What US Software Companies Should Understand About the Rest of the World
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I think it's telling in your example that the friend laughs because their grandma did it, not that the friend themselves did it. Beyond that, by your own admission all the money in tech makes bootstrapping harder, not easier, because it drives up costs. So your example makes even less sense, unless you intend to point out the ignorance of laughing at someone bragging about it.
You're also not the first to recognize that labor is more expensive in the US. Many companies acted on this information in the early 2000's, and it did not exactly result in a complete exodus of software development jobs. Culture, language, and even timezone differences can be a problem. Paying someone in Eastern Europe 30k/year instead of a US developer 100k/year to develop a product does not necessarily result in 70k/year worth of savings.
Interestingly I feel like some of what you say here goes against your recommendations in your internationalization article: the implication is that we should all hire Eastern European developers, but your internationalization article talks about the perils of thinking that all you need to do is slap a new language on your product and think that it's OK for another country.
If you're developing a product to be sold in a given country, and you hire developers from that country, you can empower your developers to act with more discretion.
On the R&D thing, of course there are issues with going international with development, but if you find the right people, you'll find that many are extremely competent and easy to communicate with.
The reality is that nearly all of the time it's not "the same product." When it is, it's great for whoever made it, but when it's not, you're making the very serious decision to release a worse product to cut your costs. Sometimes it's worth it, sometimes it's not.
The cheaper clones may also be a lot worse in practice, but hey, it seems to be working for China ...
This may be because Romanians seem to have a disproportionate interest in natural language processing.
Also, keep in mind that in some of the fast growing developing countries and regions, reverse brain drain is happening [2]. With booming economic development in those places and the rising of Donald Trump alike politicians, reverse brain drains is only going to become more common.
[1] https://www.uscis.gov/sites/default/files/USCIS/Resources/Re... Section 3.2 Table 4A
I haven't found this to be true, at least when trying to build an international "work from home team".
I've found most estimates for the cost of skilled labor in other countries to be low. Example: For software developers in South America, a good rule of thumb is you need to pay at least half of what you would pay in the US.
I have some people who do marketing for me in the Philippines. They need to be getting about a third of what a US person would be getting.
In both scenarios, you will be able to find people for a lot less, but you will have issues with quality and reliability. This is because even though the job market might suck in their country. You are still dealing with people who are trying to live a comfortable life. In order to get first world productivity, there is a base level of first world comfort that the employer needs to provide (food, air conditioning, health insurance, internet, computer equipment, car, social status, etc...)
Another factor to consider is that as you approach the upper echelons of play, pay rates start to converge at an international level - regardless of where the person actually lives (not a full convergence).
One thing people forget is that major goods cost the same all over the world. Cars in India cost almost as much as cars in the US, decent models cost more. Electronics in Brazil cost more than what they do in the US. So you just can't pay people such low wages.
US people, or SF people? There's a huge difference.
Ironically this was how I felt sometimes talking to various EU-based companies I was considering working with last year. Especially given the popularity of the "you're a contractor your first year, then maybe you become an employee" model.
I was looking at a situation where:
1. The base pay was already less than my prior salary had been, and
2. Because of the "start as contractor" model I'd get to pay at least an additional 15% in tax for the privilege of working for them, and
3. Because contractors are responsible for their own insurance, I'd get to pay for that out of my own pocket too, and
4. Since even the base pre-tax, pre-overhead rate was about 20% less than my prior salary, it'd kill me when time came to negotiate for my next job -- it'd be the same as being set back multiple years' worth of seniority/experience, since salary negotiation always starts with what you made at your last job.
I ran the math on one offer and it came out close to an effective 40% cut plus a likely significant reduction in whatever I'd make at future jobs. And that's just flat-out unacceptable.
And nope, I don't feel unfairly treated by leaving 50% of my paycheck on the desk in exchange for a society with an overall super low crime rate because everyone here has a minimum amount of money here and the same right to the same chances of starting out in life.
Guess it's simply a different lifestyle. :)
1) Minneapolis, Minnesota
2) Immigrants to Europe
You don't have to be some slick banker type moving to London to want your salary to keep pace with the cost of living. Lack of options in a small european country means less chances to negotiate what's only fair.
America’s population is growing about .8% per year (. 5% from births minus deaths and .3% from net migration). Thus 2% of overall growth produces about 1.2% of per capita growth. That may not sound impressive. But in a single generation of, say, 25 years, that rate of growth leads to a gain of 34.4% in real GDP per capita. (Compounding’s effects produce the excess over the percentage that would result by simply multiplying 25 x 1.2%.) In turn, that 34.4% gain will produce a staggering $19,000 increase in real GDP per capita for the next generation. Were that to be distributed equally, the gain would be $76,000 annually for a family of four.
Ask yourself if the GDP of Sweden is growing and if you're likely to see that as a raise.
Are you going to be able to negotiate a 3000$/yr raise for yourself? 12,000$/yr for your family of 4? (distributed according to the current breakdown of wealth held in the US for the pay range of a computer programmer)
Because that money is going to go SOMEWHERE. And if you can't negotiate for it, it will go to the top. And you will go down. Its that simple.
I'm pretty sure that's not true. I've read many times that the U.S. is at or near the top (i.e., the worst) in inequality, and that economic mobility also is higher in Euripe. A quick search found the following:
* See the map at the top which shows current inequality (it would take too long to read through the table and figure out historical change):
https://en.wikipedia.org/wiki/List_of_countries_by_income_eq...
* "Income inequality is high in the US, but the support of social welfare programmes is low. In Europe, income inequality is low and the welfare states are generous."
http://voxeu.org/article/perceptions-inequality-europe-and-u...
* "Towards the end of the 2000s the income distribution in Europe was more unequal than in the average OECD country, albeit notably less so than in the United States"
http://www.oecd-ilibrary.org/economics/income-inequality-in-...
https://en.wikipedia.org/wiki/List_of_regions_by_past_GDP_%2...
I readily concede that such numbers are not very concrete, but economic growth in the EU is quite similar to economic growth in the US.
1) Housing in the vast majority of the US is inexpensive. Paying $3000 for a tiny room is something that pretty much only happens in SF proper and Manhattan.
2) Crime, quality of public schools, etc. are all completely dependent on where you live. As economically unfair as it is, software developer salaries in most of the country are high enough to place you firmly into the middle/upper-middle class, which means that you can afford to live where it's safe and schools are good.
It's morally questionable but American software developers are paid enough that they can for the most part ignore the systemic economic issues that plague the US.
We could use a heaping reminder of this every time an argument about social issues comes up on HN.
HN is such a weird place. I can't believe the number of posts, comments, and job posts where you have to dig deep, deep down to figure out where the heck it's talking about.
And the answer ends up being "Well obviously San Francisco, California." It's the default here.
It's almost like different places have different tradeoffs, and acting like a smarmy elitist in response to GP's statement about the economics of a situation is a non sequitur.
No toddler has a right to bear arms in the United States. I hope you were being facetious, otherwise you're grossly misinformed.
> A good developer in Eastern Europe now costs $1000-$1500
> a month. I kid you not.
In Eastern Europe definition of a good developer is "hamburger flipper which knows a little of HTML". I kid you not. Also work ethics are horrendous.
In short it ends up much cheaper to hire somebody in mid-west than from Eastern Europe (even though I tried very very hard).
The really good developer in Eastern Europe is $6000/month - less than US mid-west but you have to adjust for time change, logistic, trust, etc. So you end up at same.
The UK (outside of London) seems to be quite cheap.
In sum, I agree with what you said, although maybe not what you meant: Developers in the UK appear cheap. Too cheap.
1. They commute from cheaper accomodation outside of London. It's why the train services into stations like Fenchurch Street, Liverpool Street, Waterloo and Euston are so packed. Because it's cheaper to say, live in Southend and commute for an hour than to afford a place in the city centre.
2. They live with their parents, friends, other relatives or spouse, any of which either have better paying jobs or still own property from when it was cheaper to buy.
3. They share really cramped, sometimes illegal accomodation while sending a percentage of the money to their family abroad.
4. Their parents/family are rich and they're living on a trustfund of some kind.
None of those are reasonable ways to live in London on average wages, but they are likely the reasons that your average developer/programmer job here is offering around 30-50,000 pounds a year, often nearer the low end.
The saying "pay peanuts, get monkeys" applies everywhere. I am not sure where I heard it but I recall even great developers in India, born and bred, are on six figure US income. Just because you can pay someone $1,000 a month doesn't mean they are actually doing the same work as somone on $10,000 a month.
And if they are really a great developer I would go so far as to say that they are being played and taken advantage of.
I'm sorry but my anecdotal experience totally disagrees with this.
The problem really isn't developer quality -- which I believe is quite high in a lot of places, my problem is that it's so hard to work across time zones and countries. Your costs are cheaper but your productivity sucks.
On the positive side, I do get a lot of phone calls from Microsoft in India offering to fix my computer problems if only I'd let them use remote desktop to connect to it.
Recent-History is littered with American companies acquiring European tech companies that out-compete Silicon Valley for : Skype and MySQL come to mind.
I never suggested that Skype or MySQL were Romanian - only European.
Correction: Skype is definitely not Swedish. Skype's founders are pan-European - 1 Swede, 1 Dane and 3 Estonians. The company itself was widely considered to be Estonian[1]. I frequently I confuse Estonia and Romania and I was thinking Skype was Romanian.
1. https://www.microsoft.com/en-us/stories/skype/skype-chapter-...
It's also physically closer so the occasional meeting won't be so painful to organize.
How come nobody asks how much you are paying your executives? Can't we find cheaper executives in other countries?
There are many incestuous networks of companies and investors within which startups dogfeed on each other's products in an attempt to generate profit for themselves.
Unfortunately, money can't keep moving in a closed loop. Just like the economy of a country; if money exits the network faster than new money enters it, the network's finances will dry and shrivel up.
The incestuous pattern of dogfeeding which is common in tech centers like SV tends to rely on a few 'alpha dogs' to actually extract money from outside the network. These alpha dogs are the tech giants; Google, Microsoft, Oracle, IBM, Facebook... - To avoid a bubble, these tech giants have to be able to make enough OUTSIDE profit to feed not only themselves but all startups and investors which indirectly depend on them for profit.
With this dynamic, you would hope that the alpha dogs of the industry are highly profitable; but it's simply not the case. It's very rare to find a large tech company with a Stock Price/Earnings ratio below 30 - It seems that even the alpha dogs are struggling to feed themselves so it's hard to imagine that they would leave behind enough scraps for the others who depend on them.
Interestingly enough, the giants like Google and Facebook tend to rely heavily on customers from INSIDE their network for profit (I believe a decent share of their revenue would come from advertising other tech companies) - Which means that even the alpha dogs are dogfeeding.
Sorry Dmitry, Crimea is not Russia, no matter what this crazy president of ours thinks of it.
Not to pass judgement on the current Russian claim to Crimea, but it's a very short-sighted view to pretend that Crimea won't ever be Russian.
However, using blunt military force is not a way to present a territorial claim since 1945, among civilized countries. Especially after signing an agreement guaranteeing territorial integrity in exchange for nuclear weapons (Ukraine had produced and deployed most of Soviet ICBMs while it was a part of the USSR).
Whatever legitimacy Russia might have had over Sevastopol and Crimea, now lost forever. I, Russian citizen, can't go in Crimea anymore, because it amounts to visiting the occupied territory.
Some cite Israel of doing the same. Well, Israel gained Golan Heights / West Bank in response to all-out full destruction war against her (and is still being pressed quite hard by international community for it). Ukraine didn't attack Russia in any way.
Here is my simple theory. There are two types of deals: friendly and unfriendly. Friendly deals happen between friends - people help each other, they have trust and comfort in negotiations, they enjoy making a deal and respect mutual interests. Unfriendly deals normally do not happen. They only happen when there are no friendly alternatives around. During unfriendly negotiations, seller is squeezed for all possible discounts, all terms are treated sceptically, fear and negativity are in the air, and with first chance deal will be off. Product has to be inevitably necessary for deal to happen in unfriendly environment.
It is natural that foreign companies and persons are treated friendly less often than local alternatives. But when product is good, and seller is right, then deals happen anyway. And deals help to make friends, and vice versa =)
This reminds me of the adage, "A fair deal is when both parties are equally displeased with the outcome."
The only 'upside' is it gives people in the middle of an organization a way to make money on the side.
PS: Enterprise discounts on enterprise prices are generally a cost increase. That said, bulk discounts can be standardized as there are savings for selling in bulk.
What about SaaS, when most value comes from second 'S'? =)
However, integrating some highly customized software from a 3rd party is generally a terrable idea. See any school using blackboard. Remember you pay for the work and are on the hook if the company drops the product, raises prices, changes the TOS etc.
At least with public API's your likely to find a replacement or have a good starting point to roll your own.
It's about a third the size of the US economy.
With that said, business in Japan is quite difficult if you're not Japanese, though that's starting to change in recent years. Some say their startup ecosystem is 10 years behind that of the US.
Can you elaborate on how it's a good, or neutral, thing? Startups may be imperfect creatures, but I perceive them to have a net-positive influence on the economy (and, to be clear, I don't work for one). How is their absence from the Japanese economy a good thing?
The 10 year comment was from a discussion I had with a Japanese investor/entrepreneur while in Tokyo last fall. He built his other businesses in the US, and related the current state of Japan's startup scene (funding, opportunities, etc) as being similar to that of the US about 10 years ago.
Eastern or Western?
I've never understood why Putin is singled out by the media for such vicious treatment when, as you yourself pointed out, there is absolutely no shortage of political corruption stories they could run with.
Still, it's a lot easier for the American public to swallow that a man half a world away, from a traditional enemy figure, could be evil and corrupt, rather than examine the fact that some of their own representatives might be the same. No no, that would throw into question their belief that American is the worlds shining bastion of freedom and democracy, a notion that they've been spoon-fed since childhood.
How many political opponents has Clinton had murdered?
You completely misunderstood OP's argument, IMHO.
A dispute between Obama and Putin over a peninsula where your company has maybe 1.5 users suddenly results in you being locked out of a market with millions of potential users. And the conclusion is that when selling abroad, you need to be aware that vagaries of international politics can drastically affect your business, and that an American software company will be seen - by policymakers in both countries - as a tool of American foreign policy.
Doesn't this cut both ways? If US based companies are locked out of the Russian market, don't Russian based companies run the risk of being locked out of the larger and more influential US market? If forced to choose, I know which of the two I'd pick.
Of course, and in fact it has happened a few times, e.g. see [1]. But Russian based companies tend to be aware of the possibility and plan accordingly. OP's audience is Silicon Valley startups trying to enter foreign markets for the first time, and for them the idea might be rather unfamiliar.
[1] http://insidehpc.com/2014/01/us-lifts-trade-ban-russian-supe...
Why do you assume that to be the case? Just because US companies don't need to rely on foreign markets doesn't mean they're somehow unaware of basic geopolitics.
It's actually called PIPEDA, not PEPIDA.
Also, where is the source? I have done a good share of readings in this topic as part of my research in a Canadian university (< 4 months ago) and could not find the "illegal"-ness of such actions.
Currently, the act essentially outlines consent and putting the knowledge and power to update/remove private information with the users, and does not outline what services or actions are illegal.
It is important for people care about privacy, but it is not cool to post un-sourced opinions as facts, as people often mis-cite them as fact and propagate false info.
Here is the act, and a summary of responsibilities: https://www.priv.gc.ca/resource/fs-fi/02_05_d_16_e.asp
To be honest, I can't imagine highly skilled software developers on the wages that the OP considers in his article.
Why are some people obsessed with highly skilled people making a lowly income?
... is /you/!
I know of no other industry where the professionals constantly self-flagellate with regards to pay.