How a Tech Billionaire Created Two Fortunes and a Software Sweatshop
forbes.com
forbes.com
If they really believe they can measure programming ability by the number of times their workers are clicking things, I'd give a wide berth to their software products.
previously worked on-site at a web hosting company which had similar sorts of spy systems in place - these weren't really checked or used as a primary measure, but more that spot checks were done to see if people were 'generally busy', and also when actual productivity (support request qty/quality) was down or discipline problems occurred the systems would be used to inspect/audit other performance.
programming is for sure less 'mechanical' than routine system support support requests, but I can see the same sorts of measurement as useful in a remote work / no trust environment.
The “cloud wage” story could be very compelling in such situations, but it will likely lead to a lot of issues with the more complex systems. Someone has to be the true “architect” and own the successful evolution of the software/business.
Back in 2014, this article struck me as very insightful on the subject: https://www.japantimes.co.jp/news/2014/04/07/business/gods-e...
If you only have automation or low-end jobs, you are going to lose the ability to make transformative/revolutionary moves. You will still have the ability to refine existing processes, but there are definitely diminishing returns to consider.
The other item that’s also glossed over is sheer productivity - when dealing with more complex issues, experienced developers are a lot more productive, so your $15/hr can easily turn into 10-20x more hours with the wrong experience choice, in the end costing you more.
Hate to use a cliche, but “the right tool for the right job” applies to software too.
When you are the "consulting company", you don't care. You just get to bill more hours.
If you are the client company, you don't care, either. Anyone with half a brain cell in this day and age knows that outsourcing software development is wholesale idiocy. So, if you're doing that, you are either 1) idiots or 2) outsourcing for political reasons or 3) both.
Your options to compete with them are very limited.
Is the answer to every question, "Who is actually doing something creative and innovative?" always, "Me, and everyone else is not?"
Is it bad for software engineering that its reality is starting to resemble subway sandwich artists, and its fiction inside people's heads resembles being a Michelin star chef?
Right now though, it's more like a popular restaurant chef. Moving to the McDonald's model eventually.
I write software now. I helped open that kitchen. The first couple months is engineering, how to get organized to plate 90 quenelles in 4 or 5 minutes under a heat lamp. Writing software is just like engineering that kitchen everyday all day, month after month. It's not about creativity or innovation with food. It's about creativity and innovation with solving engineering problems.
Can you see yourself doing this? We need more diversity at the senior leadership level, please consider it if you haven't!
Also if you don't mind me asking, can you share what made you leave your former profession, was it the stress/physical exhaustion? It seems like grueling work to say the least.
Thanks for sharing your background and perspective on HN!
Two or three times, sure, but ten? Any more info on this? Are Michelin cooks superhuman or Subway people so terrible?
The biggest disadvantage to those outsourced developers might be that they didn't have the chance to learn English as well as the first-world devs, and thus might have issues with communication, which is a huge part of software engineering for sure. But in terms of abilities to learn, they are not worse than anybody.
Majority of freelance marketplaces use the same creepy tracking software for gigs paid by the hour.
His obsession with sales efficiency spawned Trilogy, and in 1990, at age 21, he defied his parents’ wishes and dropped out of Stanford to build his software company.
Six years later his sales were some $120 million and he was on the cover of Forbes.“
That’s a pretty remarkable insight that’s tough to illustrate without including someone as venerable as Jack Welch. It’s the knowledge of what’s possible and how things are already being done that lends an amazing edge to talented/smart people born to the right circumstances. The cognitive leap that you have to make without this knowledge frequently leads people to over-estimate complexity and excellence you’d have to compete against. This first hand knowledge of exactly how top business plan, value and view opportunities is amazingly valuable.
The question is, how do you move this from being a family/birth advantage to being part of education?
I have no intention of starting a startup, but I watched some of the videos, and they seem like valuable new information.
It’s the initial discovery problem. I feel that currently we have all the resources for those who want to start a company, but I don’t know if we are good at showing new genetraion what’s possible across the board. Imagine the innovation we could see if every capable kid got to hang out with Jack Welch and absorb that excellence?
Also the accounting shenanigans of GE which are finally getting much more coverage lately and major role of Jack Welch in it. I'd think most of innovation by hanging out with Welch will be in separating fools from their money. Now a lot of companies would be like this but their CEOs do not get top billing like him.
With the term "sweatshop" in the title, it doesn't seem like the intent is to idolize this guy. The guy's banked some serious bucks. Whether he's done that in a savory or unsavory way is left up to the reader to decide.
Also I find it amusing that it's the "patent troll" part that turned out to be repulsive to you, but not the part about paying remote devs much less money than local devs.
That's the sad part about the article to me - at one time the emphasis in computing was, well computing. In our modern age, it's money.
Glad I was there for the good part.
Many of my friends went to work in Texas for them, only to escape a while later after toiling away on projects for fortune 500 companies which were massively overbilled. Their formula was: hire new grads, pay them well and take them to parties, and soak big corps with dot com projects they neither needed nor understood.
The article is correct in pointing out that many Trilogy grads went on to do great things. But this was not Trilogy’s doing. It was because these people are smart and would have succeeded anyhow.
As for the new strategy of paying $15/hr for sweatshop C++ coders... I can only imagine the quality of that code. You get what you pay for.
$15/hr for C++ coders will get you a highly-talented coder from poor parts of the World who may rival your above-average C++ coder in developed countries.
$15/hr is still a very good wage in poor countries.
It's not that easy and you can bet that some hours are just doubled as well.
And the middleman might bait and switch you on a 7/hr junior coder.
2 years in at current job, where most of the work was done by offshore devs, company now has a team of onshore developers to fix all of the performance and stability problems.
There is a separate and unrelated problem that your bank may also be outsourcing its app to these lightly-trained developers, but that's the bank's poor choice.
‡ I avoided the use of "write" though that's still the case, but in the longer term the app will pretty much be written a la frontpage or powerpoint, or even more high-level (some AI app that just asks some questions and spits out most of the app).
‡‡ I know, I know, but a nerd can dream, can't one?
I don't think that's what's going on at Mr. Liemandt's Code Grinders as it would be completely impractical.
The pizza place would most likely need a lot of help in having something useful built for them, website or app. It would take hours and hours of back and forth to get their business requirements nailed down. Communication, and trust, are the key elements at this point.
Then when development starts, your going to need to show them progress, get feedback, and revise. Then you're going to need to do QA side by side with the pizzeria to make sure you've met their needs.
Picture this all happening through email, or Slack, or some portal with someone in another country, with ESL, and maybe a different time-zone. I've seen it, and I tell you what happens. When it's all said and done the pizzeria takes it to someone they can sit at a table with and figure out how to fix/use/abandon it.
And those payment gateways? Don't get me started. Even PayPal, a huge company with lots of resources, has a terrible muddle for their APIs. There are exceptions, but I've always been surprised by payment gateways lack of quality.
Edit Added an "and"
I've seen my fair share of guys like him. They get rich by buying the crap that people don't want and doing the crap that people don't want to do. You hated them because you felt like it went against the laws of the universe for these sorts to be so successful. You never envied them though, because you realized that these people had miserable lives despite being rich.
As long as these people are looked down on more than they're looked up to, I think we're fine.
Color me surprised.
Calling it a "Software Sweatshop" is a little hyperbolic.
It is definitely mana from heaven, but the barriers can be somewhat high depending on the contractor's locale:
1) they need to be able to successfully navigate their own country's tax and self-employment paperwork and regulations;
2) they need enough up-front capital to purchase powerful-enough equipment to do the job in the first place; and
3) they need telecom infrastructure that presumably supports high-speed internet (i.e. faster than dial-up).
Lol, imagine as the farmers are in the fields, and merchants in the shops grinding away to make a few dollars a day. This remote dev is making a 10x multiple of their pay. Sweatshop? Ha.
They cost a tiny fraction of $15/hour so I don't see how this is a capital-constrained job for anyone.
The theoretically necessary self-employment paperwork is not going to be a meaningful barrier to action in most developing countries.
This model is waning. Eastern Europeans now flock to East Asia in swathes, and are way way more aware of global job market.
This also creates a factor of negative selection: talents leave right after graduation, and remaining labour force is not suited to "evolve" and progress without a guiding force.
If you can't utilize someone to their potential because of some political or social barrier, that's an absolute shame.
For acceptable Indian developers this is normal wage. You get all the benefits of outsourcing from something like this as well as all the problems.
He's bought out many contracts through companies that were not doing so great. Over time the companies that he's servicing contracts for will understand the quality of code they are getting for their money and perhaps change their minds. I give it 10 years.
Right, this was the deal offered to Western factory workers: you, your family and your friends will be tossed on the scrapheap when the factory that employed most of the town goes offshore, but some people you’ve never met 10,000 miles away will be slightly better off, and some other people you’ve never met will enjoy slightly cheaper consumer products.
And people wonder why those people vote as they do.
When the West had an industrial culture, we could compete with inexpensive labor because we had superior skill concentration, logistics, and capital investment. If you're willing to pay a premium, do so. It was Consumer indifference that let it happen.
Everyone gets paid at a rate relative to their local cost of living, remember. Being “cheaper” offshore is merely an artefact of exchange rates and tariffs.
Because you're a human who's part of a society, not just a cog in a capitalist's machine. What you said makes sense, but only from a blinkered point of view that treats market forces as morality. You might as well turn it around and ask yourself why the person with skills from a poorer place shouldn't get the higher wage.
Why is it inherently moral for me to get a certain benefit vs someone else, why would that change depending on where I am or where they are, where I'm from or where they are from?
I personally prefer working with people I can have a high level discussion with and they deliver their portion with best practices, good communication, baked in. That's valuable. I believe it makes your work distinct from someone without those skills.
If it were all anonymous and I can make no distinction, you're equally valuable. There are cases where people from poorer places should and do get the higher wage.
Why shouldn't that person get the higher wage? That person is also part of a society.
Ideally, they should. The problem comes in when a capitalist plays a labor arbitrage game that causes economic damage to real people in his home area, just so he can pocket the difference in labor costs.
Questions like...
>>> If your work can't be differentiated from someone elses, why should you command a higher wage?
...are pretty much always asked from the perspective of a labor-buying capitalist looking to maximize her own profits, regardless of externalities. Those questions have an insidious pseudo-moral tone that holds up the capitalist's profit over other concerns, and that subtly paints a worker's desire to make a respectable local wage as selfish.
It's very rare to turn the question around (at least from a position of power) to challenge the capitalist's decision-making.
US farmers - ~$9.50 USD a month ~1850's Euro labourer -~$652.44 USD a month ~1850's
Silver value in USD: https://commodityhq.com/education/a-brief-2000-year-history-...
References -
US Labour Rate(Farmers - page 6): https://www.nber.org/chapters/c2486.pdf
Europe Labour Rates (Labourer - pages 6): https://www.nuffield.ox.ac.uk/media/2150/allen-greatdiv.pdf
If I were FitBit, I'd send a C&D letter over this.
There's a lesson we can learn from the legal profession. Quite a few people got expensive law degrees thinking that they would quickly earn back the investment, but it turned out that 1) law has surprisingly shallow demand for low- and mid-tier legal skills, 2) law is able to automate much of the low- and mid-tier work, and 3) legal practitioner skill is real, obvious, and exists on a very broad continuum, 4) professional demand is not uniform across the skill continuum.
Sounds a lot like software, doesn't it?
The legal profession bifurcated [1] into completely separate low-paid and high-paid worlds. This "FAANG" thing people talk --- about how there's some qualitative (and quantitative) difference in employment experience between the "good" tech companies and the rest of the industry --- is this same bifurcation pattern ramping up in software.
It's especially unfortunate that in a "bubble" industry like software is (and like law was), it's the marginal participants who are the worst hit by the inevitable crash. Demand for software talent is strong (for the moment), so wages are high and rising. But the people who clump together at the high-end compensation mode --- the ones who are exceptionally good at writing software and who really enjoy the field --- are already in the industry.
A $1 increase in industry-wide average compensation won't, generally speaking, convince a star programmer to join. The person who joins due to that $1 increase is someone on the margin, someone who would really rather be doing something else with his or her life, but who's just barely convinced, by that $1 increase, to try programming. Is this the kind of person who's going to land in the high-compensation bucket? Occasionally, yes, but generally no.
So far, software demand has generally kept pace with available labor, but this situation can't persist indefinitely. What happens when it stops? There's going to be some moment at which the industry recognizes that salaries are too high. There might be some precipitating event --- e.g., the coming inevitable business cycle trough --- or the progress of automation might greatly increase productivity for low- and mid-tier tasks --- or the industry as a whole just might slowly start to ask itself, "what exactly am I paying for?"
In any case, when that event comes, expect more companies to turn into the kind of software shop you see in the likes of Trilogy, or some contract body shop, or Electronic Arts. When the developer bubble finally bursts, the whole industry will look like these places --- except at the very high end of the skill distribution, because the supply curve for high-skill programmers is much shallower than the supply curve for low- and mid-skill ones.
At a certain point --- maybe not today, but probably some day soon --- it'll be irresponsible to tell people at the margins of software skill or enthusiasm to enter the field, because such a person will be able to expect only low-paid work in bad conditions, forever, just like a marginal lawyer today. But timing the market doesn't work, so who knows when that day will be? It could be tomorrow.
[1] https://abovethelaw.com/2018/06/the-most-important-chart-in-...
I really hope the EU actually intends to prosecute those not in compliance with the GDPR.
Anyone who thinks GDPR applies to companies operating entirely outside the EU is deluded at best.
Basically, it covers companies with some legal entity in the EU.
For example, if you live in the UK, you should contact the Information Commissioner's Office (ICO) according to [0].
[0]: https://www.entrust.org.uk/privacy/privacy-and-data-protecti...
You may argue about the (efficiency of the) implementation, but that processing screen isn't a fake; it sends out a large amount of HTTP requests to URLs like "cookie-policy?optout=1" and "optout" for various tracking parties. Those requests take exactly the amount of time the progress bar is indicating.
Don't lightheartedly call somebody or some party a liar before being sure of your case.
If a California resident goes to an EU insurance website, will that EU company have to comply with California insurance advertising laws?
I think that there is a lot of wishful thinking about GDPR and a lot of ignorance on how jurisdiction works, especially internationally.
GDPR has no jurisdiction over companies without an EU domicile or physical presence. And EU citizens aren’t protected unless they are actually resident in the EU.
However, the question might now be -- do visitors to the Czech site have to agree to the same conditions and tracking as do visitors to the US site. If they're doing the same shenanigans on their Czech site as they are in the US, then of course, they are potentially violating GDPR.
However, if the Czech site (as an EU example) IS following GDPR but the US site isn't, then there could be a strong case made that they aren't violating GDPR since the main Forbes site would clearly not be intended for EU consumption; GDPR, while applicable to the EU-side of the Forbes business, doesn't provide a blanket requirement for GDPR compliance across Forbes's non-EU properties.
As far as EU citizens vs. residents, that concept ought to be clear: an EU citizen doesn't have protection of EU laws when outside of the EU just as an American banking in France isn't protected by US banking laws. The passport of a complainant isn't relevant, but their physical location. An EU resident American who is visiting the US isn't protected by EU consumer protection laws for example, during a visit to the United States.
Yes, that's a common point of confusion, but it's completely correct: the GDPR applies to people in the Union, not to EU citizens everywhere (for non-EU companies, that is - an EU company has to apply the same protections for every user in the world).
Via business partners, treaties, subsidiaries, sister companies, and the restriction on the freedoms of individuals from those countries.
> Would US law apply to EU publications?
Yes, in exactly the same way. Whether one has to worry about it relates to the dependence of the two countries on each other and their relative military might.
> Is a representative from the EU going to show up in New York and serve Forbes a summons? I am genuinely curious how a US publication with no legal domicile in the EU have any obligation to follow EU laws.
Each relevant body in each EU state can act independently, and they would presumably serve them a warning in any European office first, but for a US only company they would likely employ a US legal firm to deliver the letter for them. However its unlikely to be a summons, more likely a request for information followed by the penalty that is going to be imposed - there will probably be some opportunity for mediation and it could be escalated to a court.
> If a California resident goes to an EU insurance website, will that EU company have to comply with California insurance advertising laws?
Depends on Californias laws, but presuming the site was intentionally serving Californians then yes, it should, and would, be at risk of penalties in California.
> I think that there is a lot of wishful thinking about GDPR and a lot of ignorance on how jurisdiction works, especially internationally.
Undoubtedly
> GDPR has no jurisdiction over companies without an EU domicile or physical presence. And EU citizens aren’t protected unless they are actually resident in the EU.
The bodies that enforce the GDPR can recover their penalties by engaging any of many different legal apparatus, where they deem it appropriate (which will be rarely, if ever, as they have to convince other internal organisations to back them). It is harder, but by no means impossible, to recover money from abroad or to stop money transacting with a foreign entity.
Anyone present in the EU is 'protected', residence is not required.
---
Forbes media have offices in Paris, Milan, and London. They regulary engage in both high value financial transactions and on the ground reporting in the EU. If they were prevented from operating inside the EU it would cause them severe operational issues, and their place as an authority in Western media would disappear overnight.
Yes. For example Bank in the EU (or at least in France) have to report to the US financial organization if a US citizen open a bank account here.
the opinionated well paid tech workers who have more hard skills than the managers are a political threat..
My high school went from having 3 jam-packed programming classes to a single AP class that barely had enrollment.
You wouldn't argue against people learning math just because there are billions of people who can add numbers at $15 / hour. The point of teaching kids to code is not to make them all professional software engineers but to give them basic skills to automate the boring stuff. If that makes a greater pool of people who can do machine learning or whatever the current shortage is, then those skills can be used to solve more problems than just targeting ads and playing zero sum trading games.