Big Tech Company Salaries Are Hurting Startups
thestartupconference.com
thestartupconference.com
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.
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.
EDIT: formatting
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.
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.
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.
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
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.
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.
I don't want to make this look like marketing (as you already mentioned), but if you're really curious I talked a bit about it just recently on this podcast: https://mobilejazz.com/blog/our-ceo-stefan-klumpps-interview...
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.
1 - https://www.washingtonpost.com/news/wonk/wp/2016/02/25/how-m...
10 hours a week is an extra book you can read or 5 movies to watch or just...10 hours to relax and work on your side projects.
520 hours per year.
There definitely is a bit of marketing though and too much talk of culture is usually a good red flag.
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.
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.
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.
Spent the time hanging out with my girlfriend instead. Worth every minute.
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.
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.
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.
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.
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'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.
I was at SXSW. All the startups I talked to bemoaned their hiring problem, yet none of them wanted to even consider remote workers.
Sorry, I'm not sympathetic to that.
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.
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?
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.
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.
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 real startup appeal is you don't need to be great or play the game, you just need to be lucky.
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 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.
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.
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.
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.
Escape from the cult of google.
One example that was discussed on Hacker News previously:
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.
Anyway, I only work for trillion dollars companies (by some metrics). Bigger is often better.
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.
[1] https://en.wikipedia.org/wiki/WhatsApp#2009.E2.80.932014
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.
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.
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.
Yeah, that for instance.
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.
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.
You wanted 7% equity to make up for 20k? That seems a little excessive...
5 years to exit * 20K yr opp cost = 100K total opp cost
I think my payback should be twice my total opp cost, so I want 200K at exit
1% chance of exit at 600M valuation after those 5 years
I would expect my initial equity to be diluted to 50% of original value.
Hence, I want 6.7% equity at the beginning of the 5 years.
Note that, IMHO, I am being very conservative in calculating my opportunity cost for the lost salary.
Seems reasonable for a company with estimated current valuation of around $300k.
Why would someone work long hours for low pay with higher risk for 0.1% of high-risk small business?
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.
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.
I recommend a book that describes some of these tricks pretty well. It helps protect me from such manipulation (some of the time):
https://www.amazon.com/Influence-Psychology-Persuasion-Rober...
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.
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.
Its comp they can take away, block or otherwise control.
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.
Maybe it can be, but I haven't seen it, nor has anyone I know working in the valley.
- 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.
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.
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.
> - We are probably priced out of the market
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.
Pay my rent, absolutely free childcare, and 100% covered healthcare costs?
> The #1 thing that could entice me, over salary, would be some way for my employer to help me secure a decent mortgage...
You mean cosign? Otherwise that just looks like a really big signing bonus.
If that's too expensive for the company, perhaps starting a childcare program with some other startups could lower that cost?
You and most other people. But not ALL people. That's why we fill our positions it just takes a lot of time and patience.
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 have had a number of heart to hearts with devs to make sure their expectations on stock options are set right.
If you're thinking increased equity will compensate for reduced salary in the vast majority of cases that doesn't make financial sense.
Sadly it's not widespread. And I fear most companies wouldn't be well prepared to actually execute on it.
It won't be publicly broadcast, but if you ask around it is an option.
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 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 :)
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?
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.
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!
Greece is a beautiful country after all :)
These people are better than the ones in Silicon Valley because they refuse to emigrate? I don't follow your logic.
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 have been working hard to improve our processes but we aren't there yet.
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.
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).
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.
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.
I hope you have left already to get double the salary elsewhere. That's always the right thing to do.
Use startups as a stepping stone when you couldn't do better. Waiting 2 years is rather long.
Perhaps even move to Toronto where those salaries in CAD would actually be in line with market prices.
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.
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.
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.
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.
Just pay more if you want the best engineers. Asking for a world where top talent works for less money is stupid.
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!!!
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.
Just randomly increasing everyone's salary may not be very helpful.
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.
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.
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".
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.
/noted
For many startups the technical issues are not even the most significant problem they face. It's more about marketing and business focus.
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.
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.
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.
(and right about now I'm watching myself looking at me seeing me)
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.
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.
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.
1. Employ younger, inexperienced people and train them
2. Import immigrant developers
3. Hire people in different geographies
As an alternative, why not:
1. Hire older workers
2. Hire the unemployed American workers
3. Hire in America?
Well, because it costs more? Does it?
I don't know, I am just trying to open up the conversation here.
Edit: made language more neutral
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.
But I am more than willing to try it again.
1. If the startup doesn't have the money to pay more, what should it do?
2. If a startup decides not to opt for any of the options, and the competitors do, what should it do?
-- Note: the competitor can be in India, for example.
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)
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.
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.
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.
Well, there are cultural issues. You need to write things down more to work remotely effectively and lots of people don't like to read or write.
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.
Plenty of Google engineers become start-up co/founders. If you are good at what you do, the start-ups will magically find money for you.
If the a start-up is an equity-heavy sweatshop. You don't have to make $200K to know who is taking advantage of you.
Besides, your Uber for Cats startup probably doesn't need GoogSoftppleBookazon-grade engineers to slam together a mobile app and some CRUD services.
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.
Honestly, because most VCs are insanely lazy, and have no interest in traveling anywhere outside the Bay Area to do stuff.
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.
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.
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.
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.
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.
"Slave mentality" is a term I often use as well.
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.
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.
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 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).
Sorry for the shameless plug, feel free to downvote if not appropriate!
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."
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.
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.
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.
Seems like a solid strategy to me.
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.
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.
Congrats, you're really making $50k a year!
I built a site that helps startups do this: http://www.optionvalue.io/
That's your free market. Enjoy the ride.
I don't see the problem.
I recall during the dot com bubble people justified a six digit figure for knowing HTML.
So here's a question: does that happen?
For a hint as to the answer, consider the existence of the word xoogler.