful. And the trust that it builds, and the fact that someone’s like, oh my God, I don’t even have to think about it, I don’t even have to go to bat for myself, I can just get on with my job, and I know that you’ve got an eye out for me and the market and the value of my role — it’s so much more empowering and better for that person.

James MacDonald [5:54]: But also challenging from a commercial perspective. How often am I doing that? Each time I make a new hire, am I then upping the rest of my team? It comes hard from a budgeting perspective, I imagine — especially at the moment, with AI salaries changing the nature, and we’ll dig into that. How often should companies be looking at this rebalancing of it? Is it every time we make a new hire, is it every six months, every quarter?

Matt McFarlane [6:19]: Yeah, it’s a good question. Look, I think minimally it needs to be every 12 months. You need to have an eye on the market for the roles that you hire for, you need to understand what their clearance rates are. Some roles — obviously AI engineers, or anything AI at the moment, is probably on a faster cadence. So maybe every six months to every quarter.

But this is where — I work with HR teams, and often interface with talent acquisition teams — I think one of the mistakes is to rely too heavily on market data as well. It’s great, it’s helpful, it’s an important signal for what’s going on. But you’ve got to understand the source of that data as well, that it’s coming from companies who have already hired those people. Maybe those people have been in that role for a couple of years. Maybe their salaries haven’t kept up with the market. But then you’ve also got the other end of the spectrum, which is people that are coming into the role today, and what the market’s paying right now for that role. And so you really, as a company, need to be listening to all these different signals.

Quite often what I’ll see is that a company might have a 12-month cadence that they’re reviewing their salary data and having a look across the organisation. But six months into the period, they’re finding that the salary rates that they’ve got aren’t getting candidates, or aren’t getting the calibre of candidates that they want. That to me says, okay, we need to take a look at this now. Because ultimately they’re there to do one thing, which is hire and retain people. And if the salary time isn’t doing that, then they’re not working for you.

James MacDonald [7:40]: You mentioned the word retain there. Counteroffers. I work in recruitment. Counteroffers obviously come up — not my favourite part of recruitment. But can I get your opinion? Would you ever advise a company on making a counteroffer?

Matt McFarlane [7:56]: So, by default, I tend not to love them, but for the same reasons. I think typically the kind of people that you’re counteroffering are the people that you probably haven’t looked out for traditionally. It’s probably the person that has been doing the job for two years, and you’ve hired someone in brand new for more than them. So they’ve been given some reason to leave, and maybe they’ve gone looking.

So I think in those sorts of circumstances, in all of my experience it’s never been worth the counteroffer. They end up leaving three to six months later anyway. And maybe the company has their stuff together and they’re able to piece together some sort of transition plan. But I think the person’s checked out and they’re ready to move. So in that sort of circumstance, I don’t think the counteroffer is often worth it. I do think it can be worth it in circumstances where someone’s been approached.

James MacDonald [8:50]: Completely agree. I’ve seen a counteroffer work a couple of times. I obviously don’t like counteroffers, because most of the time I’m the person involved in taking the person out of the company, having approached them. But I know some people have been counteroffered and been successful in staying there, because they weren’t actively looking. They’re not checked out.

Matt McFarlane [9:06]: They’ve had a realignment to their value, and they go, oh, okay. If I’m worth more, and if they bring that to the business — and again, if the company’s got a pretty good setup and they’re looking at salaries annually, but there’s always someone that pays more money. If for them they go, okay, well, we’ve realised that this is too big of a risk for us, we do want to address it, then in those circumstances it’s okay. But again, I think it comes with the expectation that if there are others in that role who are performing similarly, you should probably be passing that along to them as well.

James MacDonald [9:37]: Yeah. And I don’t think, most of the time when I’ve seen it work, it’s not even a money thing. What it does is it creates the opportunity for a conversation on why you’d actually look externally, even if you weren’t actively looking. And it might be, what does my career look like — oh, this was going to be a great promotion. It allows that discussion, or fast-tracks that discussion internally, to say, here’s what it looks like if you stay, and we could fast-path that, boom, boom, boom.

So if I reverse it all the way back then — you come into a company, a company is looking to grow, they’re looking to scale their technology team, they bring you in as an external consultant to help them. How does the process start? What does this look like? I think as teams scale, very early on it’s willy-nilly, as in, I need this skill set, they tell me this is what they’re worth, this is what they’ll join for, we offer that. At some point you’ve got to bring some form of alignment to this, or some form of planning. What does that look like?

Matt McFarlane [10:32]: Yeah, I think first and foremost, getting clear on what it is that they’re looking for. I think it’s very easy to get caught up in the game of titles as well. And especially at early stage, titles can form a currency. It’s very easy for a startup that is maybe not as flush with cash as some of the others out there to go, oh, let’s call this role a CTO or a principal engineer or something like that, when maybe the person’s a mid or a senior. And so suddenly you’ve got the title, but then what tends to follow is the comp inflation.

So I think it’s getting clear on what that looks like, what is the actual role that we’re looking for. Where do we expect to hire them from? Are we hiring them from Anthropic or OpenAI? Or are we hiring them from a mid-tier player? So understanding where it is you’re looking to bring this talent from, because these are all the signals that you need to understand to work out the role we’re looking for, what the talent market is, and where we need to calibrate ourselves from a salary perspective as well.

That’s the key sort of starting place. And then I think you really want to start to think about what your philosophy is around pay. Because you’re starting to bring a bit of structure that you need to implement within the business. Maybe you’ve already got some employees in the organisation. You want to start to ensure that you’re bringing some consistency to how this works. And I think a lot of people think that it’s like this big complex thing sometimes, when even something as simple as a three-level junior, mid, senior kind of framework just gives you a little bit of a sense of, okay, what calibre, what’s the hierarchy of the roles that we have, and where do they link up with the market.

James MacDonald [12:15]: And there’s so much to that as well. As simple as that is, defining internally what a junior and a mid is — and then, what do I need to do internally as a tech professional to actually go from a junior to a mid?

Matt McFarlane [12:27]: Exactly. And it’s such an unlock for the team to have that clarity as well. I think some people think, oh, look, it introduces bureaucracy and all sorts of stuff. It’s like, no, it’s clarity. People just want to understand where they are in the business, what their expectations are, how they get about doing it, if they want to grow how they do that, what their value is, all those sorts of things. So it just helps clarify a lot of that for people.

James MacDonald [12:49]: For a lot of companies, a lot of people teams, a lot of startup founders, this is not a priority. I want to grow the business, I need more customers, technology’s not working, I need to build a more scalable, more secure platform. At what point do I bring in somebody to own this function? Let’s start with startups. At what point do I hire an external people person to come in, to be part of my team? Chloe from AirTree has an opinion on this as well.

Matt McFarlane [13:21]: Yeah, you’ll have to tell me afterwards what Chloe’s number is, and then we’ll see whether or not I align with it. I don’t know what the perfect answer to this is. I think a good talent partner is probably the most important, because for me, in those early stages, getting one wrong hire can be really bad. So I think that aspect is where you want someone’s skill set to be, if you are looking for a people professional.

It’s funny — when I first started my business, I was like, I’m going to work with companies that are like 50 to 500 headcount, because I feel like 50 is about the right time when compensation starts to become a little bit of a pain point, and 500, they don’t really have their own dedicated compensation person. And then what I’ve found over time, in the couple of years that I’ve been doing this, is that actually the pain isn’t really felt until 100. 50 is really when it’s a good time to be getting these sort of structures in place, and is probably a good time — maybe a little bit earlier — where you want to be having your first people person come in. But 100 is when the lack of structure really starts to bite them: the pay equity, and the counteroffers, and the negotiations, and all the inconsistency, and the “what do we pay for this role” — that’s when it really starts to hurt them.

So I guess that’s an indirect way of saying, it feels like that 50 mark is a good, if you want to get ahead of it, a good time to get someone in to come and own that, rather than you as the founder or the senior team having to. Look, I think they should always be hiring, but there are so many other people things that can take their time and attention away from the priorities that you mentioned, that having this professional helps them with. And it’s so much more accessible now as well. We’ve got fractional HR professionals — that’s been a massive, I’ve seen that boom in the last couple of years. So it doesn’t even have to be a full-time person. And I’m seeing that fractional marketplace really take off. So you could even go earlier, to be honest, and have someone come in when you’re at 15, 20 people and build some of these formative practices before you truly need them. And they, from my perspective, are worth their weight in gold, because they just undo so much of the headache that’s coming down the line.

James MacDonald [15:32]: Yeah. Chloe’s opinion was, most companies hire the person too late. And I agree, because that first people person — the people function is so big as well. Like, I did the talent, that crude beside of it only, and I wouldn’t touch the game that you play. There are just too many complexities to it that I don’t understand. And that’s where the fractional piece comes in, I think. Because hiring an internal talent person to start with, I think, is the first best move — because you’re only as good as the talent you’ve got, right? If you can get better talent because you’ve got somebody that focuses and specialises in this area, great, it’s going to accelerate it. But having the expectation that the talent person has the same skill set that you do is too big an ask of a people person. It’s too big an ask of one person to be, yeah, you’re head of talent, and you have to do all the HR operations.

Matt McFarlane [16:22]: It’s such a diverse function, right? Like, the talent side of things itself is enormous, especially these days. You’ve got candidates that can send off a thousand applications with a click of a button on the other side of it, so volumes are blowing out — I’m sure you see this a lot at the moment. So the job there is bigger. But then the rest of that HR remit — I mean, it’s onboarding, it’s learning and development, it’s engagement, it’s leadership, it’s comp and benefits, it’s offboarding, it’s all these different things. It’s a huge role.

James MacDonald [16:53]: Yeah. And I think, because of those different aspects of it — as you said, to partner. We see that from a recruitment side. You either have a recruitment partner, a recruitment company, or a company that’s working with you ongoing, and you’ve got that partnership where they’re an extension of your team. Similar to yourself, where you’re an extension of their team, owning one function.

If you take it to that next stage — you come into a company, you’re helping them get the lay of the land. What’s the next best practice for them? Is it just setting up those roles, setting up the clarity in the conversations? How do companies then embed this, so then we’re sweet ongoing?

Matt McFarlane [17:31]: Yeah. Okay, so past the talent function — for me, the next big priority, I mean, it really depends. It depends on your strategy. If you’re doing massive scaling, it’s onboarding. It’s how that person comes into the business, how they familiarise themselves with the context of the business, how it works, the product, what’s their place in it, how they’re contributing — it’s how they’re getting from day one to fully up to speed and delivering as quickly as possible.

Like, the last role I was in-house for, in the first year we grew from 250 to 650 people. And so onboarding was everything. It was, how do we get these people situated ASAP? If you’re not growing that quickly, then onboarding is still important, but it probably becomes more around ways of work. And by that I mean — I see that as another word for culture — how are we ensuring that who we are as an organisation, and what our operating system is, and how we ensure that we’re clear about what our goal is as a company, how it is that we’re delivering, and what steps we’re taking to arrive at it, and what everyone’s role is and how it connects to that.

I think focus is one of the big challenges I’ve seen lately with a lot of companies. AI has been this incredible thing, and I can spin up a product, a vibe-coded product, in seconds and minutes now. But what I’m hearing from a lot of teams is that it’s causing this diffusion of focus, because people are suddenly getting distracted by all these little passion projects, or these little things that they thought, oh, this would be cool to try, this would be interesting to build — but it has zero relevance to the team and the goals that they have, and ultimately what we’re trying to achieve for the organisation. Which for me is the biggest risk when you’re small and trying to find PMF, or you’re trying to generate revenue, or whatever it is. If you are not dead-centre focused on what it is that you need to do to get there, then that’s your biggest risk.

James MacDonald [19:35]: Completely agree. I think I’m in the same boat as you — I’ve got ADHD, and I tell you what, chasing shiny things.

Matt McFarlane [19:41]: I think I probably do too.

James MacDonald [19:42]: Chasing shiny things and building things. I can do it a couple of nights a week past midnight, but I do need to catch myself and be like, what value is this providing? And it’s fine if I’m doing it just to learn, and I’m doing it for fun. But if I’m building something from a business context, what value is this providing? Does that point or line up to the goals that I’ve set for myself, and does this accelerate me on that path?

Matt McFarlane [20:08]: 100%. I get lured all the time. Like, I’m back on X, or Twitter, or whatever you want to call it now, because I feel like that for me is kind of the melting pot of all this AI discussion. But I find myself regularly distracted by whatever the next thing is that Anthropic or OpenAI have shipped. And I’m like, oh, I’ve got to go try that. And then, actually, what does this even do? How does this even help me? I’m just playing with this thing because I can. And I think the other risk is that it’s really easy to get to 90% of something with AI, or vibe coding, or whatever, but that last 10% is quite hard. So you just end up with a whole litany, or a graveyard, of these half-baked ideas that don’t actually end up being that good. So yeah, that to me is a big risk.

James MacDonald [20:50]: Yeah. For a company, just having that alignment. For those that don’t know, you’ve got your own podcast. And I listened to an episode you did with the head of people from Zapier. If you talk about culture, you talk about how well they’ve embedded that, and the clarity around, we need AI fluency with the people that join our team. It starts in the interview process, accelerates through the interview process, is part of their onboarding, and then the ways of working. So I think that clarity that you mentioned just before — they do it as well as anyone.

Matt McFarlane [21:20]: Yeah, that was a very eye-opening conversation with arguably one of the most AI-native companies in the world. And I loved in particular — and I think this is one of the things that a lot of companies are struggling with at the moment — that they’re throwing AI licences at companies and expecting immediate upside, but they’re not doing a great job of scaling whatever those individual practices are.

I was having this conversation with someone yesterday, another people professional, about how AI is doing good things for personal productivity. But the second you start to think about that in the context of companies, where they’re struggling is how they’re scaling those things. And I think some of the stumbling blocks — some of the obstacles to that being successful for companies — is creating protected time to actually understand how AI can be used. They’re not creating the cultural rituals around how they’re sharing best practices. Often it’s this kind of top-down approach. What I loved about the conversation with Zapier is that they’ve got this top-down but bottoms-up approach. They’ve even got their executives who are like, here’s how we use AI, and here’s what I stumbled on, and here’s how it worked, and has anyone got an idea for how this is happening? But they’re doing that across the business. Whereas I see a lot of executives in some companies going, go use AI, and they themselves aren’t necessarily getting that embedded in it.

James MacDonald [22:41]: Yeah. I was talking to a startup the other day — Lattice is the name of the company, they’re very early days — but they’re looking at essentially that, where they would sit a layer over the top of it, have a look at the different ways people are using AI internally, and then try to take the best practices and create that consistency across the board. Because as you said, we’ve got power users over here that are using it for great, but then their skills aren’t shared across the board. Or they’re using it and sharing a skill, but then when it gets updated it’s not shared. So it’s like, potentially having all these common skills in a hard repo, and then everyone can pull down from that, or creating that company brain and everyone can pull from that. So I agree, I think there are a lot of companies at the moment that have siloed individuals and different variances of it. And that next layer for a lot of companies, whether it be people function or otherwise, is creating that consistency.

AI — we’re talking compensation. AI compensation at the moment is variant, like, it’s changing day by day. A conversation last week — the podcast ended up in an offer, upward of 500, 600 plus I believe was the range. It was offers from 220 to 300, mid-threes for most of them, about eight offers I believe, ended up 600, got offered half a mil USD to go to the US. How do companies deal with this? How do companies hire these senior AI engineers, principal engineers, AI architects?

Matt McFarlane [24:11]: Aussie companies?

James MacDonald [24:11]: Aussie companies.

Matt McFarlane [24:11]: Look, I think those circumstances of that individual — they’re not commonplace. In my experience, it’s a rare breed of talent, but I think it’s possibly a little rarer to see that.

James MacDonald [24:31]: He’s definitely in the rare. If I push back then — senior AI engineer, he’s going to come in and change the nature of your team, or you want to change the nature of your team by bringing in this talent. How do I go about hiring this person, if I’m competing out there with the likes of the labs?

Matt McFarlane [24:47]: Yeah, I mean — look, I go back to my point a little bit earlier. I think you’ve got to understand what the impact is that this person is going to have in your business. Are you taking a bet on something that’s going to have this 10 million dollars in upside? If that’s the case, then half a million dollars in salary is probably not that big of a hit.

I think a lot of people get in their head about salaries. I heard this term the other day, and this for me is like one of the most common reasons I see someone being paid what a company thinks is the right salary not happen — because they go, oh, the jump between what they’re on now and what we think they’re worth is too big. And it’s like, yeah, because you’ve been underpaying them against what you’re saying you should be paying within the market.

So I think a lot of people see — I was working with a client the other day and they go, oh, we want to pay 90th percentile for our talent. Oh, but it’s going to be — it’s a UK-based role — 80,000 pounds to bring this person up to the band, that’s too big of a jump. And it’s like, but that’s the size by which you’ve been underpaying this person. If you want to be a 90th percentile company, that’s the gap between what you’ve been banking as an upside as a company, and that’s the size of the reason for you to make this change. It’s not — yes, it’s easy to look at a number and go, oh, that’s too big, but that’s just the number. We all want to be data-informed companies, and yet we look at something like that and go, oh, hang on. So I think we need to take the emotion out of it.

James MacDonald [26:12]: Yeah, it’s the measurement part. You mentioned it again. As you said, if companies can actually measure what the value is, or the upside is, that this person’s going to bring — if you can measure that, and everyone’s become data-informed, then you can actually make the justification to say, pay half a million dollars, or whatever it might be, for one of these roles.

Matt McFarlane [26:29]: And these people are spending probably hundreds of thousands of dollars on tokens and on the infrastructure. It’s the reason, I think, for the massive spike in salaries for this kind of segment of roles — because payroll has always been, in SaaS, the biggest cost, maybe AWS has been up there as well. But tokens are now kind of superseding that. And I think it’s giving companies the freedom and the permission to go, well, we’re dealing now with an infrastructure that’s worth significantly more, and we want to make sure that that investment is sound and secure, and we’ve got the right people that are dealing with it.

I know last week, Dario from Anthropic was saying, oh, I’m worried that people are joining now for the money and not for the mission. That’s crazy to me. But look, that’s always partially the risk. As long as you think you’re hiring for the right reasons and you’ve got a dialled-in process. But yeah, I think if you’re looking for one of these roles, that’s the clearance rate, that’s what it costs for your business to be able to do business.

James MacDonald [27:32]: Yeah. You mentioned cost and vision there. I think that’s a really important one — mission, vision. If you want to compete on salary and salary only, it’s a really quick way to blow out your cost base, right? A lot of these people in demand, the top talent, it’s not only a salary conversation, it’s a mission, vision — you need to actually sell that. Where have you seen that go really well? Have you seen companies that you’ve worked with be able to pay, let’s call it market rate, not under market rate, but be able to compete for that top-level talent that they might not be able to get if we’re competing on salary alone?

Matt McFarlane [28:06]: Yeah, definitely. I’ve worked in those companies as an employee, I’ve worked with those companies who have been my clients, definitely. And I think it’s the ones that — again, going back to that ways of work — being really hyper-clear about what your mission is, what you’re trying to achieve, how you’re going about it. And the environment that you’re doing it in. Those companies definitely outperform.

I think we’re in an environment where trust is quite low. There’s so much low-hanging fruit around creating a great environment. Again, just clarity around what the role is, ensuring your leaders are good and kind and supportive and all those sorts of things. There are so many things, from just an operating environment, that you can do well, that can offset the need to spend huge amounts of money on salaries. Some of the more extreme cases that I’ve seen with a client of mine, for example — a four-day workweek, fully remote. These flexibilities are really important to people. So if you can factor those into your EVP, then you’re going to have an easier time of hiring those people, and not necessarily have to go and pay crazy amounts of money as well.

James MacDonald [29:20]: Just open the door for me. ESOP. A big way for startups and scale-ups in the past to compete for the top talent was to offer some form of ESOP. SaaS valuations have gone down across the board. Those shares potentially aren’t worth as much as they might have been in the past. So getting to that exit, more challenging at the moment for a lot of companies, especially in SaaS. How are you seeing this play out? If you take that really valuable lever that startups and scale-ups had in offering ESOP, how are you seeing this play out at the moment?

Matt McFarlane [29:56]: I’d start by questioning the value of the lever. I’d be curious for your perspective here, but I’ve always found that in the Australian market, equity has had negligible impact. I think it’s table stakes, people expect it, but they don’t understand it. They don’t know its value, they don’t understand how it’s going to grow, they’re not connected to how their role impacts its growth, they’re not kept in the loop by the business about the value and how it’s growing. And we’re in an environment where, unless you know someone from Canva, Atlassian, Eucalyptus, any of these companies where someone has actually profited and benefited from an ESOP program, you tend not to think too much about equity.

And I think this is the gap. It’s funny — I’m bullish and I’m bearish on equity. I think in Australia it’s a hard thing to get right, because so many companies just give it to you as part of your offer letter and then you never hear about it again. And that’s a huge miss, because a lot of companies spend a lot of money to set up the legal and financial framework to be able to issue equity, and then they just forget about it. And so the whole point of it, creating this kind of ownership mentality and for people to be bought in as much as the founder is — that’s what they’re there to achieve — that’s a total miss for companies, because they just go, you’ve got 10,000 options, and then off you go.

So yeah, you’re right, the environment for equity is worsening, definitely. I saw some numbers from Carta the other day saying that the average duration it takes for a startup to exit or list has blown from eight years out to like 15 or something. So that horizon is huge now. That’s a third or a quarter of your career. Are you going to be with a company anywhere near that long? Are you prepared to wait that long to see the return? So it just diminishes the value that people have on ESOP even further. And then obviously you add in the uncertainty in the Australian environment — am I really going to see even as much of a return now, with the changes from the recent budget?

So I think all of it’s going to result in — what I would encourage companies to think about is, if the equity is probably going to be worth less to people in their mind, then think about how you can offer an even more outsized grant to fewer people, potentially. Your more important people.

James MacDonald [32:20]: I agree with that, 100%. I think bigger chunks to fewer people. Those people, as you said, are the ones that are going to change the nature of your business, have a chance to change your business. Having those people more deeply bought in.

Matt McFarlane [32:37]: Yeah. But it has to come with that infrastructure, right? You have to tell them what it’s worth. And every six months you have to say, here’s — I mean, it should be changing value every 12 months. Here’s the update, but how are we going on the goals that we’ve set to grow that value?

James MacDonald [32:50]: I think five to seven years ago, there was a naivety in the market, where there were some big SaaS companies that had massive exits, massive valuations, and people are like, oh, I want to join a startup. I’ve seen Canva last year, I’ve seen the Ubers of the world, Airbnb and all that scale — look at these valuations. I want to join one of them, because that’s my way as a software engineer to actually get some form of significant capital. But there’s a naivety about how infrequently that happens, the paths of getting there, dilution, all these conversations that, if you don’t look at it as a big picture or with some form of depth, you don’t understand. But I think that was definitely used as a lever five to seven years ago to attract people.

Matt McFarlane [33:30]: Yeah. But I think that ratio is switching. I’m actually seeing startups paying very competitively now. And I think equity is still just that thing that people are like, whatever.

James MacDonald [33:39]: I completely agree. Right now, AI in particular, you’re going to do a lot more with fewer people. So instead of hiring five engineers, you can hire three, potentially two, and pay them better. There’s a time and a place to pay those overs.

If you were to build a team from scratch at the moment — and you could be an internal team at a big organisation, enterprise, I want to build a new platform, or new idea, new product to go to market, understand the customer really well — how do I go about building an engineering team, if I give you a million dollars? How do I go about building it? Is it one person for a million dollars? Is it the 0.1%, or is it —

Matt McFarlane [34:23]: Yeah, this is an interesting one. Because I don’t know if you saw the news about ClickUp in the US — big layoff, I think 40, 50% layoff. And the headline item there was, we’re not just banking the upside here, we’re creating million-dollar salaries. And then I think it was last week or the week before, they’ve put out a job ad for a CMO —

James MacDonald [34:45]: I wrote about it in my Substack. Million-dollar salary. I wrote about that, the 100x marketer.

Matt McFarlane [34:52]: 100x marketer, and no direct reports — agents, AI agents, in the team. And so, yeah, I think, yes, there are these people out there. I would of course need some help from someone like yourself to find that kind of person who’s worth that kind of money. But yeah, I think that’s the thing, right? You can go and find 10 $100,000 engineers, or you can go and find one million-dollar engineer. And I think you need to understand all the different — where are you finding that talent? Are you a globally remote company? Your talent pool is the world. Are you localised to Sydney? Okay, it’s going to be a little harder to find those people. So all of those factors come into play. And with that, once you understand what the talent is that’s at your fingertips, then you can work out, okay, with that composition, what are we going to be able to deliver?

James MacDonald [35:40]: I’ll reframe the question. There’s a time and a place, I think — if you’ve got your salary bands, then we blow it out of the water and go over and above somebody because they’re going to change your nature. You might make somebody — go to market at the moment, I think there’s a really big space for the growth of the go-to-market specialist, especially if you’re building product. That person’s going to change nature, or that AI engineer. Is there a time that you come in and advise a client to say, this is worth blowing the budget for, this is the one — if you understand how this person’s going to change your business, that it’s worth throwing the salary bands out the window, you’ve just got to make the gut call on this?

Matt McFarlane [36:18]: Yeah. Again, if you’ve got a strong enough case for the bet and the payoff, then yeah. I think at the end of the day, salary bands are good for the broad range of roles that you’re hiring for. But again, the data is what is and has been, rather than what you want to happen. So if you’re looking for this game-changer role in the market, then you’d be taking a very different approach. And if you’re certain that it pays off at this kind of a multiple, then yeah, if it’s going to cost that much to get that person in, I think it’s worth it.

And again, this comes back to where I see partners from a comp perspective — and I’ve made this mistake myself earlier on in my career — is that they sometimes hold too tightly to the salary structures and defend them at all costs. And suddenly you’re not able to hire the people you need in the business. Like, they’ve got to enable you to hire and retain people. And if they’re not, and your clearance rates aren’t working, or people are leaving because of pay, or they’re grumbling because of pay, managers are telling you that the market’s moving on — if there’s all these signals in play, then you’ve got to take a look at your data and adjust it, even if the salary survey that you’re using isn’t showing these sorts of things. Because at the end of the day, this is what’s going to help you be successful as a business.

So, is it rare? Would you want to absolutely make sure you’re dotting the i’s and crossing the t’s before you make that kind of a call? Yeah, for sure. But it’s got to enable the business.

James MacDonald [37:52]: When companies get to a bit of scale, when they get past 100 people, you don’t need tens the whole way across your team. Obviously, if you can get 10 out of 10, the studs in every single role, perfect. But there’s a time to hire your sixes and sevens that are going to get the work done and keep moving along. How do you go about advising companies when it comes to this? I’d be interested in getting your opinion on the formation of teams, and being okay with, this person’s going to get their job done.

Matt McFarlane [38:23]: Yeah, I’ve heard it framed nicely in a book called Radical Candour, which is a good book — I recommend people read it, around feedback and creating that culture. But they use this term called rock stars and superstars. And I think it’s right that a company needs both. The rock star is the person who’s like a rock. They’re great at what they do. They may be ambitious about how they do the work, but they’re not necessarily ambitious for their career. They’re not trying to become the CTO, they’re not trying to become the CEO. They love doing their job, they want to be better at it, and that’s kind of their focus. And then you’ve got the superstars, who are the people who are here for the big bets, the bold swings. You need those people too, because they do have these ambitions about outsized delivery and how they can grow themselves and move into the business.

I think one of the things that, certainly in the SaaS space or the technology space — it inherently attracts people that are, in my experience, typically the superstars, the ones that want to develop enormously quickly. They love the greenfield environment. It’s certainly one of the things I love about that space — you can come in, you can have a crack at something that hasn’t been done before, you can potentially have outsized impact. But you can’t have a company full of those people, because — and you said it earlier — companies are staying leaner, their structures are smaller, their ability to promote. I mean, I’ve been in companies that have grown by hundreds of people a year, you can be promoted once every six to 18 months, and that fact is no longer the case, I don’t think, in most companies. So you have to think about how you’re giving people the pursuit of challenge and mastery of what they’re doing within the same role for longer, because that opportunity to grow is less common.

Suffice to say, I don’t like calling them sixes and sevens in the sense that maybe they’re not as good. I think sixes or sevens in personal ambition, maybe, for sure. But I think it’s important to have a good mix. And increasingly we need that mix to come back more to the rock stars, because you need great people who are great at executing on their role but aren’t looking to climb the ranks necessarily. I don’t know what the ratio is by any means, but yeah.

One of the challenges that I’m hearing for companies within this — we’re having to rethink the career framework and promotions and all that sort of thing. There was a CTO I was speaking to the other day that was saying that the way he expects people in his team — and he has his own AI research team — the way he expects them to be promoted is that they’ve built agents that have automated the level of the role that they’re doing at that scope, and that allows them to move up. It just fundamentally reshapes how careers are going to work within that team. They’re probably never going to hire a junior again, which is crazy. Eventually there’s maybe eight or nine of them, and they’ll all just be principal-level roles with a whole bunch of agents under them. There’s no perfect answer just yet, but I think it’s definitely reshaping the whole context of what a team is, and how it works, and who you’re looking for within it.

James MacDonald [41:28]: There are two parts there I want to pull out. I’ll go to that team structure part. You mentioned there’s a part where somebody builds a bunch of agents to do what I’m traditionally doing. Now your team structure used to be 10 people across the team. It’s now 10 people plus 5,000 agents. When you’re putting a hierarchy together, an org structure, you’re looking at those agents and their token costs. Is this fitting in a technology budget? Is this fitting in a people budget? What does this look like? Because as you said, tokens come with real costs now, if you’re getting real output. These are things that people just don’t look at. A token-max role, token optimisation role, will continue to be either part of the core function of software engineering roles, or potentially a standalone role, like people have done in and around cloud. If you have a look at your total costs going out the door in the P&L sheet, your people line was one, technology would be another, but there’s this blurring with the agents part. Just interested to see what you’re seeing at the moment.

Matt McFarlane [42:39]: It’s an interesting space. Where’s it going to go? I don’t know. A few things come to mind. I was at Sunrise, a Blackbird conference, a few months back, and saw a talk by Geoffrey Huntley, I think it is — the guy who came up with the Ralph Wiggum loop. His talk was all about how AI costs less than minimum wage. I think we’re seeing a snap back from that to now, token costs are going to increase and all that sort of stuff. It’s a hard question to know where it’s going to go, where the budget sits.

It’s also — there’s an overhead that comes with hiring more people as well. If those AI costs increase, I think, like any vendor evaluation or any tool set that you use, you want to be re-looking at it every now and then to make sure that it’s actually delivering the kind of value that you’re expecting. I don’t have a good sense of how companies are going to control for their token costs in the future. I think we’re seeing some companies that are putting caps for per-person-per-month spend, things like that.

But as to whether or not we would see a transition back from agents back to hiring people, I don’t know. I think in some respects, potentially. But there’s also the on-cost of hiring people as well. Again, an agent — these are all the things that are on the billboards — they don’t sleep, they don’t ask for promotions, they don’t ask for pay increases. There is that cost that comes with having employees that I think isn’t caught up. It’s a roundabout way of saying it’s a dynamic place at the moment. I don’t know where it’s going to go, but yeah, it’s something that I’m certainly keeping an eye on in terms of what that shift is between headcount cost going into token cost, and whether or not that’s just blowing out a different budget.

James MacDonald [44:34]: Yeah. And whether, when you’re having a look at your total people costs across the business, you’re actually incorporating those token costs into that people function or not, or if it is standalone. And then, as you said, you’re having companies look at putting caps on people, which in one way looks ridiculous — because if they’re producing value off the tokens, give them more. But if they’re spending and doing the stuff all the time —

Matt McFarlane [45:00]: Is it scalable? And is it in focus, right? Again, are they spending tokens on things that don’t matter? And this is where it comes back to the incentive side of things. This is where the whole token-maxing thing, in the long term, can be detrimental. I’m a fan of, in the short term, from a building and adoption perspective, I like leaderboards, I like being able to say, James, congrats, you were number one for this quarter that we’ve decided to bring AI in, and we just want to say who’s using it the most. But we all know how easy it is to game those sorts of things, and then suddenly you’re just rewarding consumption rather than actually producing value.

So they’re an interesting tool. They obviously should not have a long-term place in companies from a reward and recognition perspective, because I could spin up a loop right now that just spends tokens and would make me look brilliant despite achieving nothing. So these are the things that people need to be thinking of. And I think we’re going to need to come up with new ways to evaluate whether or not the value of what an agent is producing for its token cost is equivalent to, or more than, what it would be to hire someone to do that same thing.

James MacDonald [46:04]: The measurement part — it’s a conversation, it’s continuing, getting better at measurement, organisations getting better at measurement. And then whether you’re also model-agnostic, you’re moving to open models. The Chinese models are going out. These are the conversations, right? And then Meta releases theirs. But obviously it’s the push back to the rising people who are actually using the Chinese models. Because at some point, you can’t, as an organisation, be held by just the global giants — being okay, Anthropic put their tokens up, our costs go up by XYZ. You have to be agnostic.

Matt McFarlane [46:39]: Which is why I do question whether or not models are kind of becoming commoditised, right? There are so many of them out there now, they’re all in a race to the bottom in terms of price. Yes, there have been price increases, but I think the pressure is downwards at the moment, especially with the recent developments. But having said that, honestly, six months ago I wouldn’t have thought we would be where we are with things. And it’s so hard to predict. So I think every company is just taking it day by day.

James MacDonald [47:05]: You mentioned companies where you can come in, have unlimited tokens. We talked about ESOP. Both from an attraction and a retention perspective, what do you see companies do really well? Where are the best couple of levers when it comes to attraction and retention, outside just pure salary?

Matt McFarlane [47:24]: Yeah, I’d say that flexibility piece is still up there in terms of the most popular. And that’s not — I think people conflate that with the remote versus in-office debate. It’s not that. It’s someone’s ability to choose. It’s this kind of sentiment that — and the companies that I see do this well are kind of remote-first by design, but they might still have offices and things like that. And what I mean by that is, simple rituals. For example, if you and I are on the same team and we’re in the office together, and we’re about to have a team meeting with three other people who aren’t, we’re still on separate laptops. That sort of concept where it equalises the level of the playing field.

James MacDonald [48:00]: Yeah.

Matt McFarlane [48:00]: I find it worse when you and I are in an office together on one screen, and all three other people, and you and I are having a kind of cross conversation. That dynamic just doesn’t work in the hybrid environment. So I think it’s those sorts of things that the companies look for. It’s the ability to be treated like an adult, and know that — we all work so damn much — give people a bit of their own responsibility over their schedule, about when and where they do it. I think we’re all pretty well wired to know that if we’re not doing our 40 hours — I don’t know anyone that only does 40 hours — but if we’re not doing it, then it’s a different conversation.

James MacDonald [48:44]: But yeah, I measure on output, as opposed to, I see you in the office at 30.

Matt McFarlane [48:50]: Yeah, exactly. And I think — I saw, I think it was this week actually, something about Commbank with their, you know, they’ve got some sort of AI tool that tracks how long people are in the toilet for. And it’s like, really? Are we really there? You’ve got people who are adults, who you’re paying to deliver a job, and you’re tracking the time that they’re at the desk, or in the toilet, versus what it is that they’re delivering. And it’s like, we’ve got the ability to see how people are working and track it and report on it in so many different ways, and yet we’re resorting to these sorts of things.

So yeah, for me that’s it. It’s out with the big brother, out with the micromanagement. Give people a sense of purpose, give people a connection to what it is that the company’s doing, give them meaningful work, give them ownership over it, and the autonomy. And yeah, for me that’s still the most compelling thing I see in the market outside of salaries.

James MacDonald [49:39]: If you flip it back to the individual side of things — you mentioned value before, you mentioned engineers building a bunch of agents to do the job that they’re currently doing, to allow them to push up to that next level. If you’re advising individuals, technology professionals, how to advance their career, how to get more money without going to another company, getting an offer, coming back, counteroffer — we mentioned that before — if you’re advising individuals, career growth, getting more salary, where do you start?

Matt McFarlane [50:09]: I mean, I’d understand what you want first. What’s the dollar figure you’re going for, and why? What’s the connection to it? Because it’s only ever a temporary focus. I’m sure you’ve had this — I’ve certainly had this — where you get a bonus letter or something, and you’re like, oh, that’s really cool, and then you forget about it. So you’ve got to understand what it is that’s helping unlock for you first in your own life. And then you’ve got to understand what’s the path to get there.

So for most people, I just encourage, first and foremost, have that conversation with your leader. Now, be conscious that your leader may not be empowered by their own company to understand how you can get a pay increase. But a good leader — and this is what I do with some of the work that I do with clients — is like, how do we equip leaders to understand how to take hold of that conversation and own it, even if they don’t have the answer right then?

I think often the biggest issue I see is that, by the time — let’s say you’re my boss — by the time I come and have that conversation with you, I’ve been thinking about pay so much, and I’m so angsty about it, that it becomes a bit of a heated conversation. And I expect you to have a response, and you feel pressured to have a response, and then it all kind of tends to go to shit from there. So I’d encourage, if it’s something that you’re aspiring towards, have a conversation with your manager. They probably won’t know what the answer is right then and there, but a good leader will be like, okay, but I’m going to go and find out for you. We’re going to work out together how we can get you a performance increase to your base pay, or if it’s a promotion, how we can define that, what the actual pathway is here. And hopefully that’s one way you can do it.

Asking what the pay range is for your role as well. A lot of companies aren’t at the stage where they even have a pay range, potentially. If they do, sometimes they’re not comfortable sharing it. But I think it’s worth asking the question, and asking, where in the pay range am I? How can I get towards the top end? What are other people doing that are at the top end of their pay range that I could be doing in my role? So having these conversations is the best first course of action. And even if it doesn’t result in the outcome that you’re looking for, at least your manager, and potentially theirs, is now starting to think about, okay, this person’s thinking about how they can progress, and if we’re not able to scratch that itch, it’s kind of a forewarning that they may start looking elsewhere.

So the tip after that then — there’s so much information around. Sure, ask ChatGPT. I mean, as a comp person, I detest ChatGPT as a source, but ultimately it is scraping from a bunch of data sets. Where I think it can be helpful is, if you’re in a company that doesn’t have any pay infrastructure — they don’t have ranges — then ChatGPT is as good as whatever they’ve got, because they’re not using any reliable data source anyway. And ChatGPT is going to be coming from Glassdoor and Indeed or any of these job boards, where there is job data and things like that. So look at the roles that are aligning to the kind of salary that you’re aspiring for, whether it’s a promotion, or maybe it’s the role you’re doing.

I’ve certainly gone to my boss before and said, hey, I’ve been looking at jobs and seeing that all of these jobs which describe a higher-level role than what I’m doing are describing the work that I’m doing today. Can I get a promotion? And that’s worked for me in the past. So understand where you are in the market, and what’s out there, and what the market is calling the kind of role that you’re aspiring for and what it’s paying, and use that as a mechanism for growth internally. And then worst case, if you don’t get what you need, then start looking.

James MacDonald [53:41]: I think, old school — there was definitely, when I was young, a mentality, and I was told probably by my dad, my early bosses, do the job first. Do the job for the level above first.

Matt McFarlane [53:54]: It’s a contentious one.

James MacDonald [53:55]: That mentality’s 100% flipped. And there’s an entitlement part, trend, conversations being had in the market around, I’ll start doing that job once you pay me for it. I’d love to get your thoughts on that theme in general.

Matt McFarlane [54:15]: Yeah, I’ve been having this conversation a little bit lately, because I think you’re right, it is switching. And I was the same. It was, you do the job ahead of you, and then in six months’ time you might get recognised for it, but you’ve kind of been doing it for free for a little while, and it’s a way for you to show your ability to step up and own it. And that’s been the way it’s worked. It’s still the way it works, by and large.

But yeah, you’re right. And I — I certainly don’t want to characterise this as a generational thing, but Gen Z, I kind of like to say — I’m a millennial, we like to talk about work-life balance, but we’ve all been shit at it. But I see Gen Z as being the ones that are like, no, no, nine to five, that’s what I work. And I think they’re bringing a real sentiment around, if you want me to step up into this role, then pay me to step up into this role before I start doing and discharging their responsibilities. And I don’t blame them.

I actually think, in many respects, this is a reward issue. I see people who get promoted into manager roles, I see people who get promoted into high-level roles, and do I think that they’re being given enough of a pay bump to warrant it for the increase in responsibility? Probably not. And so I think Gen Z look at that and go, well, hang on, why would I be doing the job for free for six months, to then get the job officially, to then get a 5% pay increase? Is that really working out? And so they’re sticking to their guns a bit.

And it’s going to force a pretty fundamental reshift internally in how we evaluate for promotion. Because we’re going to have to think of ways to — and there are ways to do it — but we’re going to have to make sure that we’re evaluating on potential, the potential for someone to come in and do this job. I think we’ll probably see things like maybe trials, or higher duties, that kind of concept, where someone’s paid for higher duties. Step up, do this for six months if you like it. Because the other thing we have to remember is that there’s that Peter principle as well, right? People feel like they have to take a leadership job or a management job to get the pay, but you just end up promoting someone who’s a great technical person into a leadership role who’s terrible at it, and suddenly you’ve lost your best technical person and you’ve got a mediocre manager.

James MacDonald [56:31]: I love the trend that’s sort of going anti that as well — in fact, that you can start to earn significant money in technology while staying technical. As opposed to, as you said, going software engineering, you either had to go the architectural route and stay super technical, or you had the people management route, and not all software engineers are great people managers.

Matt McFarlane [56:51]: Exactly. And again, in this world — even in the people function — I think you can now have a bunch of AI agents or something that allow you to remain an individual contributor, and be highly technical and really proficient at what you’re doing at a more senior level, and be paid for it, rather than forcing you up this leadership route. So I think all of these things need to be true in organisations, increasingly so as Gen Z makes up more of the workforce. Or they don’t — I don’t know, no one’s hiring juniors anymore, apparently. So we’ll see.

James MacDonald [57:20]: No one was hiring software engineers six months ago, now software engineering is going north again, because people understand. It’s all swings and roundabouts now. We all need to have quality software engineering practice, and not just vibe code everything.

You mentioned this then, the difference between people management and the technical side of things. If we relate it to the people function itself — how important is it for the people function themselves to become somewhat technical when it comes to AI? Zapier obviously all in. I’ve talked to other people people, and it’s about the people side of things, and we don’t want to lose that. Where are you seeing those trends change?

Matt McFarlane [57:59]: Yeah. We started this conversation by talking about how broad the HR function is. I think it’s getting broader. Companies like Zapier are an incredible example of how they’re leading the way on AI transformation, the ways of work across the entire business. So that’s a whole new portfolio that they’ve never had to — I mean, fundamentally it’s change management, but it’s with the technology that’s just so different to what they’re used to.

I was chatting with someone yesterday about the increase I’m seeing in the role of the people engineer. So someone coming into the people team who is an engineer, and is basically helping to deliver what might have been a vibe-coded product from a HR professional, who are now moving into this semi sort of product manager role. They’re able to spin up a concept for something that is a people tool set.

James MacDonald [58:53]: Yeah, I’ve heard it referred to as talent engineer.

Matt McFarlane [58:55]: Yeah, same. And I’ve seen — Lovable, obviously can afford to do it, they’ve just recently done it. GitLab, I think, here in Australia, SafetyCulture, Leapsome, which is an HR tech brand. There are a few companies that are starting to look at this role. And what I find hilarious about this is that we’ve never had this kind of talent in the role before, but now that we’ve got AI, which arguably you would think, oh, wouldn’t that just give the people team the ability to deploy something anyway — but no, it’s actually created more of a need. Because now the HR team is able to spin up all of this capability. Plus, there’s an expectation that they’re starting to become leaner and automate more and things like that. So yeah, it’s an interesting space.

James MacDonald [59:36]: I think it’s a similar concept to the forward-deployed engineer, when you’re having a company actually roll things out. I think this will go into most functions of a business, where you have somebody who is that “something engineer”, the most technical person — and it might be something that comes from a talent background that’s just really leant into Claude Code, or it might be somebody from an engineering background that’s really leant into the people function.

Matt McFarlane [1:00:00]: Yeah. So the impetus there for me is that, yes, people teams become more technical. I think this has always held people teams back, is they haven’t been as technical, and I think as commercial. Of course the human side of it is always going to be important, and we don’t want to lose that. But it’s just going to continue to see a further broadening of the function. And I think we’re going to see — my background’s been more people operations to the more systems side of it — so now’s one of the most exciting times in the existence of the people function, because the capability and the expectations to help drive this transformation across the business have never been greater. And it’s just placing more value on that function than ever before.

James MacDonald [1:00:44]: And I think if you get that part right, the people ops part right — you’re automating more of the ops of the day, and you get to do more of the good people side of things, the human part of it.

I mentioned before that you’ve got a podcast and you’ve got a newsletter. You’ve obviously done that from a personal branding perspective. There are a lot of conversations out there at the moment, especially in startups, about founder-led brands, and the greater importance of founder-led brands and go-to-market in selling. I think there’s the same trend for internal engineers actually creating a personal brand, because it does help them from a career perspective. I’d love to understand why you went down this route to start with. Let’s start there. And then I’d love to hear your recommendations and the trends that you’re seeing for technical people to actually do this.

Matt McFarlane [1:01:37]: Yeah. So I’ve always been very bullish on brand. And so when I left being an in-house people professional and started my own business, one of the things that I was certain I was going to do to win new business was to be seen as someone who is like a trusted partner in the industry, someone who knew what I was talking about with respect to compensation and benefits, and that I was going to focus on generating leads through that avenue rather than cold outbound.

So for me — having been in the role that I now essentially sell to — I used to wake up every day and I’d have five, six, seven outbound emails from some company that I would delete. And I knew it was the same for every other person in my network. It was constantly being sold to, and it was done really impersonally. And if I reflected on the companies that I did buy from, or the people that I did work with, it was because I either knew of them, or they came recommended to me. There was some kind of warmth there, that I don’t have with the people that just show up in your inbox.

So for me, the approach was very much to lead with LinkedIn to start with. All of my network is there. And it was very simple. I went and paid one of the LinkedIn influencers that sells LinkedIn courses, because I was like, I know how to post on LinkedIn, but do I really know how to turn this into a system that generates leads? No. So I went and paid for a course, and it was really eye-opening in terms of helping me, first and foremost, define who I am and what it is that I do and who it is that I’m talking to, the goals that I have for it, the content that I want to generate, how I create a system of generating that content.

And so I just began starting to post. And the idea was, how can I reflect on the challenges that I’ve overcome from a compensation perspective, that I know that the person that I want to talk to is going through, and how can I give them that little bit of advice or insight? And that was working really well, and I really liked it. And I kind of got to the point where I was like, I’m sick and tired of talking about comp from my perspective. I know there are other companies out there that are doing great things from a compensation perspective too — I want to start a newsletter, and I want to platform them and some of the interesting things they’re doing.

The podcast kind of happened really accidentally. First I was like, I’m just going to email these people with a bunch of questions, I’ll get them to reply, and then I’ll put it in a newsletter. And then I was like, actually, maybe I should interview them, because then I can double-click on stuff that’s interesting. And then I was like, well, I’m going to record it. And then suddenly I was like, okay, well, now I’ve got a podcast. So I’ve kind of got this whole ecosystem now.

And I couldn’t recommend it more highly to anyone. We’ve never been in a time where it’s easier to generate content. But for me, what you can achieve when you do it for a sustained period of time, and people can see the authenticity behind it, and they can see that it’s not AI, and that you’re tackling problems, and that you are actually giving value for free to people — it starts to build trust. And in many respects, that’s one of the moats that I see — to develop trust in an environment where there is a saturation of AI content is the fact that you can go to my newsletter and you can see that I’ve published 45 or whatever editions, and you can read through them, and it’s something I’ve been going at for a while, and I’m having conversations.

So from that perspective, it’s been super helpful. And I’ve documented this, I’ve talked a lot about it — I’m three years into my business, I do half a million dollars plus in revenue as a solopreneur, and I credit all of that to my brand. I couldn’t be more of an advocate for it. And I know we all love to hate on LinkedIn, but a lot of the success of my business has come from just talking on that channel, and building relationships, and building my network, and going from there. So yeah, I’m a big fan of it.

James MacDonald [1:05:37]: There are a couple of points there. I think the authenticity is the big one, and being okay with it not being perfect, but just having the consistency that you’ve done it time and time again. I think what’s overlooked — it’s very easy for you or I who run our own businesses to obviously do this and try to build a brand. But I think for individuals — founder-led brands, obviously, because they’re our own company — but for individuals, if you have a look at, again, I’ll call it, this show sponsored by Zapier, there’s up here, internal tech, HR team, talent team, their individual profiles on LinkedIn have tens of thousands, hundreds of thousands of views, and they’re like great content. If those people ever wanted to go and work somewhere else — solid software engineers that talk about what they’re building at the moment, the problems that they’re going through, the challenges that they’re facing, sometimes the things they’ve fucked up — having those conversations online and being able to build a brand and talk about that, again, when you’re going and looking for a new job, or getting tapped on the shoulder for that big pay jump, I think it’s really overlooked.

Matt McFarlane [1:06:39]: 100%. And I think, if you think about the issue that we mentioned before that is facing companies, that they’ve got 1,000 CVs sitting in front of them — the ones that are backed up by someone who’s got this portfolio of blogs or whatever, even a GitHub or something that can showcase some of the things that they’re dealing with, stands head and shoulders above that sort of a thing. And I think it works wonders in a bunch of different ways. Someone who’s within the team may not necessarily be trying to sell, like you said, but what it does from an employer brand perspective — the fact that people can talk about the challenges they’re facing internally — just adds another dimension to the careers page that someone might see. And it attracts the kind of people that want that challenge, want the truth of what it’s like to work in that company, want to understand what’s going on a little bit more. And then you’re right, on the individual side, it just makes them that much more marketable if they do want to go and do different things. And it creates so much opportunity for you to go and speak about it.

Again, I’ve had so much opportunity come my way, not just from a business perspective, through the brand that I built. So yeah, I’m a massive advocate for it.

James MacDonald [1:07:52]: I completely agree. And I think, as you said, the other part there was the individual side of it. Companies have marketing teams that’ll produce their company content. I think the real thing that’s attracting people at the moment is that human to human. I might consider going and joining your company because I understand who you are. And people buy into people.

Matt McFarlane [1:08:13]: Absolutely.

James MacDonald [1:08:13]: Speaking of people, you’ve got an online summit coming up. Startup People Summit. Talk to me about what it is to start with, and then I want to know why you’ve put this together. What is it?

Matt McFarlane [1:08:27]: Yeah, so it’s a one-day virtual summit. It’s really designed to be this space for people professionals from all flavours within the startup, scale-up space, who are building the people function, to have a place to come and see others showcase how they’re grappling with the different challenges in that kind of sector, build community, build networks. So it’s trying to be the space for not necessarily just the technology industry, but for the unique environment that I think startups and scale-ups operate in. It’s greenfields, we’re building stuff from scratch, in 12 months’ time the company’s completely different, we’re rebuilding it again. These are very different and nuanced sorts of challenges to what you’re dealing with at an enterprise level. And so I wanted to create a space to showcase that, and give people a space to come and see what others are doing.

James MacDonald [1:09:19]: How do you go about a day job running your own business, and then putting this together?

Matt McFarlane [1:09:25]: A lot of sleepless nights. It’s full on. Anyone who’s run an event before, it feels like a never-ending job. I think it’s done when the day is done. But yeah, doing that, and then also having the consultancy, plus the newsletter and the podcast, as you well know, takes up enough time as it is. So it’s definitely a full-time job.

James MacDonald [1:09:46]: Yeah. I’ve had a look at the content for it, I’ve signed up myself. I think that, whilst it is very targeted at startup and scale-up, there are benefits there for people that are working in people functions in enterprise as well, to have a look at the challenges that are going on. Because a lot of it is — you’re in enterprise, you’re still scaling teams as well, not as quickly, but you’re still building those functions. And I look at a lot of the topics, even having a look at the AI in the people function, things like that, not necessarily just scale-up, startup only. So I think, to give you a quick plug, there is a lot of value in that not only for people within those verticals.

Matt McFarlane [1:10:20]: Yeah, I would agree. And it’s funny, I think actually the startup, scale-up environment has started to stretch to that enterprise space. We’re seeing more and more pressure on that kind of calibre of company. So yeah, I agree, a lot of the challenges that we’re going to cover in this event are ones that are increasingly relevant to enterprise teams too. But I also wanted to have a space where people like, you know, what I was doing when I was in my job, have a space — it’s for them, as opposed to some of the other conferences that tend to be a bit more for the top end of town.

James MacDonald [1:10:50]: Any one trend, one thing, that people that are looking to build or scale a technology team at the moment should be looking out for over the next six, 12 months — one thing that they should be worried about, or keeping an eye on?

Matt McFarlane [1:11:02]: Good question. I think it just comes back to that focus piece. Don’t get distracted by all the bells and whistles, just be considered about it. One of the struggles I see for companies is just — there’s a lot of pressure to perform and deliver. How do I say this more eloquently — but basically, don’t lose sight of what it is that you’re trying to achieve, and just be a bit more thoughtful about what it is that you’re delivering in terms of outcomes, and how you’re embracing new technologies like AI. Don’t just knee-jerk and expect great outcomes.

James MacDonald [1:11:35]: Appreciate it, mate. I won’t do it up any more — shout-out to anyone that’s looking to solve the challenges in and around compensation, scaling these teams in that space, look out for Foundation. Appreciate it. Thanks for your time today.

Matt McFarlane [1:11:48]: Good to be here.

James MacDonald [1:11:50]: Here’s my biggest takeaway from my conversation with Matt. Matt said that the most common reason a company refuses to pay somebody what they’re worth is that the jump feels too big. But that gap is exactly the size of what they could be getting elsewhere.

The market’s been flat for the last couple of years across technology. Most roles are pretty flat, but there are a few roles that have jumped significantly, namely around AI. And if you’re a founder, or if you’re a CTO, my question for you this week: pick the person on your team that you’d be most damaged by if you lost them — the person with that intricate company knowledge, really tight skill set. Figure out what they would get in the open market today. Understand what you’re paying them. If that gap is significant, I think you should be having a conversation internally with whoever matters, whoever decides on salaries, compensation, about what it would cost you to lose that person. If that cost is significant, I bet that they understand what they’re worth on the open market. Maybe it’s time for a conversation with them, to look at what you can do to look after them — even if it’s out of your normal pay cycles, even if it’s outside of your normal conversations around pay increases.

You don’t want to lose your best people. The market’s just changed in some of these areas. Sometimes the play is to be proactive. Hope you enjoyed the conversation, and I’ll see you next week.

This was the Building Tech Teams podcast. We release new episodes every Tuesday. Really keen for feedback on guests you’d like to see, more topics you’d like to see in depth. If you’d love to provide any form of feedback to me, find me on LinkedIn, forward slash James MacDonald AU. You won’t miss me. This episode was produced by Day One.