Three Paths in the Tech Industry: Founder, Executive, or Employee
blog.ycombinator.com
blog.ycombinator.com
I have found that the executive path is actually the one that most of the scumbags take, it is the one that attracts the most people, and those people are usually not likable, they're salespeople that sell themselves all day.
The third group, the one that actually creates value, is accurately represented as not as successful both in terms of money and prestige. I think this is a damn shame, and we should be striving to stop that. This is a good painting of how bad things are today, but instead of "tricks to game the system" i wish it layed out a path of how to build an industry that doesn't attract all those ambitious selfish (executives) people.
Careers are made or broken on whether you get to be an idea person or an implementer.
If you're an idea person you get the lion's share of the credit for anything that goes right, and can always blame your failures on the implementor. Plus ideas are easier to come up with than implementations.
If you're an implementor you work hard, and then don't get much of the credit. But without implementors you simply don't have a product.
I've met FAR more competent implementers in my life than I have product owners. You seem (and others) seem to be arguing that there is some sort of market inefficiency here, but I don't see that.
And I say that as an implementer.
I can have five ideas before lunch with time to spate on blaming the people who will actually implement them for the past failures of my "great ideas with poor implementation"
But engineers/implementers who get into politics have a huge advantage: they can produce proofs, especially in tech. Nothing is more scary for an executive type than an engineer who refuses to be bullied into accepting the blame.
That said, I've met quite a few implementers that seem to believe that because it's their hands on the keyboard, no other activity warrants credit, all the way down to the guy who thinks that he commands "respect" (in the gang-sense) because he can shut down the Exchange server.
Mostly this is a self-inflicted problem. Especially in the Bay Area, where developers tend to value CS ability signaling rather than the ability to work well with product teams and the ability to engage in practical engineering.
There's too much focus by developers on shallow things, like fad-following the latest frameworks, on pseudo-intellectualism or technology-purism (e.g. "coding is doing math", code "elegance", whether/how FP is just so much better than anything else, etc.), and trivia like programming language choice.
Why is it not true for them? Sales are not magic, it is a profession that can be learned. I have seen a lot of companies stating how important is sales, and how unique they are. It can't be true for all companies. It is like everyone thinking that they are above average, it is just not possible.
If your product is software, literally it is impossible that sales add more value than the engineering organization that builds the product. Without engineering organization, you don't have anything to sell. Without sales and marketing, you will also have a hard time. It is collaboration what brings success.
> There's too much focus by developers on shallow things, like fad-following the latest frameworks, on pseudo-intellectualism or technology-purism
This is usually a problem with recruiting. You get what you pay for. If your interviews are about technical expertise and you ignore basic persona-values evaluation and fit to build valuable features, you get that. And it jeopardizes the viability of a company. You need some really good experts, but you don't need everyone to be one.
The distinction is that product development, sales and marketing can act as multipliers in a way that engineering seldom does. A tech company's growth is rarely due to the technical excellence of their product. There are obvious exceptions at the extremes, but very few of us are working for a Pied Piper with some truly amazing competitive advantage in technology.
For example, what would happen if magically Twitter's tech became 50% better overnight? That would certainly reduce costs, but would it lead to any growth? Would the average person use the service more if the tech was better? Would companies buy more ads? Would revenue increase?
Now imagine their product development, sales and marketing teams became 50% better. They could have actual product improvements beyond doubling Tweet length. They could instantly sell more ads. They could increase external partnerships to bring more attention to the platform. They would have all sorts of opportunities for added revenue and growth.
Like software engineering. And like writing software, some people are better at it / enjoy it more than others. Software engineers and good salespeople are very well compensated because they're hard to replace.
> I have seen a lot of companies stating how important is sales, and how unique they are. It can't be true for all companies. It is like everyone thinking that they are above average, it is just not possible.
Most companies, particularly most start-ups, suck at sales. "Great engineers, shit sales" is a more common failure mode in Silicon Valley than "sold something couldn't be built." Also, "good at sales" isn't a one dimensional metric. There are different sales processes, some of which some people (and consequently companies) are better at than others.
> If your product is software, literally it is impossible that sales add more value than the engineering organization that builds the product
You're conflating how essential a step is to a process with how valuable it is. Mediating those factors is how difficult it is to replace the parts in the step. Consider, for example, an automobile assembly line. It would be incorrect to assume that just because the vehicle is useless without an engine, it is impossible for anyone to be more valuable than the person who mounts the engine.
Anecdote as counter-example: a previous employer was approached by a vendor which offered a solution developed by "former NASA specialists" (I think it was to manage inventory). The total cost of deploying it was around a million.
We tried hard to stop the executives from going ahead with it, but around $400k had been paid by the time we managed to kill the project when it became clear that a. the vendor did not actually have a product and was using us as the R&D guinea pig, taking advantage of the data from millions of our customers and b. the "NASA" part referred to one of their developers who had briefly interned with a NASA contractor.
So, the sales organisation managed to "create" $400k of "value" (in the sense of hard revenue in their bank account) without engineering being involved.
Though IMO the mercenary freedom exists only in theory as the true freedom which makes it worth it is blocked by the inane interview processes that develepers impose on each other. There is a dissonance in the way technical skills are supposed to be some sort of objective measure and the moat digging this culture creates. (It specifically allows in only a certain class of "technical")
Though taking a few steps back these are all first world in first sorld problems. :/
For example, one team has spent several weeks and thousands of dollars to get another team's SOAP integration working correctly, when it would have taken five minutes in REST.
The codebase did not follow a "elegant" practice and is an absolute spaghetti mess. Things that should take 30 minutes take one week and this add tremendously to personnel cost.
I agree though that working together is tremendously undervalued. A decently smart person can be taught anything (which is part of the replacability problem you mentioned), but how to not be an entitled ass is nearly impossible to teach in a workplace environment.
This'll probably come across as depressing to most of the engineers in the audience, but I don't see this as an example of a company that did anything wrong. Rather, it's a company that did everything right but did it too early. They followed the fad of the early 2000s; there was no way to know then that a better fad would come out in the mid 2000s. And they're still around (and a "large corporation") now, which indicates that from a customer & business POV, they've actually been more successful than ~99% of other technology companies founded in that era.
If you're successful, you too can get to have the kindergartners of today complain about what an idiot you are. That's the best-case outcome, though: more likely, nobody will use your code or it will be thrown away a year later for the newer, shinier fad.
(The more positive spin on this is that our industry actually is making progress, and quite rapidly. What other industry can you look at the best practices of 15 years ago and say "What idiots we all were back then!"?)
I think you mean undervalued.
If you have a sucky multiplier of course your product won't do well but if it isn't technically executed right you still have a zero.
It is a radical proposition that a farm day laborer adds more value than an elite tech worker because 'the system would stop without food'.
The value add is controlled by the person who decides what "value add" is. That is the executive, original product designers and customers (who may well be represented by marketing in some businesses, I dunno).
This is possibly the most HN thing I've ever read. Bay Area developers are under-compensated?
Wages are (very purposely) not an efficient market so a group making more than most doing the same kind of work does not mean said group is overcompensated. It could be that the entire group is under-compensated, some of them just less so.
That's also true of marketing, sales, and product development.
Takes sales for instance, sales is knowing your clients needs, and knowing how your product fits into those needs and then having a shit load of conversations about how your product fits clients needs. There isn't any magic. You can contact more people, and you can convince a few percent more people to buy your product.
This represents a fundamental misunderstanding of how sales works.
As others mentioned, product/sales/marketing/etc can all be replaced just as easily as developers.
However, and I think this -may- be your point, the work generated by those groups is understood by upper management as a key to success, whereas upper management likely does not understand that having the best tech is also a key to success (and, honestly, it's one that can many times be partially overcome by sufficient marketing, or overshadowed by bad product people, or...).
I think you could have left off the "as a key to success" part. Software engineering, as a discipline, is very hard to quantify and hard to understand. Every metric that anyone proposes for measuring the output and quality of work of a developer has largely been shown to be possible to game and not representative of good work. We wax poetically about an extremely productive day in which we got rid of 200 lines of code...no sales person would consider losing a customer to be a success, so you can see how that would sound confusing to a non-engineer. And the interview process is largely lampooned for asking questions that have very little applicability to the actual work being done and, yet, no one can agree on what questions a good candidate should be able to answer. Even engineers can have vastly different stances on what constitutes good work.
There's an old saying, "that which cannot be measured cannot be managed." A sales team can easily be stack ranked and their dollar value to the company measured to the penny. A marketing team can be judged by engagement numbers, inbound leads and other quantifiable results that are easy for an executive to understand. A product team's output is somewhat harder to quantify, but executives usually do take the time to understand their product and customers, so they can relate and have opinions on the work produced by the product team. Meanwhile, the engineers spend they day looking at text in another language, having conversations and arguments about bizarre made-up words like Hadoop, Riak and Mesos. They often have trouble communicating technical concerns to non-technical members of the team, including management. And seemingly simple changes in product direction are met with large time estimates and mutters of "redesigning the schema" or "scalability."
So executives decide to focus on optimizing and rewarding the departments that they can understand and engineering gets seen as a black box assigned to someone somewhat technical who's often only good at spin/messaging and not really a great technical leader. It's pretty undeniable that engineers create value. Even executives realize that. But the marginal value of one engineer over another is extremely difficult to know, even for people in engineering. So it's much easier to just assign them to tiers (SSE, Senior SSE, Staff SSE, Lead SSE, Architect, etc) and then treat them as fungible quantities.
Let's take a ridiculous example, but if someone were to offer me, say, $1m (a year) to work on a specific key niche project (i.e. something that fits within my skill set and where I could add tremendous value) then I would happily move wherever around the world.
Pay more -> you'll probably get a (significantly) higher amount of qualified applicants?
I'd wager that if developers renegotiated their contracts at the point where they were most irreplaceable on projects they would be able to extract a lot more money.
I'd wager that most executives would rather pay 5 people to do the job of 2 or even simply bury their head in the sand and not admit to themselves that replacing you is going to be more costly than let you have that kind of leverage.
This statement is laughable. In almost 99% of the companies out there 'product development' is simple a placeholder to describe people who look at the results of A/B testing and say which design to go with. You could supplant a child in their position and it would barely make a difference in any value created.
Product development is the place where MBAs go to retire and for all practical purposes add 0 value to anything real. Mostly its UI designers who suggest ideas. Engineers implement them, a data analysis team crunches data and finally presents it in a pie chart. All the so called product manager does is look at which parts occupy a bigger chunk and make a yes or no decision.
If have your own business and write your own code, then you get to pick what you want to learn and use and stay with just that. And maybe you already know enough. E.g., if some parts of Microsoft's .NET are enough for what you need to code and you know it, then why rush off to Linux?
E.g., for my startup, I typed in 100,000 lines of typing with 24,000 statements in Visual Basic .NET; it all runs. And I know a lot more in computing but is not popular now. From just what I know, I can't be hired as a programmer, but I have no trouble programming for my startup.
Okay, slash your engineering staff and double the sales people and lets see how you do.
How is any of that not done by thousands of other people as well? Especially sales.
As an example, my company uses Django and the first 6-8 months I have spent hours debugging what would be a stupid issue like misconfigured Django or missing url. Eventually, that led me to optimizing the version of shell_plus that my company was using improving its bootup time by 200%(this was a rather large codebase). That's an instant 200% gain per developer/per django shell load and is probably the most impactful thing I've ever done. We estimated it would save around 6.67 hours of developer time per day(2 minutes saved - was originally 2.45 * 200 developers * 1 shell load every day)
Am reading "Deep Work" right now. In it he touches on this while explaining how hard it is to measure, and how no reliable attempts have turned up by those who try. This applies to C*O level on down, no one is sure how to measure this.
So when you write:
"The same just isn't true of product development, sales and marketing."
I call BS. There is no measure out there that can accurately gauge the specific contributions of an individual or a team within an org, in knowledge-centric work these days.
There are outliers. A team will luck into a bigger than expected sales deal. Or engineering stumble into a way to provide the same performance with less servers.
No. We all create value. Businesses, when running smoothly, are like a well oiled machine. Nothing is redundant. Garbage is collected. Businesses is cutthroat industries cannot afford to be redundant.
I always wondered why all cars had 4 wheels. Turns out, the 3 wheeled car is horrible (see Top Gear), a 5 wheeled car is pointless, and a 2 wheeled car is a motorcycle. But when you're a kid, compact jet propulsion or anti-gravity doesn't seem so difficult. But that's also why you're a kid.
I started a business thinking everyone can be their own executive, worker, and entrepreneur. They could handle their own responsibilities, manage their work, and do that work. Unfortunately, we had to go through a lot of them. Utopia wasn't working, but they were also miserable. It wasn't what they wanted, expected, or enjoyed. They all loved the idea though, including myself.
Fast forward five years, and my car has 4 wheels. I am the "founder". I decide where the business should go, lay out the work that needs to be done, and hand it over. The "executive" is then responsible for that work getting done. They hand it over to the "employees" in a way that is efficient and accountable. The third group just needs to accomplish the tasks they promised to do for the money they agreed on.
I'll see your scumbag executive and raise you my wrench throwing employee and delusional founder -- that would be me. I'd like to think 4 years ago, but who the hell knows.
If you wish to manage responsibilities, join the managers. If you wish to drive the ship, join the founders. And this is your correct career path.
An employee who believes they are better than the founder or executive is already holding a wrench.
I can also relate to the notion that the engineers do all the work, which was a sentiment I shared early in my career before I understood the kinds of problems executives and founders had to solve. I cringe when I hear an executive say "How hard can it be? Get some bright bulbs in here and have code up a solution that doesn't have these problems." or when an engineer says "The CEO just parties with 'investors' and blows sunshine up our ass while we actually build the thing he is gets credit for." or when a founder says "I wrote the foundation this company at a dam hackathon in 24 hours and you're going to take 6 months to have an alpha release?"
I have seen again and again that people who haven't been in the role they are criticizing have constructed an understanding of it that doesn't capture what the actual role entails. Or in the the crowd funding case completely under estimating to cost or effort to do some aspect of development they have never done before.
If the company is hitting its milestones, people know what they should be doing, and the problems that pop up all seem that they can be overcome. Then you know all three classes of people are doing their jobs well.
When things take forever to get done, nobody knows why or how the thing they are working on fits in, and every week there is a new problem that changes all the priorities and efforts, then you know you're on the way to being dead as a company.
This adds to a lot of the bad feelings. Some people are great at marketing, but if you work for someone mediocre then it's easy to see how you will think they are worthless.
It is easy to sit around as a dev and complain about what the suits are doing, when the devs do all the work. I don't think the same devs would be very happy if they switched jobs for a day (and in the same thought, I don't think the suite would do that well coding either).
(Edit: I have only done the dev and founder role here. But I just had about 10 executives tell me what kind of treats I was in for. I believed them, just from what I had learned in two of the roles).
The point is, what works works, and if you're forced to make things work, before you know it, you'll find yourself looking awfully similar to those in a similar situation.
There is a reason why these business structures are so common.
They work.
You may like Eric Dietrich's book Developer Hegemony[1]. He talks about both why the third group is less successful and how people within that group can potentially improve their situation within the current system.
> I have found that the executive path is actually the one that most of the scumbags take, it is the one that attracts the most people, and those people are usually not likable, they're salespeople that sell themselves all day.
I've seen the sliminess as well, but regardless of how ethical you are, in order to be successful in any domain you must be prepared to defend your interests (which people might perceive as "scumbag" behavior) and convince others that you have something of value to offer them (i.e. "selling").
I think it is possible (though difficult) to be both successful and moral, but success isn't everything. I think certainly possible to have a fulfilling life and not be successful. But (and I'm not claiming this applies to you) I would caution people in general against getting stuck in the rut of telling themselves that they value things other than success and at the same time resenting those who are successful.
[1] https://www.daedtech.com/developer-hegemony-the-crazy-idea-t...
Are you able to provide a cliff note or two about why they are less successful and how to improve their situations?
"Sociopaths, in their own best interests, knowingly promote over-performing losers into middle-management, groom under-performing losers into sociopaths, and leave the average bare-minimum-effort losers to fend for themselves."
What to do about it? These things:
* recognize that as software professionals we own the means of production
* learn the business side of software
* form partnerships with other developers such that the distinctions between worker and owner, suit and techie, no longer exists
* shift focus away from developing software according to a spec, and towards being a provider of overall business efficiency (often achieved through software).
Note that this is focused primarily towards developers working in the IT cost-centers of (generally non-technology) businesses.
[1] https://www.ribbonfarm.com/2009/10/07/the-gervais-principle-...
It breaks down the archetypes within companies, talks about what it takes to succeed as an employee or an executive, and then discusses an alternative route that we software engineers might be able to take.
Here's a blog about the book [0] and the book itself [1].
[0]: https://www.daedtech.com/developer-hegemony-the-crazy-idea-t...
But organizations today and perhaps in the past have always rewarded those who attain the power. Perversely, if you want a place where achievement (ie doing the work, building things) is rewarded properly, you need someone with that mindset to suck it up and win the power game.
p.s. That was rather negative response. May be it's the ecosystem and how things are.
p.p.s. Good post and stuffs like this should be taught in CS schools.
VCs have limited attention and those who are best at being loudest are likely to capture that available attention - similarly some people try to win arguments by being louder and making more noise than others.
But let's leave that aside for the moment. On a practical level, if engineers are to achieve money and prestige, then they'll have to (and here come several different ways of saying the same thing):
- sell themselves
- play a power game
- play politics
- ask for money & prestige, in all the different ways including dressing and speaking in a way that signals to money-and-prestige-bestowing people that you should get money and prestige
And they will have to concentrate on this and get good at it, apply the tactics & techniques, and succeed. That's how executive scumbags do it. This takes a fair amount of time and effort, so you'll have to spend a lot of your time on it. Nobody is giving away money for free without even being asked. And nobody cares about raising engineers' salaries as much as engineers do, so it's unlikely you'll find anyone to do it on your behalf. You either ask for it until it happens (selling something, selling yourself) or you say "well heck I wanted to be an ENGINEER" and spend your time doing engineering, and don't worry what's in the other guy's pocket. Screw him, he probably has an ulcer and his wife's a harpy!
Given that ten thousand years of human history have utterly failed to produce any system at any point in time where the value-makers are rewarded over the salespeople, I don't think any such system can be made. At least executive positions aren't quite at the level of a winner-takes-all competition and you have a plausible chance of making it to that level.
A lot of technical folks seem to have very little understanding or even interest in what for instance marketing and sales do. There are generalizations and often anecdotal knowledge that passes for understanding.
Developing software is just one small part of the process of creating value. Software does does sell itself. Creating demand and getting customers is incredibly difficult, expensive and unpredictable. If your target is advertisers based on users then acquiring users and advertisers is equally challenging.
As a thought experiment, get the best technical team and develop a product. Now after it is done, then what, how to do make money, how do you sell it or get users?
Next would be Employees. Jeez, those guys are the worst. Always thinking the ship will sink without them. If only the executives would listen to them the company would be on the right path.
Get off your high horse. You look foolish to all of us executives.
Founder is an employee, whose executives wouldn't listen to them.
I can see how it could be easier for you to "tune out", but from the Wozniak's mouse to Nokia smartphone presentations, your smirk is actually exactly correct: Employees make or break the firm. The ship will sink without them. Executives do not sufficiently listen to their employees.
I would though not agree fully about where you assume value is created. Usually, developers / middle managers do not create value. Mostly they are implementing ideas of others and in these ideas is most of value concentrated. I would say they deliver value but don't create most of it.
Perhaps I have a pessimistic view of the industry, but I've worked at 4-5 startups now (4-5 because one I'm on the fence about calling a startup) and I've come to find that the most value was always "created" when the devs and middle management (product) worked closely together to deliver and hustled/bustled without being blocked by some upper management bullshit. As soon as these companies grew, and these 250k-300k a year "executives" joined, everything slowly went up in flames. This is anecdotal, but it's an issue I've come to notice through personal experience in our industry.
It would be awesome if we could get statistically significant numbers of people to report on this effect, although how to avoid selection bias etc. is beyond me atm.
I was developer, and I was middle manager and I understand the sentiment fully. There are many aspects of reality that higher level management has to deal with which are not usually what they want reality to be but in practice you can not change it.
Yes, it is true that developers writing the software for Google's search engine and Gmail and other products, particularly the early developers who were writing core functionality before it even existed yet, are creating value. But are/were they capturing the full value created? In general, no. To the extent they "captured value" only came in the form of salary/benefits/etc. So they captured some, to be sure.
In highly successful companies who create hugely successful products that create tons of value, the actual capture of that value is absolutely not shared equally. This is in part because the risk was not shared equally.
Just as in successful companies, unsuccessful companies that ship a product that does not do well or fails completely, the developers who created it still captured a salary along the way. The investors and others who put in money or time and energy for little or not pay (in exchange for equity) were the ones with the most risk.
Bottom line... everyone involved in company-building and product-building create value along the way but value capture is generally concentrated for very good reasons.
It all comes down to which group the people signing the checks value. I often say "pay is a social construct" and this is what I mean -- there's no objective basis for any of it. I think devs are paid better in the Bay Area than elsewhere just because we're assumed to be more important here relative to other parts of the US/world.
There is no objective reality here, just a bunch of beliefs.
It's worth noting that this is simply in the "Tech Industry" which is much different than a "Good Life", "Adventure Quest", "[religion] walk", or any other form of purpose/success-based ranking.
Having operated in all three roles, all are incredibly valuable. Great leaders enable their teams to be more than the sum of their individual members (employees). But I would opine that the leadership roles come with significantly more risk, which is at least partially responsible for the money / prestige.
You could also say that humankind is still stuck in an evolutionary stage where in most places, being dominant is the best signal of "value". In a Tim Ferriss podcast, Ray Dalio actually mentions that disagreements at Bridgewater can take on different forms, because some people are less suitable for verbal, thinking-on-their-feet sort of debates, and might be better suited for long form (like Hacker News threads) debates.
What value is value if it can't be sold? Yes, there's intrinsic value in doing things because they need to be done but most of the work done in offices around the world derives its meaning from its worth to a buyer.
This being so(?), is the employee necessarily worth more, as you seem to imply, just because they are mashing away on tools rather than engaging with buyers or regulators, strategizing, and scheming?
the premise underlying your lament is that we should distribute compensation based on direct contribution to the product. but we simply don't distribute value that way. first of all, how would we accurately, objectively and differentially assign contribution for the success of a business to the contributing members? i'd guesstimate that an average US company might distribute value this way: owners 45%, executives 20%, employees 35%. you seem to be alluding to a distribution close to executives & owners 0%, employees 100%. are either of those correct? what would be the fair way to do it? you'd have to answer that before you can figure out how to get there.
and as distasteful as it may be, the way we seem to assign value _is_ political. we assign it based on an ability to take credit and argue for a larger share. we assign it for cultural values, like bravado and charisma. we don't really assign it for economic contribution, like commission for direct sales or compensation for risk, no matter how much that appeals to our rational economic minds. the distribution of value is exactly based on the political skill which you lament.
how do we change that? well, that's like asking how do we upend the currently accepted social hierarchy. and that's a big question.
Hmm.
Personally, I have tried to take all three paths. I find it creates the largest amount of potential.
Employee Hat: Develop stuff for the day job.
Founder Hat: Bootstrap by night and learn what it's like to be an owner.
Executive Hat: Work up the ladder by wearing the employee hat and bring what you learn as an owner/bootstrapper back to the day job.
Most sales people in IT are employees.
But i'd guess i'd say as a member of the likely scumbag group, i feel like you aren't really trying to see the multiple perspectives here. As someone else said, we all create value. It's rare successful companies can afford to keep people around who don't. It's much more likely "they don't create value in ways that you value", or value that you see. I think one of the things definitely holding you back here is the inability to see it from these other perspectives. You are telling yourself you understand people's motivations and goals (you think they are ambitious and trying to sell themselves to get ahead), but i don't think you really understand the perspective, just your story of it. And you definitely, even in these few sentences, have a clear bias and story about a ton of people.
" i wish it layed out a path of how to build an industry that doesn't attract all those ambitious selfish (executives) people"
I think you need to question your assumptions a lot here. You are assuming that such an industry could exist, or that it would be successful. You are assuming (as mentioned above) that your group is the only one that creates value. If that was really true, do you really believe the other groups would still exist?
Why wouldn't someone, in each industry, already have made a successful company that doesn't have those roles, and because they produce much more value, taken over?
I could believe you don't value what they do, but like the author, i don't believe that deserves the judgement you seem to. Assuming your definition of value is the right one, or better than others, is not a good place to start a real discussion from.
I think you would do well to rely less on personality stereotyping and more on understanding if you want to get to the place you desire (where the ambitious, selfish people you see, aren't causing you the annoyance they apparently do)
For at least a million year, you would have improved your chances of survival by sticking with a physically stronger mate than you are. This guy can beat the wolf when you cant, and maybe more importantly here, he may be able to beat the other tribal chiefs when you cant.
Guess how bad people stick to this habit even today. They literally have a brain forged to command them to do that. In practice what happen is that people will confirmation-biased you, they either gonna find out everything you do well, or everything you do badly depending on how badass you are. They will fill forms and say: "look, here are the reasons why we promoted him".
From what I've seen, even at Amazon which is a big geniuses recruiter - and therefore should be able to crack this problem - (amazon also have a form "reasons not to promote" which, if you're following, is kinda smart but mostly wishful thinking), people get promoted mostly based on the following leadership principle: the guy who's most likely to beat the wolf is gonna be promoted. I've experienced it first hand.
There is a light in the tunnel though. From my observations, I can tell that Amazon, for example, is able to recruit based on skills. Note that at this point, the social bonds aren't made yet which is why it works. This might also explains why you go up the ladder more easily by getting recruited - aka move diagonally. So the best thoughts I've been able to come up with is that, somehow, promotion should try to be like recruitment. Both intuitively and counter-intuitively, I think people should get promoted by people who don't know them, by some sort of recruitment process because we know we can fix that one. In any ways, I guess there is a fantastic startup to be made here.
unfortunately, it is a _whole_ lot more work and a _whole_ lot more stress, and is thus the road less traveled.
Pros: - Work on what you like, with the people you like - Potentially very high salary, definitely more than you would get as an employee - Want to work on side projects (e.g., software, books, and courses)? Go for it, and benefit from multiple income streams.
Cons: - You're running a business. That requires time, as well as skills/knowledge (often learned the hard way) that are completely separate from programming. - You have to market yourself (until you're good enough that people contact you). No marketing, no work. No work, no salary. - It's harder to do when you're married and have children. (I started when I was single.)
In many ways, freelancing is like the "founder" described in the article. However, the article also talks about teammates and a financial plan (including funding). Plenty of successful freelancers make good money just by themselves (or maybe 1-2 junior people). And I definitely never intend to take investment money.
Not everyone is cut out to be a freelancer. But it's a very viable option, beyond being a founder, executive, or employee. And I can tell you that many of the founders, executives, and employees I meet as I travel the world teaching Python are quite jealous of my satisfaction.
Plenty of successful freelancers make good money just by themselves (or maybe 1-2 junior people).
You may find yourself at a substantially reduced income (because you have to pay these extra people), but without the increased productivity / revenue to show for it. There's like this uncanny valley between freelancing and having a stable team / process structure (aka company).
For me, building a proper consulting company around machine learning / Python services took the better part of 4 years. Along with considerable stress & hair pulling. Sometimes I long for the solo freelancing days...
Perfect one-liner. I've found myself at the edge, and sometimes going in to that valley, for years. Finding the combination of people and process to get through that is more work than most people imagine, and a whole lot of risk. You get to the point where you can hire/contract one other person? That person better tick a lot of boxes, or you better be able to ramp up to X people quickly. Having a whole lot of effort in to one person, then to have them leave, loses you a whole lot of time/money/effort. Getting to a team of 4-5, which I've seen folks do, reduces that risk a lot, but figuring out how to get there and remain stable ... haven't done it myself, and have seen others try and fail (and some succeed, to be sure).
But I've also started a small partnership with two other excellent developers, and that has been working very well. I don't have to manage anyone, but I have help when I need it. And as a firm we avoid some of the "market for lemons" freelancer stigma, so we can charge more. Also with 3 of us the chasm to eventually hiring others is maybe easier to leap. I think this is a great way to go!
One of the perceived downsides of being an employee is that you can't "be your own boss", but I don't think it's very different for an employee to be accountable to his/her employer than for a founder to be accountable to his/her customers or a freelancer to be accountable to his/her clients.
The only way to truly "be your own boss" is to become wealthy enough that you don't need to be accountable to anyone (for financial well-being).
Not to put a damper on your post, as it sounds like you have had good success. But this is a very real thing for many people. When I graduated and went out into the world, I needed insurance, and this was before the ACA, which meant that my pre-existing condition was not something that would be insurable, at least at any decent rate. The ACA fixed that, but now you have the GOP attempting to return things to how they were before, especially for pre-existing conditions. They failed now, but they're not going to stop. So, for many people, currently the climate is not one where they could go without a group plan that they'd get at their employer.
In other countries, this isn't even a consideration or thought, because health care cannot be denied, and is independent of your job.
I grew up in the US (through college), and returned in graduate school. Paying for health care as a grad student + independent consultant was horrifyingly expensive, and I'm lucky that I was able to do it.
In Israel, where I've lived since 1995 (except for grad school), there are lots of reasons not to be a freelancer -- but health care isn't one of them, I'm happy to say.
Otherwise: +10 for freelancing/contracting. It's a genuinely different and attractive option for folks to whom "employee" seems an OK fit but not a perfect one.
> for many people, currently the climate is not one where they could go without a group plan that they'd get at their employer.
It's been this way for decades. 20+ years ago I remember talking to people about freelancing, or starting their own business, and the same reasons came up "Oh, i've got this medical condition" or "we can't afford to lose this insurance".
I can't speak to the 60s or 70s, but for the bulk of my adult life where I've been aware of this issue, it's been like this. :(
How did you find your first clients? You mention you're traveling the world teaching Python (which sounds awesome!) -- do you consider that "freelancing" or are you taking client work in addition to the teaching?
For most of my career, I did development work, with some occasional training. But over time, I found that training (a) was more fun, (b) paid better, (c) allowed me to schedule in advance, and (d) didn't mean getting angry calls about bugs in the middle of the night. Plus, it was a great way to specialize and thus become better known for one thing.
When I started to call myself a trainer, rather than a consultant, I started to get calls from companies I hadn't heard of. Not only does being a specialist with a clear focus make you stand out in companies' minds, but my former students remember me, too -- so they recommend me when they switch jobs, which is pretty common in the high-tech world.
I definitely consider training to be freelancing. I have someone who works for me, doing day-to-day development on projects, and I'll occasionally do that myself. But right now, I mainly do training, a bit of consulting, and am working on products (including http://WeeklyPythonExercise.com/) that I want to supplement my consulting/training income.
The work and the mission may not be exciting, but there is huge room for growth and often the large companies have programs especially designed for career growth for new college grads.
But don’t get stuck. The job will comfortable. After a few years it’s time to move on. Maybe you’ve found a few folks to cofound with, or maybe you just have a good lead on a much bigger role. But the only way to really advance is to leave — most big companies have artificial limits on salary growth and promotions. You can always go back later.
At Defense companies you're both clearly a cost center and a cog in an unfathomably large machine. Imagine a combination of Kafkaesque and Chtulhu.
At a Unicorn. You learn a lot but only because you work insane hours. Also you're paid under market wages because your job is sexy.
Freelancing is pretty good in terms of work-life balance as well, although it can feel like an endless pursuit of finding projects (interviewing, selling yourself, etc)
Regarding the executive path, or more generally any management role, learn early on if it's for you. If you're the type that gets caught up in human interest stories, considers it inhumane to fire low performers, or generally believes in a sense of fairness to the world then forget about it and stick with being an employee. It's better for your own sanity.
However, I disagree with you second point. You seem to be saying that good managers should be sociopaths. That is simply not true. Some managers can operate that way, but the great managers that I have had in the past are the ones that truly empathize with and take care of their employees. This pays dividends in work output from those employees. As I've moved into management myself I have incorporated this mentality. As for firing low performers, the result is almost always better for both parties if it is handled correctly (again, empathy). If they were given sufficient opportunity and still cannot complete their job, then there is a reason they are a poor performer: they are not in the right position. Don't believe that empathy precludes you from management. It's quite the opposite.
I thought this when I was younger, and so I stuck with being an employee for a long time and didn't aspire to learn management/executive skills. But in doing that I was exposed to the many reasons and mechanisms that "Productivity can be blocked by bad management" - one of the cons of being an employee mentioned in the article.
Now I see that being a good manager or executive takes skills and that doing it well has huge benefits to productivity and sanity for everyone in the org and not just myself. I think a lot of managers and executives suck at their jobs, but I am now more interested in learning those skills and exploring that path and I wish I hadn't ruled it out so quickly earlier.
- Maximize every retirement vehicle offered to you (max 401k, HSA, etc).
- Pretend that any money you sock away for retirement doesn't exist. This is best done with automated withdrawals so you never even consider it money in your checking account.
- Learn to cook. This doesn't actually save much money at the individual level but is huge for families.
- Set up separate accounts for expenses and savings. Most payroll setups allow you to automatically divert funds to multiple accounts. This lets you automatically put $X in your expense account and $TOTAL - $X in the savings account. Again, the idea is to never consider that money spendable. It goes into a lock box.
- Shoot for a 50+% after tax savings rate. It sounds nuts but it's actually easier than you think. The key is to not bump up your expenses as your income increases. You might not be there when you first start out but if you're increasing earnings 5-10% per year you'll get there quite quickly (particularly in tech).
- Never buy a new car. They're for chumps.
- Never lease a new car. That's for the biggest chumps.
- Once you've built up an 8 to 12 month nest egg of reserve cash, start allocating the rest in a diversified portfolio. Pick securities from the trading company that don't have transaction costs (large discount brokers usually have in house mirrors of popular ETFs for this).
Stick on this path and you'll eventually be sitting on a decent nest egg. Plus if you've reined in your expenses, if you decide to go the founder route you'll have plenty of runway to pursue your ideas.
> - Never lease a new car. That's for the biggest chumps.
Disagree on the leasing if you have your own company. The lease payments are all interest and deductible from your income. Sure, you don't end up with a car but if you do a 36 month lease, your new car is under warranty the whole time.
I've seen too many people suffer from the false economy of used cars. If you are lucky (or a skilled mechanic), you can benefit, but if not, the repair expenses and vehicle breakdowns become a large drain.
I agree that financing a new car is just a depreciation hole, but you need your wits to avoid being screwed over when getting a used car. You just never know what's been done to it.
A new inexpensive Toyota Corolla will have cheaper financing, fewer miles, and a longer warranty and fewer years at the starting to get expensive to maintain stage.
You also have to price in the true cost of an old car once it reaches the age of unreliability if you intend to drive into the ground. Just one failure on a road trip can result in expensive alternate transportation, towing fees, expensive and unreliable repairs, your time etc. Having a young reliable car has value and how much value it has depends on whether you have more money or time.
Used cars are over priced IMO. There is an argument to be made RE trading in cars at 100k before you need to do the tires, brakes, plugs, transmission fluid either the first or second time. So many things aren't priced into cars correctly. Depending on how much you pay for mechanical work it's overall cheaper and lower risk and requires less of your time.
Note the item about hiring a fee-based financial advisor. I hired one starting a few years ago even though I am pretty good at this stuff, but I think they're especially helpful for newbies to establish good expectations and habits.
With that said, be realistic about the trade offs you make, you can spend $30 on food and $10 on coffee every day if you want or you can buy a $30k car in cash in three years if you eat on $10 a day[0]. Good financial planning allows YOU to make informed decisions about YOUR money.
[0] ($30 (expensive food) + $10 (coffee) - $10 (cheap food)) * 365 (days in a year) * 3 (years) = $32,850 That is almost a Tesla Model 3 ($35k standard)
Don't mind the corny title. It's full of practical and solid advice. And unlike many books, he gives you actionable steps to follow through with the advice. That's what makes the difference.
https://www.ribbonfarm.com/2009/10/07/the-gervais-principle-...
First, executives will routinely attempt to take the founders' roles. Industries vary widely, but they are roughly "showy spenders" and not savers. Many have no experience in new ventures. They have ridden high and will panic against adversity. If they cannot flee in an overall industry downturn, they will feed on the founders. Be very careful to make "executive" expectations brutally clear and consequences for any and all hubris terminal.
Second, many founders want to be 1-hit wonders. Unlike our industry ecosystem building heroes, they are neither in the ecosystem nor interested in developing the ecosystem. They want in to get out ASAP. Their short termism sadly translates into teaching bad examples to employees.
Nevertheless, the information rich life of the "small rooms" where plans are crafted and industry roads remapped on whiteboards are truly the most wonderful teachers anyone can expect to access.
Any examples of how to "do it right?"
Here are some ideas.
IBM's head of federal sales said make hires show their past tax forms. Her point was to remove any "cleverness" over negotiating salaries and outcome responsibilities. Negotiate serious matters "naked." Watch details like commute times, time consuming rituals or debt levels.
Reading and writing are paramount requisites of organizing. I would recommend seeking at minimum faithful business press readers who are not day traders.
Seek executives who show up for smart dialog at the office. Teams have to share the world and not just their own company. Smart people are team players who seek correction or validation.
Seek executives who apply methods they can describe. Beware the latest buzzword fads.
Places like SV, NYC Or BO have deep benches of worldly smarties. That worldly wiseness is important in a startup seeking relevance to very real supply chains in constant motion. Many job seekers at all levels are very narrow specialists who have "rounded themselves" adapting to roles deep inside very incestuous companies or industries. Those folks are motivated by popular delusions of "riches" or "wonders" hiding elsewhere.
Attrition is normal. But recruiting is costly and executive attrition is super costly for the teams and companies left behind.
Industries are all different. But enduring purpose, role and focus are good character attributes to seek in startup hires. That's not highly prized in our fast-transacting careless world.
Don't get me wrong. The gold miners needed jeans and supplies. But Levi Strauss lived off them and not the reverse. So the fourth path is service providers: lawyers, accelerators, accountants, contractors, ..., even VCs to a degree. I think Silicon Valley has a competitive advantage in having the best but it is a different path. And as much experience as they have when I talk to them, they haven't done it themselves.
Well, most haven't. Ben Horowitz knows. Some know but most don't. That doesn't keep them from doing an awesome job. It's just a different path.
I know a bunch of them now leading some divisions or branch offices.
I think founding a company helped my career, but not necessarily faster than working on a similar exec-level track for 2 years.
Reading this article was interesting to me. I really bristled at the descriptions of founder and employee, but exec feels comfortable. I really enjoy owning a set of responsibilities that's not redundant with anybody else in the organization, and I enjoy working on internal relationships in order to help everybody get their work done better ("politics").
Maybe at some point I'll found another company, because that pressure really does force you to confront the weakest parts of your professional skillset. I learned a ton about myself by doing it.
Founders, from what I understand[1], tend to be high on the Big 5 Personality trait "openness", which has to do with creativity. Executives (and employees to an extent as well) who are successful tend to be high in trait "conscientiousness" which has to do with being hard working and orderly.
I think once you are a team lead and have some number of direct reports, you can then start jumping your way up that ladder. But going from 0 to 5 direct reports has often seemed impossible. I'd be open to tips on how to do it.
You can see this on the IC track as well for top-tier tech companies - there is a step-function difference in mindset at certain levels.
Jumping from IC to line manager, as you suggest, is one; you need to recognize you are no longer shipping code but are shipping your team - they are your output, and their performance is how you are measured.
At director it switches again, you are responsible not precisely for the people but for your organization as a whole. There is an adage that you know you're a director after your first re-org and are moving people's names around as cells on a spreadsheet.
It changes again at VP, as an executive of the company you are responsible and accountable for an entire function. Excuses cease to matter, even external forces - you should have accounted for them. You are optimizing for the company's overall future and not your org or people.
This is a vastly simplified explanation, obviously.
Some things that can help (in no particular order):
- excel in your role as an IC
- Take on leadership responsibilities in your role as an IC. Don't just do stuff, own things
- Work in a growing organization in constant need of new leadership
- Take the initiative to start something new that succeeds to the point that you need additional help to keep it going
- Mentor an intern
- Ask your manager for leadership responsibilities
- Be connected enough to the wider organization that you know when opportunities arise on adjacent teams and leaders of those teams know you well enough to think of you when filling them
Recommend a place to start?
When the company had financial trouble though, they fired all the middle managers and kept the engineers. He learned an important lesson - working at a low level with only machines below you is a safe and stable job.
I want to do the same. I'm now 28, so I have plenty of flexibility. But I'm worried that as I get older, there will be more pressure to go into management instead of staying in engineering. Companies want fun, young engineers who know all the latest tech - they don't want experience at the technical level.
The truth is that most layoffs don't work like that, unfortunately. Members of the management class will generally try to protect their own, and they see engineers as mere blue-collar workers, no matter how skilled or qualified those engineers are. Yes, even software engineers.
until your job is replaced by a machine
Yes you can get made redunant / fired as a manager, but people management is much less likely to be replaced by machines in the future
Don't know where you are at but I work for one of the big 5 and most people are over 30 and practically all principal+ engineers/executives are over 40.
---
This is an understatement that I see many new or junior developers completely missing. You don't magically become a rockstar. Working with rockstars is helpful, but it won't make you a rockstar. Company name/brand is irrelevant to becoming a rockstar. It is all about practice solving hard problems, which takes lots of time and concentration. This is the only factor that separates the amazing developers from everybody else, and honestly most people don't have the discipline or personality to get there.
Actually, now that I think about, becoming an awesome developer is similar to the advice for becoming a successful founder. You, counter-intuitively, have to spend a lot of time doing things that don't scale. A good example is ignoring all those frameworks and abstractions so that you can really learn how the code actually works. If you expect tools to do your job for you or grow reliance upon some temporary artifact you aren't as strong or self-reliant developer.
In order to be a great executive you have to be a great employee. The military flavor of this is that you have to learn to follow before you can learn to lead. You have to know what your people are going through and be willing to step in and assist your people if the situation calls for it.
At some point a founder has to transition from founder to executive if their company is to grow or they are to keep their job. Promoting, building, and marketing a new production or solution is great, but at some point other people will do that for you. You must be able to lead these people, build confidence in the team, and provide proper direction. You have to be a leader.
I'm not sure if the use of quotes here is intended to imply one doesn't actually know the right answer, but only feels that way. It's a particularly important point, I feel in my career I've met so many managers insecure in themselves that they would never consider listening to an idea from a report, not unless you can convince them it was their own idea.
Scare quotes are meant to cover 3 and 4 I think
If you're a manager, you can address this by inviting thoughtful debate and sharing information. But if you're a non-manager employee, you can't always rely on managers (even when they're good and capable) to have _time_ to deeply consider your ideas and share relevant info. Therefore, sometimes you have to accept that major decisions get made without your input.
Ideally you have managers you trust even when they make decisions you don't understand. In practice, getting that requires a willingness to move and enough social acumen that you're likely moving into management yourself.
Net effect is that even with open dialog, debate, or input, management teams still need to work with their employees to make decisions that are right for the company, or at least appear to be, at the time they are made. And inevitably, some employees who feel they should be entitled to influence or even make a decision outright will feel sidelined when their input is not heeded. The feeling of a lack of control sets in and this can be frustrating as it now means supporting decision(s) made by others with whom you do not agree with.
But at the same time that doesn't mean what you're saying isn't something the manager should have made time to listen to.
Of course it's easy for me to criticize management when a lot of the startups I've worked at have gone out of business and a lot of the features I've been asked to build get canceled.
I personally do the full time job plus contractor gigs. My contracts come from referrals, places and people I worked full time for and from being number #1 for a specific search term locally for a number of years.
I have found work on upwork, craigslist and angellist as well. Usually starts off as an employment position but changes into a contract.
I haven't worked for any A-list brand name companies (no Googles or Facebooks) but I've worked for quite a few B-list and C-list corporations and also some B-list startups as a software developer/engineer (including a YC startup) - The startups which I worked for the longest have grown very fast and are profitable.
In spite of this, the last time I was looking to switch companies, the only thing that prospective employers were interested in was my open source work. Nobody was interested in hearing more about the small startups I worked for which ended up becoming successful because they're not A-listers.
I know engineers who work for A-list companies (I've worked alongside some of them in the past), they're very good; but not different from engineers who work for B-list companies; maybe they're better at taking technical tests.
Another pro for founder is that you can remove yourself from echo chambers if you choose. Maybe this falls under "Choose the people you work with".
Then instead of doing another startup, I took a less stressful job for less money, and enjoyed my family time.
As a founder I never really had a day off for 5 years. Even if I was "taking a vacation", my laptop was never always in a backpack within 20 feet from me for emergencies, and my mind was always focused on the consequences of failure. For me it was living in fear, even during success.
Some people are more optimistic. They don't feel stress in the same way. I think that is a KEY ingredient in being a successful founder long term.
Option two, reframe ordinarily stressful things to be less stressful. Stoic philosophy is probably a good start here. Adopt a mindset that does not require you to "be responsible for" your employees. (One possibility: there are plenty of independently wealthy people that will join the right project.) Reject self-flagellation -- the only person "blaming yourself" is you.
I'm sure there are other options as well.
Also consider that while being an employee may provide a sense of financial stability, it introduces other forms of stress, such as reduced autonomy.
I've done all three paths and it's not this cut-and-dry. There are years at startups that aren't stressful at all and years that are stressful. Likewise for being an employee (or executive).
Startups are, by-and-large, less secure than most jobs so if that insecurity bothers you that can create stress. On the other hand, most people starting tech startups are fairly employable and "failing" doesn't really look too bad. On the plus side, at a startup you have more ability to manage your stress by controlling your world.
Since the vast majority of founders fail, having significant financial cushions from your family or years working prior is probably the top pre-requisite if 'founder' is your path.
This may or may not apply to all locations and all collapses, but expect collapses to happen every 8-10 years.
I'm also not all that certain that down markets don't hit all categories with similar force. Contractors may be cut slightly earlier (discretionary spending), but that depends on contracting terms and duration (there are set-length contracts), and as a bonus might be hired back earlier.
Much depends on whether or not you have a specific skillset that's in demand, and know how to market it effectively. And that's regardless of your employment terms.
Contractors can save many more multiples of cash than employees in the same period of time between collapses, assuming they have some discipline.
Discipline contributes to freedom more than anything.
I had to laugh there. Moving to the Bay Area will reduce your ability to save money, not increase it. I was probably saving 40-50% of my salary when I worked in Nowhereville, Florida. With the housing costs out here in the Bay Area, the long commute (wear and tear on vehicles) and the massive local and state taxes, it's almost impossible to save.
I think college towns in the midwest / rust belt are untapped resources, or areas that used to have strong technically focused companies that moved away. I've personally seen founders bootstrap and launch successful companies (B2B with real revenue, not Uber for cats) in areas with little tech presence.
The ability to not have to shell out huge salaries and equity was a real winner, there's also less distractions. You can get strong engineers (no, not SV / Seattle top end engineers, but people that can throw together a reasonable website) for < 100k in these areas, and they won't bounce around as much. You aren't competing with AmaFaceGoogSoft here, you're competing with HR companies and random consulting houses. There's disadvantages to being outside of the tech bubble, but advantages too. That being said, for an employee, you should at least try and do some time in SV / Seattle etc.
> ...starting a company in an area that does not need the top tier of engineers...
As far as quality of talent, the "top tier of engineers" aren't all in SF, Seattle, or NYC. There are plenty of "top tier" engineers in all kinds of places.
If you mean the "top tier" in pay rates are in those cities, that probably true. But those cities also have a ridiculous cost of living adjustment baked in.
I might be misreading what you're writing here, but it sounds like you're saying, "Try founding a place in Champaign, Ill. The engineers aren't top notch, but they're cheap enough to be worth it." I just wanted to push back against this meme.
- A cat sharing service?
- A 'cat on demand' service that allows you to reap the benefits of cat ownership without having to worry about acquisition and maintenance costs?
- A taxi service for cats?
I could envision paying for all of those, under the right circumstances. So such a company would likely have at least a few dollars of real revenue. :)
I'm curious to know what your current thoughts are behind this. As someone who intentionally has steered clear of both those areas in order to try to optimize financially I sometimes wonder whether I'm missing out on something. Obviously one can learn more from better engineers, but don't the brightest ideas from the brightest engineers wind up being written about online and/or presented at conferences at user groups and broadcast across the Internet? Or does having the opportunity to put time into a name-brand tech company for a while really increase lifelong salary or career prospects sufficiently to recover the money thrown away on rent there? Or is there really sufficient value in serendipitous collaboration/socialization to justify moving to one of these places? Is there some other question I've overlooked?
* a meaningful degree of racial diversity (makes a big difference if you're not white)
* comprehensive public transit (yeah, yeah BART and MUNI suck, but where I've lived in the US previously, they didn't even exist)
* an abundance of job opportunities in tech
* nice weather
I'm able to save 40% of my income and I don't even work at a high-paying company like Airbnb, Google etc. I live in a new apartment with one roommate in an area that's only a 25 minute commute to my office in SF via public transit.
We all need to accept that people are looking for different things in life. It's difficult to save money in SF, while also having a lifestyle that's relatively easy to maintain in other places. For instance, living without roommates.
You're able to do that because you're obviously "unattached" or "young"... You live in an apartment with a roommate. That's probably fine when you're single/dating. It's not super appealing when you're a person with a spouse and kid(s)... Also, as one progresses in age, there is a desire to stop having 'roommates' and perhaps even consider owning something.
The cost goes up considerably within those parameters.
It's "easy" to save 40% of your income if you live like a college sophomore in a dorm. It's not when you have other responsibilities.
Bay area in a nutshell. You can have higher savings rates too, I do around %40 and I could save even more. Working at a startup does make it harder, usually it's better to work at FANG. You also learn a lot and realize the difference between 'facebook does this dev practice because it's huge so it has to vs. it's the better practice'
And the difference is smaller compared to other large markets like Chicago, Houston, and L.A.
Your example is a higher savings amount, not rate.
In your example, I may still prefer the 80K one. Why?
Assume taxes are a third of your salary in both places.
In the 80K job, you save 40K, and your living expenses are 13.3K
In the 160K job, you save 56K and your living expenses are 50.7K
In Nowhereville, you are saving 3 times your annual cost of living. In SV, you are saving just a little more than 1x.
The result? Even though you save more in SV, you will not be able to retire quicker.
(My claim of 1/3 in taxes in both places is likely inaccurate, but the essence of the calculation doesn't change).
A higher saving amount does not mean earlier retirement (unless you move to a cheap city to retire).
I moved to San Francisco in 2006 straight out of college to work at Google as a SWE. I was $27k in debt (student loan + credit card). My rent was $1450 at the time (2 bedroom with a roommate in a nice part of town), and I took out a $26k loan to buy a car. I'm not particularly frugal.
I did well at Google, left in 2010 with >$200k saved, and used that to fund my entrepreneurial adventures from then til now.
I was very fortunate to land that job, YMMV.
For what it’s worth I did exactly that - moved to the SF Bay Area, started saving (you can still do it if you don’t have debt), and those connections and that experience really matter. I don’t think we could have gotten into YC without them.
I doubt 40% of Nowhereville, FL salary is as much as 20% of Bay Area salary for a large number of cases. Developer compensation in Nowhereville caps out much lower than it does in the Bay Area (I'm talking base salary): figure in RSUs and other benefits (e.g. job abundance) and it's almost a no-brainer that a move to the Bay Area is better.
If you practice frugality, find cheap housing (which does exist if you look hard enough), and don't spend money on things you don't need, then it's quite easy to save a lot of money.
Being a 400 sq. ft. studio that you pay $3k per month for to live in an area where you won't get stabbed when you go out at night and is close enough to work where you don't need a car.
Plus, doesn't pg say the most important thing is to just stay alive?
Whereas now that I live in the bay area, I see companies get funded all the time and think to myself they would never get funded if they were HQ'd elsewhere.
To have a successful company (not a VC startup) you really just need to code a little and know to market/sell (or have co-founder who can do that). And you will be fine - not rich but fine.
Of course, the above is only true if you live in Bay Area... If you live in Bay Area, then you will need at least $250K/year to live "fine". Which is about $150K/year in Austin, TX.
This doesn't mean move to the Bay Area to be a janitor. Some jobs will absolutely make it difficult to afford the cost of living.
But with good discipline, I'd argue it's typically easier to save (in absolute dollar terms) in a high-COL place than a low one.
In Atl, I saved $2k/mo.
In SF, I saved $3k/mo.
Its hard to save $3k/mo if you're only making $4k/mo. In SF, I took a huge lifestyle hit. No car, no apartment to myself, eating out less. which let me save a lot more.
Base comp 200K
Bonus, stock, 401k match 50K
Total gross comp 250K
Expenses:
Taxes 40% (30% fed, 10% state) 100K
Rental housing 40K ($3300/month)
Food 15K
Transportation 15K
Discretionary spending 20K
Total expenses 190K
As a result, you can comfortably save $60K per year. Of course, kids and housing options will add greatly to your spend.
I've personally been saving over $2k/mo on an after-tax income of just over $6k/mo, haven't been trying particularly hard to max that out though.
Sales/marketing, finance, investor relations, training/ hr, event planning, etc
For me back 25 years ago, the thought of being in my 40s & 50s learning the latest version was tiring.
CEOs back then came from finance or marketing.
> A higher likelihood of having a huge impact (given that most startups fail).
I think it's important to note that regarding money, starting a company does have a very high _expected value_. It's just that it's high risk-high reward, which makes it a bad fit for people with lower risk tolerances. But if your goal is to have as big an impact on the world as possible, risk doesn't matter too much.
https://80000hours.org/2012/01/salary-or-startup-how-do-good...
I am living my dream life. I'm 26 and about to break 200k base salary. I have been programming for fun since I was 13 and I enjoy most of what I do every day. I feel myself growing both technically and in soft skills. I rarely work more than 40 hours a week but I still feel very productive. I'm receiving excellent feedback and am being groomed for engineering management. I walk to work, the grocery store, and the weed store. I have time outside of work to focus on self improvement, fitness, and side projects.
But then my acquintance tells me he bought a house in cash after earning XX million from their startup and I feel I'm completely off track.
Here's my perspective-
-- Experience is undervalued by people who don't have it. It is critical for a startup. You don't all have to be experienced, but get someone who has experience. One of the real killers of startups is bad management, and one of the causes of bad management is management by instinct, especially terrible is "type a" CEOs (to pick a stereotype for succinctness sake only) whose management history was being president of a frat in college, telling software engineers how to build product, but he knows nothing about software.
-- Experience as an executive who didn't start out as an individual contributor is not experience. If you cannot do your subordinates jobs, you cannot manage them effectively, unless you have a subordinate who can do the jobs (like a lead) who you manage.
-- Your CEO needs to be proficient in the unique value of the company. EG: If you are a sales organization you need to have a CEO who is a proficient sales person. Apple needed a proficient CEO when it was an engineering / product organization (and Steve Jobs was that- not as a good an engineer as Woz but he knew electronics and software development) ... but now Tim Cook is a proficient supply chain master and that's what Apple needs to thrive now. As a startup your CEO needs to be able to build the product. Or he will make bad decisions.
-- Founders give investors way too much power. They seem to think that investors are an old boys club that decides who wins and loses. In the valley for BS startups that's maybe true- you can get BS money until you make it. But if you're not a Golden Child then you need to get traction and revenue, and you always, always, want to be in the drivers seat for investment. You never want to need it.
I've seen so many VC and even lately angel deals with terrible terms that I'm convinced the reason being a founder is not as remunerative as it should be is founders signing bad deals desperate to keep the company going.
Always keep your burn rate low.
When I was making minimum wage in college I was ecstatic because I could afford to go see a movie in the theater every week. That was "luxury" for me. As my income grew, I kept my definition of "luxury" well below my income. This produced savings. Those savings helped greatly in lean times.
Run your business that way. You may be able to grow to 100 people now, but don't, grow to 70 or whatever, so you have more cushion.
If your hiring is ahead of your traction you're probably not hiring the right people anyway.
LOL, IF ONLY!
Another example that people in silicon valley (and yc in particular) have no idea what goes on in the real world.
(HN reply in one window, with skype and webex open in 2 other windows, my 5th and 6th meetings today. I've been on HN for 10 years with over 5,000 contributions, almost all while in meetings, ignoring talking heads and engaging you guys. You don't actually believe I'd be here if I had meaningful work to do, do you?)
What makes my company less real world than yours?
And no. Me neither. :)
[EDIT] That said, meetings effective are a manager's, CEO's, and founder's job. So in comparison to them, we have do have fewer meetings.
Do you see the irony in accusing others of not understanding the real world while making assertions based on personal anecdotes?
https://www.grammarly.com/blog/what-is-the-oxford-comma-and-...
• freelancer • advisor • fractional cto • performance consultant • various other vendors
my family moved to the states from moscow when i was 7. we spent all our money that we got from selling a crappy apt on the move itself. we lived on food stamps, had to learn english, my parents (both with technical university degrees) went to community college and worked low wage jobs to pay the rent, bills and tuition. we had a super old used ford that was rusting everywhere a vehicle can rust and the dollar store was where we went shopping. today, i'm somewhere between employee and executive [limited only by personal preference of work/life balance] thanks to my parents; my children will certainly have it easier than my folks or i ever did. but to say that it was because of some innate wealth misses the mark.
I'm not sure it misses the mark. All data show that wealth carries over multiple generations. That doesn't mean that non wealthy can't make it, just that wealthiest will, on average or even probably some p95 and up metric.
And wealth should be put into perspective, its often more to do with the surrounding education of the wealthy. If your surrounding growing up ran businesses of their own, knew how to manage people, understood finance, investments, calculating risks, knew about markets and business, had connections, that's a great environment to learn the same from. You mentioned both your parents had technical university degrees, so you had some advantage there.
Everyone can give it a shot, we have equal opportunity, but not equal challenges to face. You making it out of less is double awesome to you, even if maybe you felt it was easy, dunno, its still a hard thing you did, harder then if you had come from a more supportive environment.
Right there, there was enough wealth that you ultimately transferred for what was far better prospects in the US than in Russia. This was probably a very smart move that others with much less means from Russia might have had a very difficult time even leaving their country for the US in the first place.
Don't forget that you have lived through a period of growth in the US. It might not happen again for this generation.
What if the fundamentals changes, and the situations/opportunities you have been through are no longer there?
We like to think we make our choices and ourselves. But most of the time we are driven by whichever random events come in our way.
But then there are those who are both materially and educationally impoverished - those whose families struggled despite having been in the US for generations. Not sure it makes sense to conflate them with people like you.
On the executive front, yes, you are more likely to reach that level of position having a "wealthy background" but there are plenty who don't. Your odds of becoming a moderately successful executive of a medium sized business coming from a middle class background seem dramatically better than winning the tech startup lottery.
I dunno, I just think these categories are very broad and multi dimensional so that you can make decent arguments against the point that a wealthy background being required.
I really want to take this path at some point. I don't feel like I fit into either of these categories very well and the idea of having my own consulting firm has always appealed to me. I don't know where to start. Can you share some knowledge or tell me where I can contact you? If you're in the Bay Area I'd love to buy you a coffee and pick your brains.
Generally there is better advice!
=== Startup Big Point
Here is a big, huge, gigantic point about doing a startup and owning 100% of it: In broad terms, that's the American way!
Or, it's obvious; just look: All across the US, east to west, north to south, from an isolated house in the woods to a crossroads up to the largest cities, sole, solo entrepreneurs start and run successful businesses. No biggie. No tech. No MBA. No venture funding. No team of co-founders. By the millions -- wrong, by the 10s of millions. If that was so difficult to do, then there wouldn't be tens of millions of people doing it.
=== US Mainline Business
What do they do?
Mow grass -- the ones on my street show up with $100+ K of capital equipment counting the truck, the trailer, the mowers, etc.
Note: Now $100 K will pay for one heck of a powerful Web server farm; if you can keep that farm busy, then just at standard ad rates you have nearly a license to print money. Or, for computing, $100 K in capital equipment is now a LOT.
Do auto body repair.
Do other auto repair.
Sell car tires.
Add asphalt to driveways.
Do landscaping, architecture to grass mowing, for good customers, e.g., any company with nice grounds.
A dentist.
A CPA.
A pizza carryout.
A Chinese food carryout.
An Italian red sauce restaurant.
A manufacturer's representative.
A local wholesale plumbing, electrical, building materials supplier.
A wide range of what can be called big truck, little truck businesses -- buy stuff delivered in a big truck and sell it out of a little truck.
Run several fast food restaurants, gas stations with convenience stores, etc.
And on and on.
Generally these businesses have one of the most powerful advantages in all of business -- a strong barrier to entry. That barrier is, and may I have the envelope, please [drum roll], geographical, that is, the businesses are not in competition with anyone more than 100 miles away. In particular they are 100% immune to competition from China. If they are in Tennessee, then they have no competition with anyone in NYS or CA. Etc. So, if they can do comparatively well in a radius of 100 miles, then they can do well for their career.
A huge fraction of the people who pay full tuition for their children at private universities did not take venture capital, did not have co-founders, didn't get an MBA or a STEM field college degree, were nearly never an employee, and were not close to any of the scenarios in the OP.
Okay, that, my friends, is American Business 101 Facts of Life. That's the overwhelmingly popular version of US business and, indeed, US careers. Nothing else even comes close. And the OP is far away from that.
So, take that US business 101 and, with computing, try to do more -- the computing should be an advantage.
=== Being an Executive
Okay, briefly, for being an executive: No security. None. Zip, zilch, zero. No matter what. Instead are an at will employee that at any time can be fired for any reason or no reason. Biggie reasons for getting fired: (A) As in the OP, office politics. E.g., there's gossip (you get accused, tried, convicted, and fired all while knowing nothing about it). (B) The company does poorly. (C) The company does fairly well but gets bought out by another company. (D) The owner has a son and wants to give him your job. Etc. The crucial point is, you don't own the business.
Just as an executive, your skills, alliances, knowledge of your current job, etc. anywhere else with a dime usually won't cover a 10 cent cup of coffee.
Is there a way? Okay, be in sales and have a nice list of your accounts that do well. You don't really want to be the sales manager, just a good sales guy. If your employer goes out of business, gets bought out, etc., then take your customer list to whatever company in the industry wants to server your customer list. Be sure the industry will be solid even if your employer might not be.
There's just no magic to being an executive. And there's nearly no power; instead your job is to get along, go along, and hope nothing bad happens. If you sponsor a new project and it fails, then you have a black mark on your record, and everyone else has an excuse to gang up to fire you. If the project is successful, then you have jealous enemies all the way to and including the BoD.
Part of this is the fact that currently the US economy has about 94 million people out of the labor force. So, mostly, there's no shortage.
Currently it's too common for Mr. Big CEO to wake up, have a bad day, look at his budget and organization, draw a big X, and say "Off with their heads." In this way big, famous companies have suddenly fired dozens, hundreds, thousands, tens of thousands of people. E.g., at one time, as computing was roaring ahead, IBM suddenly went from 407,000 employees down to 209,000. They cleaned out rush hour traffic over big parts of NY, CT, and NJ.
Another time, at IBM Research, a group of about 100 people got into serious political trouble, and when the dust settled a lot of managers were demoted or fired and a about half of the rest, about have high-end Ph.D. holders, were fired. It was all about work-place politics, cliques fighting each other, etc.
Sure, decades ago lots of people could join a company and work until a nice retirement. Things changed slowly. E.g., could work for Sears for decades and retire. Sears? It's about to go belly up, totally. No more; that's rarely the case now. If you really want that, then: (A) Work for a company, e.g., a public utility, where the employees have a strong union and join the union. E.g., at one time could do that with the Bell System. Alas, even Ma Bell didn't last. A local water company might be better. Be careful about a local electric utility since that industry might change a lot before you get to retire. (B) Work for government, local, state, or Federal. Remember, though, even working for government have to be careful about the slot. E.g., don't be a civilian Civil Service employee for the US military: Then some military officer is running the place; they likely have their job changed each two years or so; so a new guy comes in and quickly doesn't like you or your job, and you are OUT. So, each two years you have to sell yourself to another person you never met before. That person can make a big mistake firing you, but, then, you are still fired. So, for a 40 year career, you have to sell yourself to 20 people you never met before, and you have to be 100% successful in all 20 attempts. That's not good job security. (C) Work for, say, some very solid, stable financial institution, maybe The Ford Foundation.
Officer in the US military? Every now and then you are up for promotion, and if you get passed over three times or some such, then you are out. So, as time goes on, the many lower level officers become many fewer upper level officers. It's not at all clear which lower level officers will leave; it is totally clear that nearly all of them will.
Net, it's better to be a non-commissioned officer, e.g., a sergeant where you can keep your job. Even if you get 4 stars, like General Mattis, you can be out because someone up there didn't like you.
Some private companies have personnel policies similar to the military for their officers: They hire lots of people in their 20s, and by age 35 they are in management or out the door. It's not at all clear who will be out the door, but it's totally clear that nearly all of them will be. A lot of those people would be better off in their 20s starting and growing a grass mowing service, quite literally: There's a good geographical barrier to entry, and the grass will keep growing. Commonly in the US, a Ph.D. in electronic engineering will have a better long term career as a licensed electrician. No joke.
I know a guy, bright enough, who got a Master's in environmental engineering. His real career was as a plumber and installer of home heating systems.
=== Being a Founder
What the OP says about being a founder is quite narrow.
I have a high school friend. His father was selling beer for a small brewery. The brewery went out of business, but he knew a lot of people in the beer business. He went to the NW corner of his state, arranged to distribute about six brands of beer (right, the beer came to his warehouse on a railroad siding via railroad freight car) and sold out of little trucks. Somehow people still like beer! He passed the business down to his son. People still like beer! Good business. Darned good business.
If want to go into computing, then be sure you have an even better business than selling beer.
The OP wants to say that the business idea in computing is not very important. IMHO, that's mostly nonsense.
Sure, if want only routine technology, then the OP comments about employees, teams, etc. are important. But a business with only routine technology tends to have a darned small barrier to entry. Sure, one of the best barriers to entry was virality from a social network with a strong network effect, but that's path seems to be about saturated.
Again, there are 94 million people out of the labor force. So, if you want a job as founder of a successful business, then, IMHO, need to do something new and powerful with a good barrier to entry. Basically you have to plow new ground in US business, have to do something those 94 million don't know how to do.
For those kinds of people, that should be listed as a pro rather than a con. A job you can do purely by schmoozing and not producing is exactly what they want!
For what it's worth, I acknowledge that many/most of these are indeed applicable to all people. I know you're not asking for this, but the points that jumped out at me as possible opportunities to highlight challenges specific to a wider group (most pertinent bits highlighted):
* Figure out the financial plan. I.e. Do you have enough money in savings, do you have friends/family who can provide seed investment, can you bootstrap, can you reduce your spending and save enough give yourself 6-12 months to work on your idea?
* Often times there are hard barriers preventing people from starting a company. In these cases my best advice is to move to a tech hub (preferably the Bay Area) and work for a tech company until you can save the money, make friends with the right potential teammates, or discover the problem that you are passionate about.
* Producing results isn’t necessarily how you move up the corporate ladder. Internal politics are usually as important, if not more so. <- Noted since it's often more than politics.