If you are a startup and are trying to compete head to head with Google / FB / Amazon / Apple / Microsoft for the same people, you are going to have a really hard time recruiting.
But there are plenty of great engineers that don't want to work at those companies for various reasons. There are plenty of great engineers that want to work remotely and don't have that option at the large companies. There are also plenty of inexperienced engineers with high potential that can't yet get hired at those companies and can be great additions to your startup. Do what you can to find and recruit those people.
Very true. For both of our companies [1][2] we pay a fair salary plus a quarterly bonus on top of that based on what we can give (based on the company's quarterly profit results). We also offer remote retreats (so far Cape Town, Thailand, Martinique, Spain and Skiing in the Alps) and the biggest contributor to everyone's satisfaction is that we let everyone work from where ever they want and as much as they want as long as it is planned properly.
The result: we've had a couple of employees who received job offers from companies like Apple, Google and Facebook. But after going to the interview process and talking to other employees there they've all (with the exception of one) decided to stay with us, with a significantly lower salary, but a lot more freedom and work-life balance.
Not saying that we've a better offer than Google & co, but saying that our offer is different than theirs and there are enough people out there who care more about other things than just money.
The problem is there's no way to know how true the promises are. What do "flex hours" mean to them? Is it conditional, if so, on what? How far does their trust really go?
Compensation doesn't have this problem. You can't offer me $160k and then pay me $120k six months down the road. I mean, you can, but not with a straight face.
The soft benefits you described are one CTO/manager/investor change, or engineer bus accident, away from vanishing and it's not looked at the same way as cutting pay, furloughs, and things of that nature.
While I want to take one of these "work to live" jobs, I always end up taking the salary. I have a much easier time carving out a bastion of sanity in a given company that doesn't advertise the benefits, than to take a significant pay cut along with the risk I just described.
Totally agree. A lot of it is based on trust and a future that no one can predict nor guarantee. We're a small company of 20 (in my opinion) great people and we just have a different relationship with our employees than most other business owners.
While I totally get that the future is always uncertain, I think past actions of myself and our management team (which also includes employees) speak a lot for how we are probably gonna do things in the future. Our philosophy is called Optimizing for Happiness, because we try to base our decisions on what is best for everyone's happiness, even if it means to sometimes make less of an profit as long as the overall profit is still positive.
It's difficult to explain how we do things, but to give you one example of the past. We had always very successful quarters, except of one where we couldn't pay bonuses. In that quarter people did not complain, but also offered us to voluntarily work less (and get paid less) to overcome this situation. In the end it didn't come that far but I highly appreciated it. And I think this can only happen if it's a give and take from both sides and everyone genuinely caring about each other.
> We're a small company of 20 (in my opinion) great people and we just have a different relationship with our employees than most other business owners.
If that's not embodied in contract then it's, regrettably, close to worthless. Companies change, managers change, leadership changes, philosophy changes, contracts only change when they're renegotiated.
> I think past actions of myself and our management team (which also includes employees) speak a lot for how we are probably gonna do things in the future
In my experience it doesn't.
Soon the company is too big to known everyone, new managements and leaders emerge, whether you want it or not.
There are a lot of people joining in a growing startup. They will outnumber the current employees quickly and shift the current culture with them. Startups change in all aspects, very fast
That is true, if you build a company for growth. We built our company for lifestyle. We don't need to show off that we have 200 employees and make X million in revenue. While other people are busy bragging about it, we go skiing together. Different mindset.
I think the "not with a straight face" thing depends on what you're willing to get in writing up front and then insist on. As you say, companies can cut pay like they can change any other terms (depending on jurisdiction, natch, but mostly true in the US). The difference is that they know people take that very seriously. So if you want those other things to stay true, you have to be just as serious. Agreements don't enforce themselves.
I'm not sure how many companies would agree to it, but you could potentially work those items into your contract so that they are on the same level as other benefits (e.g., salary, health care).
The risk I described is separate from startups. A company of any size/age/growth rate can substitute soft benefits for compensation. To be clear, I was not talking about the job stability risk of working at a startup, or startups at all.
I'm always curious about companies who talk about "caring about things other than just money". Maybe I'm missing somethings but if you are a for-profit company by definition you care about money, any claims other wise feel like marketing.
I used to work for a proprietary financial trading firm, where we turned the founders' pile of money into a bigger pile of money. It's the purest "only care about the money" circumstance, and even there they occasionally cared about things other than money. E.g., the people they worked with.
More broadly, though, you misunderstand what companies are about. They're just a collection of people who get together to do a thing. They are only soulless to the extent that the people there are. (Or decide to pretend they are.)
The best places I've worked and visited actually care about the thing they're doing. E.g., I have friends who do catering. They love making people's events go well. They love making people happy. They fucking love the physical acts of making food and serving it to people. Sure, they have to get paid, or the enterprise isn't sustainable.
They are, legally, a for-profit business. But if clubbing seals or trading bonds got them 10% more annualized ROI, they wouldn't do it. Because they're not really there for the profit. They're there to please and delight people by doing something they enjoy.
(That isn't to say that reptiles in suits won't put on the mask of "changing the world!" when it gives them an advantage. We could all name examples like that. But there are plenty of sincere people out there.)
Never said we don't care about money. But we care also about other things than just money. And that a lot more than most other for-profit companies out there.
There's nothing wrong with making a profit either. The more profit we make the better. But it's important to decide what you do with that profit. And I much rather pay for our employees to join me for a week of skiing in the Alps than buying myself a Ferrari.
This is the right approach. Build a business you want to work at and your employees want to work at. Focus on maintaining operating costs and expenses, everything else is gravy. The buy in and work output isn't necessarily greater or worse than others, but I would argue the quality of life is through the roof. Kudos on what you're doing.
Average US commute time is about half an hour [1], add to that another 15 minutes on each side for context switching and "settling in" and it's an easy 10 hours a week at least you're saving.
Remote work isn't for every job or person, but the financial difference would need to be significant to drag me back into an office.
I find I have context switching and settling in time just as much (sometimes more) at my home office as I do at my office office. (IOW, I don't think I'd be inclined to count it as a cost of commuting.)
I think the distinction isn't making money as that's necessary to keep the doors open, it's more about corporate motivations. Some firms want to be a unicorn and some like where I work are more focused on building a business we all want to work at. While both are motivated, there are different buy in strategies with the employees. We have great growth, but we regularly turn down clients because they're not a fit for our team. I realize this isn't as feasible in all areas of expertise.
There definitely is a bit of marketing though and too much talk of culture is usually a good red flag.
This is a pet peeves mine. It's one thing to be honest but another to brainwash people into thinking that taking less pay is some how good for the employees.
Just wanted to reply exactly that. Obviously fair is very subjective and different to both parties involved. But we try to find a good combination of salary + bonus and also investment in the company itself (be it retreats or taking risks with new products like Bugfender), which then results in temporarily lower bonuses, but an expected bigger payoff and possibilities for everyone in the long turn.
Yep, exactly that. A while ago I took a consulting gig where the company couldn't afford my rates; we just negotiated working 30 hours instead of 40 at a weekly rate that fit within their budget. They got the expertise they wanted, while I got time on the side to work on other stuff. Win-win.
If you can't match salaries, then you can move other levers (work/life balance, flexibility, etc.) in order to get an agreement that's suitable for both parties. For example, I don't think Google allows for part-time engineers for the majority of the rank and file. For a startup, if they're more concerned about results than butt-in-chair hours, it might work out depending on the role.
Am I the only one that when I hear about retreats wonders how much it costs per employee, and given the same situation would rather have that money in my pocket?
I've heard that Google often has A class talent doing B or C class work; e.g. an expert in PL will often be working on ads. Sure the pay is great, but it can feel soul sucking. A startup can be appealing to some talented people if the work is interesting, even if the pay isn't as good.
Their attention span for products and tendency to half-ass things that aren't highly visible (Android SDK and documentation comes to mind) supports this notion. It's exactly what I'd expect from a company hiring 100% A players but needing 95% B-C work—avoid and shirk until you can land on a greenfield project, work on that until it's boring, then jump ship to another company or a more interesting project, because god knows you didn't go to MIT and then cram algos/structures for 6 months to update developer docs 8 hours a day.
Being/becoming good at CS-riddles (i.e. passing Google-like interviews) doesn't necessary correlate to being A player on the real job. So one might say Google employs a lot of B/C players (who just passed their interviews) where being A is a requirement for the job.
Yes, this. Also, if you look at the source of the output that is publicly available, you find that the overall quality is actually much lower than one might expect if they were hiring people that were truly great at making software more of an "art" rather than a blob shoved out the door that passed QA testing.
This describes the target of hiring at all levels in the Bay Area. Everyone wants A class talent for their B or C class CRUD. A major contributor to this is that the industry is relatively immature with respect to engineering practices.
Does the class A talent describe their education or their work ethic?
I've been on projects with incredibly knowledgeable and talented people that just couldn't stay on track, and I've been on projects with people that weren't the best and brightest but they were focused and put in a lot of work. You need both kinds.
I have a former colleague from academia with a PhD in math (his focus was algebraic number theory) who works at Google...writing a lot of JavaScript - the kicker is he enjoys it a lot more than his time in academia (I feel the same way as a PhD dropout myself - I primarily write JS/manage engineers now).
I definitely believe that there must be people who enjoy this, in fact they are probably in the majority. It's just that some of us don't, and these are who startups should be pursuing.
Ugghh... this exactly. I recently turned down a "we will fly you to the west coast" interview with one of the big five because I couldn't be bear the idea of spending weeks preparing for the 4-8 hour day of whiteboard coding (only to not get selected anyways).
Spent the time hanging out with my girlfriend instead. Worth every minute.
I think you almost played this right, with one caveat. You should have taken the flight to the west coast and done the interview, with minimal (hour or two) to no prep at all.
Why? First, you never know. Maybe they legitimately want your skillset - why fake up some crap you hate for a job you don't need? Second, you'll get practice taking interviews in a very low pressure situation. Worst-case they laugh at you and you fly home. Best-case you get an unexpected job offer you can evaluate. Either way you got some practice and "game time" with the process so if you're ever in a more high pressure situation (e.g. you really need the job) it's a lot easier.
Plus, smart people meeting other smart people is never a bad thing.
> You should have taken the flight to the west coast and done the interview, with minimal (hour or two) to no prep at all.
Having done this when I was younger and more foolish, I would not recommend it at all. I felt like I did pretty well overall, but ultimately flubbed a couple of [simple] questions that torpedoed my chances. While things worked out for the best (that company's future looks grim and I'm very happy where I am now), it was a blow to my confidence at the time.
I probably wouldn't have had to have prepared for a month or two to get that offer. A week of glancing at my notes for 30 minutes to an hour a day to refresh would have been sufficient. I think you owe it to yourself and the company who is paying to fly you out to at least brush up a _little_ bit (within reason) beforehand. It's almost like basic hygiene.
I think the worst case is a little hairier than that.
Companies keep records of their applicants and interview feedback. I'm dramatically oversimplifying, but your feedback will spell out two things in isolation: your fit for the role you applied for, and your fit for the company in general. If you do badly enough not to clear that second hurdle, you're going to have a hard time getting future interviews at the company.
So I wouldn't recommend winging it in a Big 5 interview unless you're comfortable with the possibility that a bad performance might blackball you there. But hey, some folks are fine with that risk. Others are confident enough that they feel their seat-of-the-pants performance will still clear the basic hurdles. If that's you, then more power to you.
Meh, personal experience has been that demand for SE's is high enough that every company will give you another shot after a year. That is important to note though: you don't get another shot for a year.
> So I wouldn't recommend winging it in a Big 5 interview unless you're comfortable with the possibility that a bad performance might blackball you there.
After going through "interview training" for one, they do blacklist people. But it's probably not as bad as you think. Also, even after getting pushed out of one org, another was extremely happy to offer me a job years later despite having all the info on me (even if I turned it down).
Individual hiring managers can have a good amount of discretion.
Failure really hurts me on a psychological level. I don't have any interest in half assing stuff. If I can't crush it, I don't want to play.
The cost of the flight & hotel is pretty trivial in the grand scheme of things. By that I mean relative to stuff like going to a place you want to see, the value of spending a vacation day, etc...
I do agree that the meeting smart people is fun... but the full on crash-and-burn on an algorithm + whiteboard interview would really have a massive negative impact on my confidence & self-esteem. Not worth it.
I am horrible at checking my comment replies, so sorry about the lateness. Hopefully you see this.
This is a fair point, but I simply want to point out that was half the reason I suggested it. Learning how to fail :)
I very much understand the mental aspect here though, so that's a tough one and my advice is not for everyone. I will say that at some point in your career you will fail though - or you aren't pushing yourself very hard. I believe this was one of the harder things I had to "train" myself to deal with; the mental load of failing at something and how to recover.
If you're not in a mental space to make that experience a positive for you? Absolutely skip it.
It's really worth it, IMO. There's really a HUGE element of luck: from the personality and opinions of those interviewing you to the questions they happen to choose that day. Seriously - internalize that and just try it out!
It's really insulting that the exact same interview steps and questions are being handed to all levels of applicants. If you want to see a different screening process that focuses on the skills you've acquired (technical and soft) and not just trivia and knowledge of one exact stack, you'd have to move on to a management or exec position. Those that stay developers will find themselves sharing their screen while literally doing FizzBuzz and reversing linked lists with 10+ years of experience on their resume.
On the flip side, it takes a huge amount of forethought to create different tests, projects, and screening practices for every position and then re-shaping for each experience level, particularly if the team is young and inexperienced; it's difficult to test for what you don't have yet.
I have no problem with a five minute check to make sure that I'm not just flat out lying when I claim to be able to code. There are a surprising amount of "senior architect" types that can talk all day but can't write very simple code.
I'm never doing another hour-long whiteboard interview again in my life however. The whole process has become so gamified now that most new entrants have practiced the exact types of questions asked hundreds of times. I'm not interesting in spending a month of my life doing that any more and I no longer need to.
The whole SAT-prep feel of the interview process now is tiresome.
Since when does remote mean a lower salary? I work remotely in the US and I expect (and receive) a market rate salary that's not based on my location. Offering me a lower salary because I've chosen to live in a lower cost-of-living city will ensure that I don't consider working for you. It's not always an employee's market, but while it is, I intend to take full advantage of it.
There are some number of jobs out there and most of them don't want remote workers. Job applicants that are willing to take jobs that forbid remote work can also apply to those that permit remote work, while workers that will only look at jobs that allow remote work can only apply to the small subset that allow it.
It's straightforward micro-economic exercise to see that the when you hold all other things equal the market clearing rate for a particular employee is higher if he is willing to take on-site work than if he is not.
It'd be the same thing if an employee was only willing to work at companies whose names started with a-m.
It works both ways. Even in this "perfect market" model, the remote salary will be higher if there is lower labour supply in the empolyer's local labour market than the global remote labour market.
I don't think there is more aversion to remote work on the employer side than on the employee side, so that effect should not turn the tables.
Why? How does the value of the work I provide change based on where I'm located? Is an if statement somehow different if done in the Bay Area vs the Midwest?
> What does the value of your work have to do with your salary, though?
Delivering more value can justify more compensation. But unless you're on contract for a percentage of the take, you don't necessarily get compensated based on output. Most software people get paid based on market rates which can be a lot lower than the actual value they deliver on the high-end--they're paid their "replacement cost" rather than per value added.
I don't think you understood what he said. He was saying that one of the attractions of a startup, which couldn't pay the $350k salary like Google, was that remote work would be possible, and some developers would like that flexibility. He wasn't claiming that startups pay remote workers less than in house ones.
In my experience that is an incorrect argument to begin with: many large tech companies seem to have more flexible work hours and remote working capabilities just like startups. I would rather focus on work-life balance, working on products that matter, having equity in the company, being able to experiment with technologies and be part of the decision making process rather than a cog in the machinery as reasons to prefer a start-up.
There's no reason it ought to mean a lower salary. However, I would very happily work at half-price for a fully remote job I actually want. But even with that concession, the vast majority of companies I'd like to work for still don't offer the option.
>But there are plenty of great engineers that don't want to work at those companies for various reasons. There are plenty of great engineers that want to work remotely and don't have that option at the large companies.
They don't have that option at startups either, because the startups all want people who'll be at the office 18 hours a day with "team spirit".
I think this article is useless. Startups are only for people who are under ~25 (maybe 30), have no families, are willing to spend all their waking hours pursuing someone else's dream, and think they're going to make bank doing it and are willing to take that gamble. This is not the kind of engineer who goes to work at most large companies; they're two entirely different hiring pools.
> Startups are only for people who are under ~25 (maybe 30), have no families, are willing to spend all their waking hours pursuing someone else's dream, and think they're going to make bank doing it and are willing to take that gamble.
OR those over 55 whose kids have left school, have mostly paid off their debts, already achieved a few things and have the experience, strength of character and financial stability to look their 23 year old CEO in the eye and say "sorry, I'm busy this weekend" when necessary.
Rapid exit focused startups are no place for those in their 30's and 40's. I say this as someone who spent their 30's and 40's in startups but survived.
The odds of getting a six figure payout at a startup is lower than the odds of getting a six figure annual salary at bigco. Which dramatically changes the math.
The real startup appeal is you don't need to be great or play the game, you just need to be lucky.
> The odds of getting a six figure payout at a startup is lower than the odds of getting a six figure annual salary at bigco.
Well-funded, small start-ups that are high growth can still get to 80% of "bigco" salaries--well into six figures. If you are fine on a bit less (which is still a LOT more than many make), then you can also get more freedom and a few lottery tickets thrown in.
Some even build a "diversified portfolio" out of those tickets.
I'm 35 and have only worked at startups. I'm at the largest company I've ever worked for now, and we've grown since I started from ~20 to ~80 employees. Previous companies I was in the first 10.
I think you need to pick your startups better. Every company I've worked at has pad me reasonably well(admittedly less than the big companies), has not required more than 40 hours/week except literally for one or two days around a high pressure launch or demo.
I guess you're right, in that I wouldn't go work for a large tech company - it would be hard to convince me to give up the level of freedom I have and ability to contribute to company direction.
I treat startup stock like lottery tickets. It'll almost certainly not pay off, but it's a nice dream. All the companies I've worked at are still around and doing well, so the payout(s) still might happen someday.
I am copying this to Evernote because you pretty much described everything that is wrong with startups.
Now, to be fair, there are good things as well, but they are more rare. 37 Signals comes to mind as innovative company that is doing things just right. They never wanted to even be associated with startup world.
37 Signals isn't really a startup in the traditional sense in that it isn't designed to scale up. It's more like a "small business" or "lifestyle business". And there's nothing wrong with that but it's a different type of organization.
Also, almost certainly, you don't want to hire engineers after they end up working at one of the tech giants, and the more experienced they are the worse. Having had the unfortunate experience of working along side some of the 'veterans' of one of these tech giants, it was a little disconcerting how easily they would form cliques based on perceived 'proven vs unproven' folks - if you hadn't worked at one of the tech giants, naturally you were unproven.
There were also tangible side effects. You couldn't generally expect them to work on what they perceived to be work which is low profile but actually important for some unquantifiable metric such as morale of the customer support team. You couldn't generally expect them to play by the same rules when it came to check in policies, documentation standards etc.
But best of all, the actual code they wrote would uniformly fall on either end of the astronaut architecture spectrum - either completely ignoring maintainability and turning the entire team into Schlemiel the painter, or being so convoluted that they themselves couldn't make quick progress a few years down the line on the code that they wrote.
The cliques are not the fault of the engineers from Big Co - it is the fault of your management who perceives them as "proven" and you as "unproven".
This is a self-perpetuating thing too, when most of the promotions go to people from the "proven" cliques, and those who got promoted, promote more of their "proven" brethren.
If you noticed this problem at your company "from below", your upper management completely failed to notice it, and it's their fault for not noticing the strain and for letting people behave lazily and arrogantly in the first place.
Good managers would reeducate or remove the veterans on a case by case basis, ensuring everybody follows the rules and collaborates productively.
There are also a lot of startups that simply need to focus on some of the basics of management, such as "be reasonable" or at least "don't be completely psycho".
One example that was discussed on Hacker News previously:
> But there are plenty of great engineers that don't want to work at those companies for various reasons.
There's something in the water at the big companies, many employees there think they have passed a rite of passage and that EVERYONE NOT WORKING THERE simply didn't pass.
I wish I wasn't exposed to evidence of this, but unfortunately I have. Many people don't consider the idea that others just don't want to work there.
In one example of this, I was brought in to interview at one of the big ones, referral, special project. I liked the idea of not necessarily being just some pawn in the never-ending recruitment draft, but someone on a special project.
And here I am, talking with the project manager and how other organizations sometimes do custom integrations into their enterprise product. Regarding those other organizations, and I quote "Now this is some 100 million dollar company in Canada, so you know their engineers don't know anything"
and I'm like YOU KNOW I WORK FOR 100 MILLION DOLLAR COMPANIES... RIGHT? I work in Series A and Series B startups primarily, after their 12 million funding rounds close they its often at a 50 - 100 million paper valuation.
The hubris....
Other examples are what I've heard from bus drivers talking about their riders, other engineers that disagree with the hubris, and just the general society that also puts Googlers and other big tech company employees on a pedestal because of the enviable compensation and perks.
The person that had asked to interviewing me at one of those companies liked my competence and experience in certain areas, seemingly missing that I worked for the same scale of companies that he decided to rail against
Just to add, it is rare for most companies to be able to compete with the Googles or Facebooks of the world in pure compensation. You have to win these people on other grounds such as increased autonomy, more work flexibility (working from wherever - I have had co-workers who got to spend time working remote from eastern Europe and Nepal at my small company for example), promotions (smaller companies are more able to offer title promotions than big companies for new hires), or other perks such as fantastic environments for employees. These are especially important for retention and hiring better employees than the norm.
There's also a lot of candidates abroad who are willing to work as contractors for your startup for usually lower salaries than you'd pay a local employee.
The way the article frames the $350k competitive salary as a "problem" for startups is backwards.
If you're a businessman, you build a business that works with the prevailing pricing that's out there. That includes prices for everything such as raw materials, office rent, AWS/GCP cloud costs, government taxes & fees, and yes, high programmer salaries.
Complaining that your startup is "hurt" because AWS egress transfer fees are too high, or office sq footage $ is too high, or programmers cost $350k is counterproductive.
To think like a businessman, one has to turn that around: how do I build a more valuable business that can pay the high costs of the San Fran office and the $350k salary?
E.g., Jeff Bezos in 1994 isn't going to handicap himself because Microsoft was paying $100k salaries. Google in 1998 can't blame the difficult recruiting on Cisco and Sun Microsystems paying $100k salaries.
Either build up value in the business and/or include the high programmer salaries in the numbers when you ask VCs for money.
The other option, as other sibling comments noted, is to attract programmers who will work at a discount. Brian Acton & Jan Koum applied to Facebook and were rejected.[1] They are obviously not the worst programmers in the world and many of their caliber won't get $350k from Facebook/Google. See if you can hire overlooked programmers like them. Some will also work for a discount because they value the startup's equity or other intangibles. A startup entrepreneur has to hustle and make compelling propositions to these programmers.
That's a reasonable tactical perspective. For the individual entrepreneur, it's valid.
That doesn't mean that this article isn't a valid complaint from other perspectives. E.g., It's totally reasonable that CEOs and investors will grumble about this. I'm sure Bezos, Page, and Brin were grumbling at the costs back in the day.
But I think the interesting perspective here is at the ecosystem level. If startups have to spend a lot more, it changes what's possible. We'll have fewer startups. We'll have less interesting startups. The incentive to pretend to be a zillion dollar winner is higher. As is the incentive to pursue artificially amazing growth rates. And to lie, cheat, and steal your way to making good on your sky-high valuations.
Personally, I think the startup world was way more interesting 10-20 years ago. The pressure to be the next unicorn is so intense that I think we've lost a lot. There are a lot of factors here, but I strongly believe that much higher living and operating costs is one of them.
This is why I'm kinda getting on board Courtland Allen's belief in indie startups. They're a counter reaction to that unicorn obsession of the current startup world. And the developer and entrepreneurial ecosystem is now such that launching and running small, competent businesses with useful products/services is easier than ever.
In other words, yes, the ecosystem is starving out traditional startups. But it seems like it's making a breeding ground for indie startups. They don't suffer the cost of a $350k/yr salary, which gives them a nice advantage.
Definitely. A friend is bootstrapping a company that she just loves. It will never be a unicorn, but it doesn't have to be. They already have a bunch of wildly satisfied customers, good press, and excellent prospects for sustainable growth. This is probably the last year she'll have to consult on the side to pay the bills. And she's so happy with it.
> If startups have to spend a lot more, it changes what's possible. We'll have fewer startups.
Paying higher salaries and spending more on development are related but distinct things.
You might be able to get more done by having fewer, higher paid employees. Or maybe you need have more of a mix of different ability levels to keep costs down.
> If startups have to spend a lot more, it changes what's possible.
Sometimes the business plan is just not workable. Why blame employees for expecting higher pay and not customers for not being willing to spend more? Or other cost centers for not being cheaper?
> There are a lot of factors here, but I strongly believe that much higher living and operating costs is one of them.
I agree with most of your comment. One thing to note though is the whole scandal where Steve Jobs colluded with other firms into a non-poaching kind of agreement, essentially distorting the market. So that is a possible outcome as well.
If it weren't for the relentless attack on wages via wage fixing cartels, visa abuses, outsourcing, etc. we would likely be seeing the very top engineers making close to $1M per year.
Far from that "hurting startups" it would be a benefit to all tech workers as wages would rise across the board.
This framing of "hurting startups" is a euphemism for "hurting investors" or "hurting the wealthy". It's roughly the same complaint as when they claim that there are "tech worker shortages".
They want to pay employees pennies on the dollar, full stop.
We are seeing the very top engineers making close (or over $1M a year)... just that the percentage is quite small. Like a handful of people at big 5 tech, and a few in finance.
I would say that it's kind of the opposite. Having high developer costs means that you need investors in order to scale. This helps investors because it means if you want to succeed, you need to get investors, which they can use to their advantage to get more desirable terms for them and their rich friends.
This is really just another symptom of growing wealth inequality, which affects businesses just as it affects individuals. Qualified people are a finite resource, and consequently, the greater the wealth gap between the richest companies and cash-strapped startups, the smaller the share of talent that startups will be able to recruit. This in turn will take competitive pressure off the richest players, enabling them to widen the gap even further. Contrary to popular belief, there is no 'invisible hand' that acts to counter this feedback loop. Just envisioning how to build a more valuable business is no solution, because if you cannot access the capital or personnel needed to bridge the gap to profitability, your vision will not matter. As time goes on, a smaller and smaller portion of the population will be wealthy enough to bridge that gap, even as overall average wealth increases.
It's true that startups have always had to deal with better funded competitors that could pay more. But what you're not accounting for is that that gap is increasing over time, and there is a point where the lead becomes insurmountable.
I'm an older, successful dev in Chicago. I recently corresponded w/ a local startup CEO on linkedin. My skillset seemed to be a good fit for the role, but their stated top salary would be a 20K pay cut for me. So I ran a quick estimate, based on expected exit and expected dilution figures that I found on the internet (I know, grain of salt...), added a risk premium for myself, and found that I would want about 7% equity, in order to be interested. They said no, of course.
My point is that (some) startups can't or won't pay for the technical skills they want. And that's their problem, not ours.
Alternatively you could have accrued the salary deficit as convertible debt that would roll into the next funding round, at a discount -- which is a bit more anchored than estimating a 1% chance of exit at $600M valuation (if you were serious about wanting the job, which it sounds like you mostly weren't).
All these figures are subject to debate and would be more realistically modeled by probability distributions, but I was looking for a back-of-the-napkin quick estimate as a starting point for negotiation.
I also neglected to make explicit my use of the expected value of the exit in my calculations.
Seems like the key number here is the 1% chance of exit. If you really think the odds are that bad -- and I'm not saying you're wrong! -- then there isn't an offer they can make you that you'll take. They'd have to convince you that the odds are at least 5%, and probably higher, before there's a basis for a deal.
Averaged over all startups, of course, 1% is a reasonable estimate (might even be high). So another way to put this is, a savvy top developer just isn't going to join an average startup, period. They'll have to be persuaded that the opportunity is an extraordinary one. The bulk of startups will have to make do with less-experienced developers. This is why pretty much every startup now needs a technical co-founder.
> 1% chance of exit at 600M valuation after those 5 years
Ah, I see, I wouldn't have taken that into account since I'm not sure it quite works out that way. It seems you've intertwined probability with opportunity cost, is that correct?
EDIT: Thanks for the breakdown, by the way! I really appreciate the insight.
This is the right math if he's stuck there for 5 years, but his opportunity cost is lower if he can exit the role earlier if the company isn't trending towards the exit he wants.
That's true, I don't have a complete picture. I, probably falsely, assumed that he was being brought in as an employee in a team of at least a few people.
It's because those same software engineers have 0 financial background. It's not different than a software engineer going into a financial firm and saying "I can't believe none of these guys know how their technology works".
The most financial exposure these individuals have is reading the $Xmillion Series X funding, or $Xbillion exits that they see on TechCrunch on a daily basis. Their risk is assessed on those headlines.
From my own experience, it was naivety and manipulation.
I trusted the founder when he would make big promises for the future. He didn't bring up equity until the last moment once we already were ready to quit and join. In hindsight these are clearly common business tactics (get the person to accept before going into details), but as a young engineer I had more trust in older more experienced folks like the founder. Even when there were huge alarm bells ringing in my head, I said yes. It's hard to describe how a good salesman can have you saying yes to things you aren't comfortable with.
In the end the company crashed and burned after losing all it's founding team who all work at top companies now.
Because being underutilized in a large company is unfulfilling. Because being a staff engineer in a large company gets you no closer to running your own business. Because you want to learn technology that you cannot yet compete for. Because options outside of large companies are limited, especially if you are unable to take large immediate financial risks.
Personally, because I don't like being told what to do :) If I don't have a significant amount of control I shut down, become depressed, anxious that I'm wasting my life, etc. I'm also wary of being taken advantage of. If I'm going to spend half or more my waking hours working I want to be reaping the profits. I need freedom. I've been directing product at a seed stage startup to get my bearings in the small business world but now I'm feeling antsy because I am starting to think I could be doing better on my own while having more control over my time, the products I build, the money those products earn, etc.
Yep, I think people are starting to realize that unless you are (a) a founder with 20-30% equity or (b) an early employee at one of the few startups that successfully exits for >$1B without any down rounds, your equity most likely will not be worth more than $100k. If your equity is only a $100k bonus after 7 years, it doesn't make as much sense monetarily to take a pay cut to work at the startup.
My friends and I discuss this all the time. There are always people trying to get us (software engineers) to join various startups around town/country, but the comparatively low salaries coupled with the exceptionally low possibility that any offered/granted equity will be "worth it" some day leads almost all of us to follow more traditional routes with companies that can pay us today, not MAYBE tomorrow.
Devs seem to be realizing this, at least the ones I know (new thing).
Seems the endgame's going to be higher equity grants. If VCs won't fund something unproven at 350/head and devs won't work for peanuts, higher equity grants seem the only option.
I think it'll be just like Hollywood, in that projects are evaluated as much for who they've managed to recruit (e.g. a movie with Brad Pitt is fundable) as on other business fundamentals.
It's striking how much of business views "labor" as ancillary to success. That might be true if you're running a pizza joint but it couldn't be farther from the truth building a software company, or making a movie.
> That might be true if you're running a pizza joint but it couldn't be farther from the truth building a software company, or making a movie.
Or starting a medical practice
Or starting a hedge fund
Or starting a law firm
It might be the most important thing for any new venture, across history. There is a good reason that the start of the story about Jason and the Golden Fleece describes assembling his crew of Argonauts.
This is very much aligned with what I have learned, and its only made worse by successful startups often taking 8+ years to exit with many more rounds than before. The stock incentives are aligned with the startup exiting in four years or dying.
O.1% of common shares with complicated tax options. Investors get preferred shares cause they invest money. But engineers get common shares even though they're asked to take paycuts.
Startups insist this is "standard". Well I hope it's standard for them to fail until they actually value engineers. I don't see why engineers need to be a monastic underclass to subsidize founders and VCs.
Don't forget 90day expiry if you leave. Even though you already sacrificed the salary for them. Also very unclear legal ramifications if the company is sold. ie, do you get immediate vesting, do your options disappear, do they become some number of options in the new firm (how many, why that ratio?)... They can deny the sale to anyone until IPO.
Its comp they can take away, block or otherwise control.
My experience has been that options have negative value. I learned this the hard way when I exercised options from a firm that has since gone sideways. I ended up with a $40,000 tax bill on stock that is worthless.
Nowadays I only look at companies that can offer RSUs. Until the re-write the tax code to stop taxing people on fictional gains, options are crap, especially with companies remaining private far longer than you are likely to remain working there.
I can apply it against future gains, but its complicated. Since I was never able to sell the stock, the gain is entirely fictional, which is why ISOs suck so badly.
This is absolutely it. I worked for 2 different start-ups and as an engineer it is damn near impossible to get tangible value out of equity options, yet they're being used as a mechanism not to pay market rate salaries with the notion that it'll be "worth it in the long run".
Maybe it can be, but I haven't seen it, nor has anyone I know working in the valley.
I work at a startup that isn't profitable yet so our salaries are very low...
- Our typical junior makes $50 - 60k
- A typical mid makes $65 - 75k
- Seniors (including CTO) make $90 - 110k
In greater Boston.
It is VERY difficult to hire at those rates. We had someone come in interviewing for a senior that I would place as a mid (generously...) and he accepted another offer for $150k. At our scale he would be making $75k at MOST.
It takes us 6 months to find a single hire.
But I'm not bitter at Google. I think the market is valuing the workforce fairly. Which means...
- We are probably priced out of the market
- We should / do offer higher percentages equity
- We need to hire the people who the Googles of the world won't hire and train and mentor them
That last one works really well. We hired a few people that couldn't get jobs elsewhere that after two years with us left for a job that pays over twice more but they wouldn't have been able to land without our training and mentorship. We actually congratulate and celebrate those people even though we are VERY sad to see them go.
"We had someone come in interviewing for a senior that I would place as a mid (generously...)"
Exactly. Do not be so cocky. This is free market and while you are entitled to your opinion why should a candidate try too hard to get a position that pays less than half of what he will get elsewhere just because his skills are not up to your standards ?
You cannot really assess my skills in an interview the same way I cannot really asses whether it's actually worth taking your offer. Money talks bullshit walks. Eventually at the end of the day all of us unless really financially secure are in it for the money.
Placing someone at mid / senior / junior is not "cocky"... it's pretty subjective if you do it right. The guy missed questions that over 50% of our applicants knew the answers to.
I'm not talking the "implement this obscure algorithm from scratch on a whiteboard" kind of question HN is so fond of. The hardest coding question we ask is Fizz-Buzz.
But we can't / won't pay him more than we pay other employees with similar or higher skill sets.
If we drew a bell curve of all the applicants we had, this guy would be in the middle.
His resume was impressive though. My guess is the company that hired him didn't do their diligence and only weighed the resume.
Well I have to tell you this that there are a lot of companies that want you basically re-engineer the whole universe and want to pay you peanuts while I can get a DECENT salary (eg. your 70-75k vs 100k) and have time for my family and hobbies doing less challenging job.
I won't comment on whether the guy was or could be a senior because I obviously did not attend the interview but there are many many incredibly skilled people that just suck at doing f2f / online interviews.
Not at all. The discussion of whether a person is a senior or mid level developer can be completely separate from a discussion of whether the company pays fairly for those positions.
Then I guess you are targeting the wrong pool of candidates. Do the candidates know how much can you pay (ranges?).
It often happens that I as a candidate have to go through several rounds just to learn that they can't afford me.
So what Modulo is there to catch people out. If you were a front end developer do you really need this?
The fact employers will reject based on a test that is fashionable just because a few coding blogs said so doesn't mean they can't provide value. What about their past work or qualifications?
Cocky. Sounds like a clique i'd want to avoid at all costs.
I can't tell if you're being serious or trolling but using modulus in front-end is not all that uncommon. Especially when doing reporting or animation.
For years the only way to do zebra striped tables was that way.
Also, I never said...
1. We were taking about front-end.
2. We reject solely based on it. I just used it as an example of a type of question.
In fact we've hired candidates who didn't know what modulo was because when they encountered it they were able to reason through it.
Furthermore... this candidate failed far easier questions that that. I used FizzBuzz as the "hardest" question.
Does not knowing Fizz Buzz mean you won't be productive? No. But it is probably a good indicator you aren't commanding of $150k a year this guy got hired for.
I said Front end as an example could apply to most developer jobs really.
Anyway, this guy you placed as a "lower mid", this is your judgement, how do you know it's correct? Did other people say the same? Perhaps he didn't have the skills you were looking for but was good at other things. Saying the other company didn't do their diligence is easy but is that really what happened?
If you are hiring developers and placing them as lower, mid, lead etc. you are going to get flak anyway as you're just jailing them and hiring a load of people who only agree with what you think.
You're going to get people who are good at developing software who don't care about math(s) or machine learning, give them 2 seconds and Google and they can answer your Modulo question.
Is it not about the willingness and enthusiasm to learn? Or do they have to go through "hard" tests to prove they can work out some academic nonsense they are never going to need to use. To prove themselves to the frat. I'd argue a lot of really clever people good at the hardcore Computer science and data analysis type subjects aren't always as good at writing decent code.
First I didn't say "lower mid" ... I said "middle"... you are miss-categorizing what I said. It's a minor difference but the fact you changed the facts of the discussion in a direction that makes me look more extreme is very telling. Not only did you twist what I said but you even quoted it as if it is a citation.
Second one of my other posts talk about how we've had great luck bringing on and mentoring juniors and they have been successful. I have hired people who literally dropped out of school freshman year. Again, you're either not reading or not listening.
I think you may be projecting your pre-conceived image of who I am and I don't think I can convince you otherwise.
I also think the fact I have almost 1700 on my throw away account and you have -1 on your year old account is very telling. I shouldn't have even engaged. I'm done now.
You said mid generously so I think it was fair to say lower middle.
No need to get competitive about who has the highest score - sounds like this guy dodged a bullet from having to work with you anyway. You seem like you would be a nightmare to work for.
If the candidate received and accepted another offer for twice what you would pay him, it is hard evidence that you pay half market value.
Planning to pay people half market value is madness. If you cannot afford salaries, you need a business plan that involves more profits and/or more "runway" of sacrificial capital or debt.
Hey... I know this is a late reply but so was your's :)
We pay about 70% below market. Unfortunately I am not the one that makes the decisions or the business plans. I am just barely high enough in the org to be privy to what people get paid.
For what it's worth I 100% agree with you.
The result is we get software engineers with much less experience. For what it's worth... they have all worked out very well. But I think someone with more experience would work twice as fast and therefor work out to about the same cost anyway.
Ooof, those rates are indeed pretty low. I get why you're doing it, but could having access to more engineers easier maybe help get you to profitability faster? I find interviewing a bunch of good people, making offers and then having them turn down the position because of money to be a big waste of time/money. How many hours/dollars do you spend in that 6 months?
I had students leaving my classes at General Assembly in 2014 start between 50-90k, with a pretty good bell curve between. I think the market has gotten tougher for them since then, but whenever a strong student got an offer for 50k I told them to push for 65k.
I'm a senior engineer at my current startup, live in the Boston area and yea... a 90k salary would have me turning down the position likely, unless you had some really good benefits. I'm trying to think creatively about benefits that would make me consider a 90k salary. If you were able to get some bulk rates (making it cheaper than just paying more $) for employees, and paid for things like: laundry service, some amount of Uber credit per month, parking, crossfit membership, phone plans, tax preparation, auto insurance, etc... that could perhaps entice me. Find the pain points in my life and help me fix them.
Perhaps this is just the state of health insurance, but I've been finding my health insurance getting worse and worse too; and even with a 'decent' PPO, I find myself getting random bills for junk the insurance wouldn't cover. Some type of employer-filled reimbursement/savings plan would help there. I don't think I ever got a medical bill 10 years ago.
The #1 thing that could entice me, over salary, would be some way for my employer to help me secure a decent mortgage and help with the down payment. I'd like to buy around Boston, but 20% down payment on $600k is a kick in the teeth (I'm aware you can do lower, but then there's PMI and such). If an employer helped me secure that, and make part of the down payment... as long as the salary paid my mortgage / student loans / food, then I'd be happy camper for a while and not complain about what the technical income number was.
Increasing equity is great, but in general my view is that increased equity does two things:
1. It compensates for the increased risk of working for a startup (you don't have as much runway as google, might fail to raise your next round).
2. It gives the employee a stake in the company, and aligns their interests with making the company successful. I.e. Not just doing whatever they're told, failing to raise potential issues because "it's not their job".
It doesn't really compensate for reduced pay in my opinion.
I actually agree with you. I am in disagreement with our CEO on that one. But unfortunately it's all we can afford to give so at least it is something.
I have had a number of heart to hearts with devs to make sure their expectations on stock options are set right.
This statement makes no sense. If you feel that the company doesn't pay enough, there are two possibilities. 1. You get paid way more then your teams rate, proving the CEO is not being truthful (there is more money if people negotiate hard enough) 2. You are also underpaid and are doing yourself a disservice by staying
Unfortunately it is #2. I am underpaid by over 75%. The average on the team is under by about 30 - 50%... so not only am I underpaid I am underpaid quite a lot more than others in the company. I do, however, have quite a bit more stock options.
And the CEO from what I understand went two years without a paycheck. But he is independently wealthy (I am not).
I stay for various personal reasons. Reasons that the other people on the team don't have.
And because 75% underpaid is still enough to support me and my family with a modest lifestyle.
Honestly this sounds terrible. From what you have said it seems fairly clear that you are being exploited by the CEO / others. And what does it even mean that the CEO (who presumably owns a large portion of the company) went without pay for two year when he is independently wealthy? You sound quite intelligent so just think about it, if he was paying himself a salary it would just be transferring money from his bank account to his bank account again, all while being taxed. The fact that this is used as a mitigating factor to argue that you are not getting screwed is absurd, for your sake I hope you go out to the marketplace and get paid what you deserve.
I think it can depend on the size of the operation, and your mindset. If I'm employee #100 at a well-funded startup, I'd tend to agree with you and value equity as a risk adjusting factor. But if I'm employee #5, I probably would take a pay cut in exchange for a significant chunk of equity - if I was even considering such a risky operation, I probably wouldn't be in a place in my life where job security was especially important to me.
Have you considered alternative comp mechanics? For example, I know it may sound unorthodox, but short work weeks is an awesome perk and worth a lot IMO. Other things like guaranteeing to ship engineers off to a conference per quarter of their choice and paying for a day and night of travel expenses + a day off so they can explore the destination is pretty cool too. How does your company handle IP assignment also for personal projects? If I can work on side projects freely without worrying about legal junk that weighs heavily into a decision. All of these things have value and if combined can make a killer compensation package.
I thought about this myself as well. To me a 20% reduction in work days is well worth a 20% reduction in pay. This is an easy perk that is offered at no large companies.
Sadly it's not widespread. And I fear most companies wouldn't be well prepared to actually execute on it.
In the UK, it's certainly worth trying. Apart from purely the fact that places may prefer to keep you for 4 days rather than lose you, employees have the right to request part time work (amongst other things). Businesses have to give a reason if they say no, and the reasons get harder to justify typically as a business grows. Not guaranteed, of course, that would be rough on all businesses but it's certainly something that should be taken seriously.
At $75k/year $15k for a day off a week would be roughly "break even" on the hourly rate trade off.
Someone on $100k taking a pay cut to 4 days would see their time valued at an increase in hourly rate. Since you're getting 15% less money in exchange for 20% less time.
Broad brush strokes on the math there but you get the picture.
Being self-employed, I have to make that choice -- "How much value is a day off?" -- every time a customer asks me to take on a project. Converting a 4-day week to annual vacation: 1 day in 5 is about 50 days off the standard 250-day work-year. I'd pay a whole lot more than $15k for 10 weeks off.
We have flex hours. We've toyed with short work weeks but it hasn't taken off (yet).
We do have the typical stocked fridge and beer and foosball. But so does everyone else.
We've actually found that given the choice between a perk and more money, people almost always take the money up to about $100k. After that priorities change.
> How does your company handle IP assignment also for personal projects? If I can work on side projects freely without worrying about legal junk that weighs heavily into a decision.
Our CEO and myself are vigorously debating this one :)
Flex hours aren't really the same as cutting the work week by 8 hours. It also requires you do not just expect people to make up the lost day by putting in 10-12 hour days on the regular. It's a deeply cultural thing and requires top-down executive and mgmt buy in.
Well if you put it that way, it wasn't really on the table for us then. We would have expected employees doing that to do 10 hour days the other days of the week.
I love the idea of not requiring that but the math just doesn't work out for us. We have specific goals we need to hit to make payroll and losing 8 hours a week from everyone wouldn't work.
We are actively working to improve our processes so we can make more money with less hours spent though. When we crack that nut we can consider something like that.
You wouldn't even have to cut the work week by 8 hours. Just cut it by one work day, with the same 40 hour week. Shit, it's not that rough working ten hours officially when you're already working ten unofficially, and that extra day off for a three-day weekend is worth its weight in gold.
Don't forget the people who don't want to go where the Goobookzonsofts would want them to move.
If you're running a startup, and not trying to build a remote-friendly team, you really need to consider that.
Some location-bound businesses probably have some eminently poachable employees. For instance, look at the largest employer in the state of Indiana, Indiana University: http://www.indiana.edu/~uhrs/salary/pa-ranges-201617.html#it . A typical mid-level software pro would be classified by them as "3IT". Senior-level would be "3IT" or "4IT". A developer-manager would be "4IT". They probably have at most seven "5IT" employees, one for each campus. I think there is probably only one "6IT" in the entire university; that would be the CTO-level executive of the whole university system.
(I learned most of this a few years ago when driven by curiosity to figure out why anyone would even bother sending them a resume.)
IU pays their mid-level to senior-level tech pros only $53,892.80 to $70,033.60 . Why not target a few for recruitment? They'd likely jump ship immediately for a remote job at $70k. After all, if they are already working for so little, it must be because they don't want to move, right?
We need to hire the people who the Googles of the world won't hire and train and mentor them
Very true. If you're willing to take a risk on someone smart who majored in Cognitive Psychology but is interested in programming, you don't have to pay them anywhere near Google salaries. But you do need to train and mentor them, and give them respect.
You'll get programmers from developing countries with a good 10 years on them for $70k if you can build a company around a completely async remote culture. And I'm not talking about fad-following framework-crazed devs, but rugged pros who'll cost a premium if they were in a developed country.
this is not only true for developing countries but even for developed countries. I'll speak about my country, Greece. The average wage for a junior developer is a little less than 20 000 euros per month (around 1000 years/month x 14 months + 4000 for insurance etc) while for a senior may be a little more (but probably less than 30 000, depends on years and kind of work). Wages of more than 35 000 euros are seldom found for developers and are mainly reserved for management positions. The wages are more or less the same on most Southern Europe countries (Italy, Spain etc) and are definitely much less in less developed European Countries (Bulgaria, Hungary etc).
So, if you focus on developers from similar countries you can get top talent (and I mean that, there are many great developers here, most of these people are better than the ones in Silicon Valley since they are working in their own country which the jobs are not much instead of migrating to a different place to find a job) for less than 40 000 euros / year.
The only drawback would be that they'd want to work remotely (or else they'd have already migrated). So the best course of action is to create your company's culture to not only allow but to embrace remote work (i.e by trying to only hire remote people -- this'll also save you money). Also, another idea is that migrate the start up offices instead of trying to convince developers to migrate!
"most of these people are better than the ones in Silicon Valley since they are working in their own country which the jobs are not much instead of migrating to a different place to find a job"
These people are better than the ones in Silicon Valley because they refuse to emigrate? I don't follow your logic.
Sorry, I probably didn't make myself clear (english is not my main language):
Here in Greece there are not too many jobs on local (Greek) companies because of the economical crisis and repression. Definitely there are more candidates than jobs. So most of these jobs would probably be given to the better / more experienced developers while, other, not so good developers will try to emigrate to other countries to find jobs.
Notice that there was no culture of emigrating here in Greece before the crisis, people seldom emigrated because the family ties are strong here and people are raised with a culture of loving their country and not wanting to leave it (and as I said in a previous comment Greece is beautiful - you only want to leave it if you actually starve). This has changed due to crisis of course but I think that a good developer will definitely be able to find a job here in a local company and not need to emigrate.
I see. What you mean is that the average employed developer in Greece is better than the average Greek developer due to competition for jobs and culture of attachment to the homeland.
This may be true, but it has little relation to quality of the average developer in Silicon Valley.
I'd be careful with that calculation. Is the 20k EUR / year figure includes Taxes, Social Security and Office Space. The figures being thrown here (in the US) are pre-Tax/Social Security.
I can attest to this. A good dev in India with 10 years exp will cost about 40 lakhs - about $60K. You gotta keep in mind the ridiculous inflation in India and the rest of the developing world. So in like 2 years you could be paying at least 30% more.
Yeah. There is significant management overhead. And things like standardized QA and requirements become very important since a miscommunication can cost a whole day due to timezone differences.
I have been working hard to improve our processes but we aren't there yet.
For comparison, what do Google et. al. pay in the UK?
I work in a small medtech in Manchester UK (like a scaled down Boston!) and simply currency adjusting these numbers would make for attractive offers here. For example I've a PhD in computer vision, 20 years building and selling medical device approved imaging software in the EU & US and have yet to be offered anything close to $100K (yes dollars) and options that would impact on anything I do. I'm good at what I do too. I just think the UK investment attitude is totally different.
If you have a PhD AND 20 years of job experience, I am sorry to say you are doing something really wrong if your base salary has not crossed the six figure mark. Maybe companies in the UK don't pay as much as those in the US; I wouldn't know. If that is the case though, I would suggest that you work in the US for a few years and maybe move back and try to negotiate a better offer. Having EU/UK citizenship makes it much easier for you to work in the US and I would implore you to make the most use of it.
The starting salary for a new graduate in the UK is probably in the range of £25-£33k, unless you're really lucky and do something like investment banking which is about half of what comparably qualified grads make in the US.
On the other hand, there are additional things that are paid for because of various legal differences between the the UK and the US (such as paid maternity leave, paid sick leave, and employers have to pay a tax for each employee called National Insurance which effectively funds the state pension system). The law also gives all employees 5.5 weeks of holiday (though there often some restrictions on when it can be taken).
We do have a paid maternity and sick leave in the US (well, at least in the tech companies. In my current company (IBM), we even have paid paternity leave). How expensive is the National Insurance tax? I can't imagine it being much more expensive than what my company pays for health insurance for its employees (although perhaps I'm wrong here).
> The starting salary for a new graduate in the UK is probably in the range of £25-£33k,
Are you talking about starting developer salary? That seems really really low! Why wouldn't UK devs simply relocate to the US where they could make a lot more right away?
Apologies, I don't mean to pontificate...it just befuddles me why a UK developer wouldn't want to move, if only for a little while.
Sure. How much are employer health plans in the US? Employer NI is 13% of the salary over £152 per week, so for an employee on £25000 per year, the employer has to fork out about another £2000 on top.
Almost all companies have a pension scheme too which are usually something like matched contributions - the employee contributes X% of their salary, and the employer contributes an additional X% of their salary up to some threshold (usually 5-10%).
Starting salary for any graduate job is about that in the UK, and most of Europe too. I suppose that the cost of upping and moving is significant enough to put people off. Plus, the difficulty in getting a visa is likely a major factor.
Not sure about Google but other large/well-known tech firms seem to pay their UK engineers on par with their US ones based on speaking to my UK friends who work for SF-based tech companies.
I hear contracting for day rates in London is the route to ££ in the tech field over there (or working for a US-based company), but the salaries/equity on offer in the US even for non-rockstar positions dwarf what UK employers are able or willing to provide.
The UK massively undervalues and under-compensates its technical talent, it's a big part of why I left the country.
On top of other things, it's worth noting that the exchange rate has shifted a lot over the last few years. $100k would have been about £58k in 2014, but now is about £83k.
Manchester here too, though I work remotely for a mainly London based company. I think salaries are climbing here, as more business comes but we don't have the same size talent pool as London so the demand is pushing things up.
They're pretty much the same thing from the employee's perspective. Unless my human capital is appreciating somehow (improving skills, leadership opportunities, better networking, etc.) then I'm lowering my profits when I take a lower salary.
I'd love to stake applicants. But this is a anonymous account and I can't answer that question without giving it away. I wish you the best of luck, though.
Do you advertise your pay rates with your job postings? Cause that would probably stop a lot of people you can't afford from applying, making it easier to find the people you can afford.
Startups want to underpay for talent. Google isn't overpaying... the big companies aren't overpaying, the startups are under paying.
Being a startup isn't an excuse, and you're asking people to take less pay to work at a place that has a decent chance (compared to established places) of going under. You're asking engineers to take on more risk for less pay.
If you aren't funded enough to pay your engineers what they deserve, you aren't funded enough to hire more... end of story.
I describe the ability to hire as being a U-shaped curve: new grads (whether undergrad or grad school) or people that don't actually need to work anymore. Google's high pay actually means that for senior folks, they're getting closer to the right end of the curve! (But also, that they'd most likely be a founder unless they believe so strongly in your idea that they must see it happen).
As bla2 says below: the reality is that .1% is a pretty low equity offer, and while engineers aren't naturally greedy we can do math. A person just out of school might not care, but you shouldn't begrudge folks that say "Umm, the expected value of this offer is pretty bad compared to my current situation". You can offer them something else (work that matters!), but I feel like everyone knows that employee equity is still too skewed towards founders and investors.
The biggest thing hurting startups is the fact that big companies provide health care. Having Businesses provide health care, IMHO, is the biggest issues facing job growth in the U.S.
Having been on the ground floor of 3 startups, the biggest issues wasn't salary it was health care, the only people that you can recruit are those young enough not to care, either because they are single or they don't have children. If you want to hire experienced employees the roadblock will be health care. I've lost more people than I can count due to health care issues.
Big businesses actually like to provide health care, they bitch and moan, but if they didn't want to provide it they would drop it. Big business controls the job market by providing health care, it limits employee's freedom to change jobs and start companies. Business provided health care also makes our products and services more expensive decreasing our ability to compete globally.
Which is part of a reasonable benefits package. So you're arguing that, in addition to underpaying base comp, they also want to bypass a competitive benefits package--but that may not be obvious to young people who don't think they need insurance.
I think the parent is trying to make the case that startups by nature can't provide competitive healthcare, which hurts the economy when small business can't attract top people.
It's much different than a 401k, free meals, foosball table, vacation policy, etc, in that once you experience a major health problem you are compromising your health or face prohibitive costs if you are on a mediocre healthcare plan.
They're trying to make that case. Healthcare plans (for the time being) are available outside of employers but are not inexpensive. If the company can't either provide a plan or pay employees enough to buy a plan on their own, they're simply providing inadequate compensation.
I've worked for smaller companies in the IT industry and salaries haven't been Google level but I've always had a decent benefits package, including healthcare.
I left at startup because of healthcare issues. Having healthcare tied to one's employment is terrible in so many ways for both the individual and the economy as a whole. Maybe one day someone will cut that chain...
I don't think the average engineer with 5 years of experience makes 250k; not even in the top 10%. And startups DO pay that much, it's just reserved for powerful exec hires.
Just pay more if you want the best engineers. Asking for a world where top talent works for less money is stupid.
The average engineer at google with 5 years of experience makes at least 250K. To put it bluntly: I'm pretty sure the average cash compensation (that is, disregarding RSUs entirely, which is likely at least another 100k/yr) is going to push 200K. The same is substantially true of the main competitors to Google (Amazon, Facebook, Microsoft).
Right, but the article seemed to imply it was true generally. FB/Google/Apple are outliers and there are plenty of great engineers left in the talent pool.
The reason startups have trouble is that engineers can smell bullshit and know they are in demand. You can make a great offer (e.g. substantial equity, support growth, be an actually transparent leader, etc etc) and hire great talent.
Problem is everyone wants to have and eat their cake. I've founded a startup; founders are not special and their whole job is to build a good team. So stop whining!!!
Since the interviews at Google/Amazon/MS is famously hard they don't have the average developers (or shouldn't, then they have done a bad job with the recruitment). THEIR average is not the same as the average in the industry. I do think they are a bit closer to the average than they think but not very close to it.
I'd consider myself average at best and got job offers to two of those companies. I still work at one of them and have been promoted (so I can't be that terribly bad).
Honestly, reading cracking the coding interview and the algorithm design manual go a long way to summarizing relevant information you learn in college. Knowing how to write Python coupled with working through those books is probably enough to get hired like maybe 7/10 times. (I say 7 because a bad interviewer can sink your interview and there is nothing you can do about that).
My point being, is that the people that work at those companies are not dumb but that they are for normal people too. I wouldn't not apply just because you think everyone is somehow really smart.
The Amazon salary for a senior software engineer (amazon L6) in London is 86K GBP cash plus stock that varies on when you joined. After L6 almost everyone goes into management or leaves.
Not sure how you define "average" engineer, but salary+bonus+RSUs at google hit 180k for new grads. A promotion and overlapping equity grants gets you to 250k within five years, easy.
No, you need to raise compensation. If someone is worth 250k at Google, they may work for your company for 150k if they get 600k worth of options paid out over four years at a reasonable valuation.
A 400K investment over 4 years to earn something worth 600K over the same period which will be liquid after another 4 years - does not sound very compelling to me. If it were 600K/year, yes, that's attractive.
Your best strategy would be not to have a fixed salary, but a range of salary which you can afford with your outlay, and then seen what the potential hire can be enticed with. That way you know immediately if the candidate is too expensive for you.
Just randomly increasing everyone's salary may not be very helpful.
The "Google compensation package" (not Salary) is making it a realistic option for Google employees to buy homes in the Bay Area after a few years of work. (Unfortunately thereafter, the RSU pyramid makes it really hard to leave Google, since you'd be giving up a virtual fortune, shimmering off in the distance like a mirage...)
Your startups... aren't doing any of that. Most of them pay shit-all for equity and salary, even for early engineers, even for senior-level employees. On top of that, most of them fail, leaving engineers with worthless stock and a hole in their bank account balances.
I'm sorry, this is a simple game of economics - if you want those engineers, you need to give them more in their package. Deal with it.
> Unfortunately thereafter, the RSU pyramid makes it really hard to leave Google, since you'd be giving up a virtual fortune, shimmering off in the distance like a mirage...
Never understood that argument, how is it different from your base salary, isn't it a similar mirage? Per year you get XX USD in RSUs vesting, you don't have to consider granted RSUs as being "yours".
> Never understood that argument, how is it different from your base salary, isn't it a similar mirage? Per year you get XX USD in RSUs vesting, you don't have to consider granted RSUs as being "yours".
If you can/do get an offer that replaces your outstanding RSUs and you're willing to move on, then none of this really matters - you are going to move on and the whole conversation is moot.
However, RSUs are typically based on looking back at previous work, not forward like a salary. If you did a ton of work at the beginning of your career and earned a huge stack of RSUs, you've sunk a cost... but one that is easily recoverable simply by waiting. Even if your output drops.
The biggest problem is that people are very often more productive and energetic in this field at the beginning of their careers, so much so that big companies don't even want to touch older people - built-in Silicon Valley ageism. And that's its own whole can of worms...
So after a few years when their productivity begins to slide and their life priorities change, they get married and have kids and buy cars and homes and pay for private schools... and getting a new job becomes more difficult by virtue of ageism and the sheer volume of outstanding RSUs a company would have to offer you making you a very unattractive candidate, people find they literally cannot tolerate the risk of moving on.
I've heard stories of people willing to accept fates such as being "roofed" (see Hooli on Silicon Valley) for months at a time looking for a new position internally while learning to be a world class barista in the employee lounge, simply because by sitting on their ass and doing nothing, they can afford to buy a house next year, but they can't find a new job because nobody is willing to give them the half a million they feel is owned to them as what is essentially back pay. It becomes a working pension, albeit one where the end goal isn't funding retirement, it's the freedom to move on. This is so common a phenomenon it has a name: Golden Handcuffs.
So yeah, some percentage sunk cost, some percentage risk tolerance, some percentage boredom tolerance.
It is about 80% an instance of the sunk cost fallacy, but RSU payout is based on past performance, so higher performing employees will be granted more RSUs. That means that if you got a 10% RSU bonus over average due to performance, you'd be losing out on a portion of your compensation for your past work.
Also there's something to be said for "the mirage I know is better than the mirage I don't know". Although in general I'd agree, if you're capable of performing well at one of the big guys, you can probably go to any of them, and get a starting bonus to offset your "losses".
This article is basically arguing that farm teams should be able to afford pro athletes... Having engineers who "perform in the top 10%" is a nice-to-have, not a requirement for startup success.
I agree but the problem is also the money. A lot of the VCs want to talk about how many ex GOOG and FB engineers who graduated from MIT that they have building their next unicorn. They don't have the same story talking about three state school graduates from Kansas who may be just as talented and have a better product. They also never want to fly to Kansas, like ever.
I've lived through this working at a startup in central PA. We were in discussions to be acquired by several of the top 10 west coast tech companies and having to have an office in PA and come here killed all but one deal. Some Director of X doesn't want to fly to Philly and take an hour train to visit the team. This is despite the fact that costs here are like 30% and there is plenty of reasonable talent.
If the startup is truly revolutionary|innovative, shouldn't we see VC's pounding down the doors to give them money? If they have money, shouldn't they spend that on their personnel (assuming they are not manufacturing robots or something) if we are talking software?
Seems to me that startups want to have their cake and eat it too. If you have money to pay, then pay competitive wages. If you don't, offer equity. If you have something worth a shit, people will want to work for your startup.
The next facebook, unless it is the next facebook, isn't going to sell a lot of people. I look at the YC list of startups and shake my head... most of them don't make much sense. They might be winners, but I would ask for a large paycheck instead of equity for most of them.
There's a limit to how much a company can raise pre-product/pre-traction. It hinges a lot on the team and whether they've had a big exit.
Keep in mind, most early-stage funding is done by angels who "work for themselves", not VCs -- real, true VCs work for their limited partners (investors) and if a deal goes south, there can be a lot of "how the hell did this get funded" blowback that can be career-limiting.
So as much as I like to think VC can change, their incentives do make it a bit difficult.
No, VCs are fallible and don't always recognize opportunity. They may not trust that it can be delivered. They might be hedging their bets for whatever reason. Having a good product is no guarantee of significant funding.
Most startups, even potential game-changers, only have a limited amount of cash on hand and need to make it stretch as far as possible. You're thinking about the unicorn case which is so rare as to be a joke.
The definition if Irony!!!
Google is hurting us, so use a system by Google to read how Google is bad for (some) business(-es) which you could not read if Google didn't exist, while at the same time this article wouldn't exist if Google didn't exist!
(and right about now I'm watching myself looking at me seeing me)
I'm leaving Google this week to start my own company again. The prospect of eventually sitting on the other side of the table and competing with these big companies used to bother me but I've realized that the personalities I'm looking for don't flourish at Google, and vice versa.
Google engineers (those that stay past the first vesting event) tend to be very risk averse, even for engineers. I'm not talking about technical risk and skill but I mean career and life risk. There are relatively few motorcyclists and skydivers. On our last team Vegas trip I kept track of how much everyone was gambling as a proxy for their risk appetite and decided that Googlers like a sure thing, not a risky payout down the road.
My point is, you may want Google's talent bar (who doesn't?) but you aren't truly competing for the same people. Give me some smart pirates and a fast ship.
>On our last team Vegas trip I kept track of how much everyone was gambling as a proxy for their risk appetite
Yikes. Gambling is just a dumb idea in general (it is literally designed to make you lose money)... unless you are gambling with other's money. ;)
There is a diff between "With enough work, this risky thing could work out" and "With enough luck, this risky thing could work out if I stop while I am ahead"
Or, a thrilling and potentially expensive form of entertainment. I don't feel it's dumb when I lose $200 at the blackjack table when I'm in Vegas for a bachelor party.
Statistical events tend to be lumpy. If you've ever experienced firsthand the act of winning a reasonable amount of money gambling, you'll realize the draw is more than trying to just beat the system.
The other problem is that with so many startups nowadays, none of them offer a compelling enough vision or mission that would entice someone away from the Google/Facebook/Microsoft's of the world. A lot of them are either still working on their product-market fit in a niche field or they are hire front-end devs for some CRUD analytics tools.
I'd much rather go work at a non-profit, NGO, or government-based organization where there's a better mission statement or something you're doing for moral reasons.
If you're a startup who can't hire but you're still doing whiteboarding problems to screen candidates, you're doing the equivalent of using vanity metrics.
Bingo! You could get 0.1% equity and low pay to work on yet another food delivery or social photo chat app or you could work at M/G/F/A/A for $200k+RSUs and at least know you have competent co-workers and management.
We've tried the latter too but have not been even remotely as successful. The job requires some mental elasticity and they older developers we tried it with were a bit too set in their ways. It didn't make sense given the market since at least here older developers are pretty well employed so the salary is still high.
Increase the equity for early employees by roughly an order of magnitude and aggressively protect their, still relatively small piece of pie, from dilution.
Dilution is inherent aspect of equity financing. However, due to the extremely small amount of equity that employees receive in exchange for such a large amount of their overall resources, the effect on their personal outcome is disproportionately affected by the dilution that occurs with series.
To the point where the risk and reward involved make it a losing proposition. As a rule of thumb, I anticipate the value of employee options to diminish by an order of magnitude between the angel round and IPO/sale. This would make an initial stake of 0.5% in a company that sells for 100 million dollars to be worth $50,000, before taxes.
In my view, this complaint is just one step above an acquaintance who claims to have an amazing idea, and all you have to do as an engineer is make it into a reality and then we'll be super rich
Oh... but you can't really pay me that much (or at all), but once this idea comes to fruition, I'll be so glad I invested all my time and energy.
This is what I hear when a startup can't pay a competitive salary. If you can't offer to pay a competitive wage, you shouldn't be in the business (or you really do have an amazing idea, and the engineers are willing to take that bet based on merit or based on trust the founder has previously established)
In my view, this complaint is just one step above an acquaintance who claims to have an amazing idea, and all you have to do as an engineer is make it into a reality and then we'll be super rich
No, this view is exactly the same as the folks that crawl out of the woodwork back in 2010 when they find out you write iOS apps: you build my idea, and we can split the profits. The fact that a startup throws some token amount of money at you doesn't change the formula.
Can't afford a million dollar CNC milling machine? Then you don't get to make widgets. Can't afford the going rate for a software developer? Then you don't get to make shitty throwaway apps for profit. The difference is that the milling machine vendors will tell you to pound sound when you whine that you can't afford it, whereas there's always a doey-eyed college grad ready to believe they're going to get rich writing the front-end for "Uber, only for cats".
1. Hire candidates that these big companies overlook, or that aren't interested in experience-blind trivia style data structures & algorithms interviews
2. Hire in locations where the cost of living is low
3. Allow your engineers the freedom and flexibility to work remotely. A side effect of this is that it opens up your candidate pool outside of your geographic confines and allows you to accomplish #2
4. Shorten your work week, or even remove the mandated work week altogether. To most this probably sounds blasphemous, but engineering is the type of work that doesn't have to be confined to a M-F 9-5 schedule.
5. Increase equity (0.1% is an absolute joke for most startups)
Hiring remotely is the easiest way to compete with fat corporate compensation packages. I would gladly take a pay cut if it meant being able to forgo my $2k/month rent in NYC and digital nomad around Europe and Southeast Asia.
Alternative hypothesis: these salaries are helping startups.
It is fantastic that someone not born into wealth and connections can pay off their debt in record time, then save enough to cover financial security and take a few risks, such as quitting the well paying job to bootstrap a company before your twenties are over. And if the venture goes pear shaped, there are plenty of high paying jobs to catch up with the rat race.
I've heard of $170k starting salaries in the Valley last year, admittedly for the best students from MIT or Stanford. But on that money, or even half of it, you do not need to hot bunk to put a serious amount away, and give yourself the time to develop the product or convince a decent technical person to join you. And you won't be (as much) at the mercy of investors or clients.
Man, every startup at SXSW was bitching about this.
I think it's an easy fix...
1) Startups need to pay more than they want to. If you want a talented engineer, they aren't free. I see a lot of startups offering WAY low salaries and then getting frustrated they can't find devs... it's basic supply and demand. Budget accordingly and stop making business plans that involve finding devs for lower-than-market-rates.
2) Hire more junior people, build a process to mentor them. Recognize that they will leave after a year or two...
3) Hire freelancers to augment where needed.
4) Hire remote workers who live in cheaper locations -- realistically these days the only hard part about managing a distributed team is when they are in dramatically different time zones.
5) Work smart... a stitch in time saves nine, measure twice cut once... hire good product managers, UX designers, and QA people to help keep your project momentum going. Devs building prototypes that you just want to changeup as soon as it's launched... those are the most expensive wireframes you'll ever build... you're not only saddled with the dev cost, but tech debt to make changes. Prototype to keep costs down.
6) Cut other costs... Get rid of your office, for starters.
Think about every issue in your current backlog. What's the real reason it's in there, and not in the done pile? I'd willing to bet the root issue is lack of documented scope leading to a lack of ability to estimate which leads to a lack of ability to prioritize... Writing and reading are important; I wouldn't let people get away with half-baking requirements even if I worked right alongside them... always be kind to your future self and document.
First off don't bother trying to outbid google/facebook/amazon. Instead look to the good engineers that they can't hire. Large companies can afford to put a large list of requirements down and throw out anyone who doesn't check all the boxes. Zero in on a frivolous requirement that the bigco's commonly use to reject good candidates and target those engineers.
Secondly the real elephant in the room is equity. The path between early employee in successful startup and payday is narrower than ever and filled gotchas. There is a reason we tell startup employees to treat equity as worthless.
Bluntly it's a 'tragedy of the commons' type problem. Individually each startup will have large incentives to keep all the dollars at the top while constantly delaying any possible payday for early employees. Collectively trust in equity grants has collapsed to zero. It doesn't matter if you individually are a good startup, because an engineer isn't going to gamble away a 300k salary on the off chance that this time it is different.
You also can't simply solve this problem by saying: "engineers should have known X about Equity". No thanks, instead I'll take the cushy big-co job with benefits, reasonable schedule, and cash on the barrel today. Sounds easier than trusting that I've found all the ways I could get screwed by professional business people who do this every day.
One of the reasons Google and other top companies pay so many engineers high salaries is to prevent said engineers working on startups. Other comments mention that PhDs are doing trivial and insignificant work at Google -- why? Because Google doesn't want them working on new startups.
One of my friends was rejected while interviewing for some SV startups. But was not rejected by Google. Now he works in Google. Startups should re-think how they're interviewing people. Seems like they suffer more from broken interview process, not Google salaries.
But when everyone on HN is constantly complaining about how the Google interview is ridiculous and shouldn't be emulated by startups, this sounds like a perfectly acceptable outcome. Skills needed for successful startup engineering vs Google engineering are not the same.
Why doesn't the article explore starting up in different geographies?
Also, the most interesting questions are:
* How much of the pool are employed by those companies?
* How does the largest segment of employers pay? What percentage of top talent do they employee.
I'd bet there is a larger percentage of top talent at top talent at other companies. Many, many people don't want to work at mega companies. Also, many, many people, particularly the best, are motivated, like startups, by challenge themselves, working on something important to them using tools they enjoy, people they enjoy working with and most importantly external factors and how work relates to their own life.
Optimizing for compensation is a silly idea at an engineer's salary.
I am a whole lot happier in a small company that pays me a reasonable salary and is fun than a huge company where I have to play politics and jump through hoops on command.
EDIT: Plus I get a lot more responsibility and exposure to everything involved so that I am better equipped to strike out on my own.
Startups should be paying more than established companies. The odds of success are low, the hours are worse, the benefits are worse, and the odds that the job will disappear within two or three years are high. Seldom is the equity worth much unless you're in the first few employees.
It’s actually like the golden age of Wall Street. The companies here are collecting the smartest people in the world to improve their Ad click rate and camera filter.
The talent also believe they are making the world better place but the truth is just few people care about the REAL problem in the REAL wold.
The article assumes that most of the engineers at that experience level are hired by Gooogle/Facebook etc, but it is simply not the case. The acceptance rates are quite low and there are plenty of 5-10 year experienced engineers who would be willing to work for startups at $130k.
As long as startups refuse to hire unless they find a young white/asian guy who's good on the spot/whiteboard with trivia questions you'll have a hard time hiring---google or not.
I've twenty years experience and couldn't get hired last year, so gave up and joined a freelancer site. Getting lots of work now, no questions asked, and guess what? Five star reviews, and work from home. I'm not interested in games and prefer to get work done.
Every founding team wants the _best_ engineers to build their CRUD app.
Maybe top talent is a requirement for some startups, but most won't make it or break because they've got the very best engineers. Or even the next tier down. Or even one tier below.
The vast majority of startups need a few engineers (usually only one) who have been around the block and know what pitfalls to avoid. The bulk of the team should be mid or junior level to do the grunt work.
Boulder isn't that bad, isn't it only a 10-30% cut off base salary? The good strat is to get hired in MTV and then transfer to Boulder, your GSUs will still stay the same size. The better strat is to get hired in Zurich and then transfer, even bigger bonus!
Lower than in Bay/NYC, but still good, partially offset by the lower state tax rate, and (signing) RSUs aren't any lower than in the Bay, which means that take home pay for someone in Colorado after rent can be higher.
If I make 350k+, and a startup is telling me I should take their 150k base + worthless options deal, or else I've "pigeonholed myself in the current role" (actual quote), I think they're just being stupid and unrealistic.
Are you jealous? I know I wouldn't mind earning 350k. It isn't as if I'd move anywhere for Google to start earning that, at least not right now, but to be honest, if you are going to earn 300k less that WOULD be a pretty big pay cut.
I think parent is just suggesting that they are priced out of that market, which is completely true. People are reading more nuanced views into this, but they aren't supported from the comment.
Don't start companies in places where the prevailing rates are in the 6 figures unless you have the cash to afford it.
The idea that software engineering is a "talent" strikes me as wrong. Knowledge of algorithms and data structure is attainable by anyone willing to put in the time to read a book. Hire people, incentivise them to learn what's important to the success of your company. Pay them to practice their new skills. Being congenitally "smart" is not the only path to being useful and innovative in a company. Being curious, willing to learn, and having a company that knows how to steer its workforce is.
> Knowledge of algorithms and data structure is attainable by anyone willing to put in the time to read a book
Cognitive limits do exist. Hardwired g-factor correlates like working memory will ultimately limit any one individual's capacity for understanding the above.
I do agree with your larger point, though. SF/NYC/Boston are not the only places one can find high-IQ individuals motivated to learn and build things.
I'm not so sure one needs to be high-IQ to be proficient. Outside of pure CS research, there's nothing in practical software engineering that requires much more than average to slightly above average intelligence to comprehend. the main thing you need is a person that is genuinely curious.
There are a million different factors where startups are at a disadvantage to big tech companies. That's the whole point of a startup. Of course you can't compete on salaries. But if you're smart you'll find that startups have many advantages in recruiting that the big companies don't. Namely self determination and recognition - the two most coveted workplace qualities of any good hacker.
Same here in Berlin, I got an offer with 75k p.a. as Sr. DS.
I mean one could cite the living costs, but then one also has to compare the different taxation / social welfare models. $350k+/year sounds huge, I would actually switch to Google for that amount (ofc. knowing what a senior/lead role encompasses).
I ma co-founder of London based startup and salary was one of the reasons I decided to build dev team in Poland. East Europe is great resource for smart software engineers asking for 50% of what we would have to pay in London (and London is still 50% behind SF). I am surprised why so little startups are looking for remote employees.
The idea that VC-funded startups should pay the same cash salaries as big companies is a sign of hot markets. It happened in 1999 as well. In reality, startups should pay less because they give equity, allow more freedom and creation, and have less stupid corporate rules. It's not for everyone, but that's the tradeoff.
Generally when you're borrowing from VCs who expect a 30-50% return on their equity, it's a bad idea to pay too much cash. (It's like paying salaries on a credit card - the lender may be willing, but they still want to get paid back) When it does become equal, it's a sign of froth. To get the benefits of a startup without any downside runs up against, "There's no such thing as a free lunch."
That would be entirely true if equity were handled the same way as it was in 1999. To be fair, I wasn't there to know for sure and can only base this off what I've read. As I understand it equity has changed, almost in the opposite direction of the "free lunch" equation. Equity values are frequently hidden from employees to mask how low value they are, VCs now figured out how to ratchet and protect themselves at the expense of the rank-and-file options holders, and so forth.
Why should VCs get a 30-50% return on what they put in, but engineers don't get a 30-50% return on the salary they sacrificed to actually do the damn work of the startup?
Because we live in a capitalistic society where supply/demand ultimately controls price, not what's fair.
I.e. On average, engineers get paid what they do because if they demand any more, another peer of equal caliber, on average, will take their job. VC's get paid, on average, what they do because no other VC will do it for less.
Whether or not that's true, you have little to no power to change it.
Unless you have some genuine superhuman value for justice , you'll be better off spending your energy learning how to work within the system versus being angry/complaining about it.
Except that equity is worth nowhere near the equity that VCs get, and in the majority of cases does not represent a reasonable return over the opportunity cost of taking the higher salary instead.
They get the talent that could build great companies on their own, and if that talent is interested in the same areas they are, they lower the risk that talent will end up building successfully competition.
If the markets are worth winning, the difference of a $50K * team size doesn't really matter in the big picture.
At the same time, by driving up the ante, if an area they're not paying attention to does get traction, to get to a successful exit there's a higher likelihood that the startups will need VC capital only the likes of Google Ventures and similar corporate venturing funds can provide.
I see a problem where companies are looking for the magic wand of the "hero engineer". For example, a manager at a small company asks me if I can refer someone with the following qualifications: excellent technical proficiency in many areas, front end and back end, great communicator, great leader, has a design vision, experienced in obscure areas.. etc.
Come on! Even the people I know who meet these qualifications are often not all they are cracked up to be. What happened to training people? What happened to looking for role players. In my career I have seen good teams accomplish great things with no geniuses.
My solution: business and executives in Bay Area, engineering in Poland.
Syncing: I have to wake very early every day, but it's a small sacrifice in the grand scheme of things. "Remote, office not required" book have a case study of 37signals with two founders in Europe in USA. European moves his day forward, USA wakes up very early, at least 4 hours of overlap a day is enough.
Relocation: If you open European subsidiary, you can long term relocate people to USA on L1 if necessary.
How to find good people: It helped that I studied in Warsaw before relocating to Bay Area and I know some good people who stayed in Poland due to personal reasons.
In California/SF the net take-home is about 8k/month on that salary. Average 1 bedroom rent is about $3000. Knock down another ~1000 per month for average things like a car, parking, phone, internet etc and your spendable take home is about half the actual paycheck.
I like the to see startups be pressured into offering higher compensation. Startups take advantage of engineers by over promising and under delivering.
Traditionally, startups had the advantage of compensating with equity/options that in time would be worth a lot of money. But ever since the laws passed after the dot-com bust equity is mostly worthless unless you're one of the founders or investors. That IMHO is the real problem here, not the big company salaries.
If startups want to compete effectively for talent with big companies, they need to communicate more effectively about the value of their equity (and in many cases, give more).
These moments feel like validation for sticking to our guns and not relocating to the valley. From what I hear from our coastal investors, hiring engineers is a major major problem in their portfolio and it's only getting worse. Frankly, we don't struggle to hire engineers.
Another problem is the cost of housing. Even if you want to join a startup in the Bay Area, it's hard enough to pay the rent/mortgage on a big tech salary, let alone a startup salary.
There's no way six digit salaries are going to be sustainable in the near future. This kind of money is possible because of low interest capital going around but when the rates inevitably rise and capital dries up, it's going to be hard for companies to pay someone $350,000 USD /year doing the work someone in Vancouver, BC can do for $100,000 CAD /year.
I recall during the dot com bubble people justified a six digit figure for knowing HTML.
On the other hand it means that anyone with that salary can easily (no sacrifices of any kind) take a salary of $0 for two years, for equity alone, if the right idea and team comes along.
So here's a question: does that happen?
For a hint as to the answer, consider the existence of the word xoogler.
Maybe startups, instead of going for the lavish offices, should put more of that VC money into salaries and health benefits. Or try to offer a better work/life balance. This entitled idea that startup founders have that they can pay shit wages and work people to death needs to go.
But there are plenty of great engineers that don't want to work at those companies for various reasons. There are plenty of great engineers that want to work remotely and don't have that option at the large companies. There are also plenty of inexperienced engineers with high potential that can't yet get hired at those companies and can be great additions to your startup. Do what you can to find and recruit those people.