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Comment by nappy-doo | Hacker News Reader

The people who get rich in a gold rush aren't the miners, it's the people who sell the shovels.

I ask HN, who are the shovel sellers in this goldrush? Is it the tech superstars who can "touch millions", the VC, the founder? Who is hocking shovels in our current scenario?

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> who are the shovel sellers in this goldrush?

Property owners, who get to rent out their houses and complain about how millennials ruined everything?

Long term property owners who benefit from Prop 13 to be precise. John Arrillaga, Stanford grad, saw the Valley for what it was and bought property. And kept it. Google rents from Arrillaga just as Sun did before. Prop 13 locked his commercial property taxes in at 1978 levels.

Oh yes they are milking that cow dry

Also, recruiters take a huge chunk of the hourly pay/salary of candidates they place. I was offered a job that paid "$90/hour" but I'd see about $60 of that. That means the recruitment agency would make about $60k per year off of me, all while not really doing anything but checking in monthly with me.

Not sure what it's like in the SV but here in the midwest I know a lot of people are hired through third party recruiters, and even a small team can place hundreds of candidates per year.

EDIT: Sorry for the confusion, in this case I have no idea why the recruiter revealed the "true $ amount" to me, rather than just the amount I would make.

They wouldn't be taking the $30/hour from me, they'd be charging the company I'd work for obviously.

99% of the time you only see the amount after the agency takes their cut.

Reputable recruiters charge employers, not candidates. Any so-called "recruiter" who takes their cut directly out of your salary (as opposed to charging the employer a percentage of a candidate's salary in a lump sum payment) is a con artist. Period.

Sorry, yes you're correct - edited my comment.

They wouldn't be charging me, they're taking a 30% cut of the hourly rate and giving me the rest.

My point was that the recruitment agencies will benefit from the rise of salaries

No, they still took the cut directly from your pay. Sorry, but you were scammed.

Yes my last contract in the UK took a few £ a week to manage the umbrella company

How else would it work? The recruiters need to take a cut somewhere, whether it's a lump sum up front or a cut per hour is fine with me.

I agree that it's annoying that a company would pay a recruitment agency 90/hour to have me, but would never pay me directly that much.

They take a cut from your employer. The employer pays the recruiter above and beyond what they are paying you.

> How else would it work?

Recruiters get paid by the employer, and not off the candidate's pool. It's employer who bears the burden of paying the recruiter in our current setting. This is why your situation was deemed scam (a.k.a. unusually sub-par for the environment).

But on the other hand, that sounds very similar to the arrangement wherein a contracting firm hires you at $100k/year and bills customers for your services at $100/hour, even when you work at the customer's site, using the customer's equipment.

If the customer drops the firm, you just get fired instead of benched.

That is exactly how hundreds of "Beltway Bandit" firms operate. Charge the government double what it costs you to employ someone, and spend most of your workday recruiting on behalf of your customers.

Uh, what? I thought companies pay the recruiters a percentage of first year salary, or a flat fee, for the successful referral. The employee should not be paying anything.

He might be talking about contracting firms. Not full time hire recruiters.

Sorry, yes you're correct - edited my comment.

The recruitment agency wouldn't be charging me, they'd be taking a chunk before they pay me my cut.

that's a w2 subcontractor not a real job or a proper self employed contractor role

The companies who create new technologies (mongodb, docker, nodejs, mesos, etc) and the companies who provide infrastructure or support around those new technologies (aws, azure, google, any number of consulting firms).

The vast majority of startups would be just as successful using prior models of the shovel, but people love to be on the bleeding edge and take the stance that their business model couldn't exist if it weren't for NewShovelX.

>Who is hocking shovels in our current scenario?

AWS/Azure

- Property owners

- Restaurants, bars, night life sellers

AWS is more like SUN microsystems, selling infrastructure, whose subscription will dry up (or at least slow down in a bust cycle).

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