Rise of the 10x Class (2020)
drorpoleg.com
drorpoleg.com
Another thing not mentioned here is that employee productivity is a variable that is almost always invisible before the hire happens. Leonardo DiCaprio can command a premium because he is identified with the work he does. This is not the case for tech workers who's work is typically invisible. Suppose you are a 10x DevOps sorcerer. None of your potential employers will know that in advance, so they are all only willing to pay 1x salaries.
FAANG companies pay higher across the board, not because they want to, but in the hope that by overpaying 90% of their employees (relative to market) they will be able to attract top 10% candidates whose skills are hidden until after the hire happens. If they could price discriminate in advance they would.
The thought is that it would show through your past experience, no?
Resumes or similar self-marketing says a lot less than we would like. If there were good signals here, hiring would be a solved problem.
IMHO building teams that work together well is far more indicative of success than individual high performers, and as a result the economic impacts will not happen to individual "10X" performers but rather teams, organizations, and companies that can harness the network effects (i.e. what we see right now, where companies like Facebook, Google, Amazon, Apple, etc. are more dominant than individual people).
When a country/people are young and poor, like we were in the 1950s, everything is about physical goods to make our lives better. That's where everyone is spending their hard eared money, incurring their labor. Manual labor, to make goods and services -- and those services that don't transmit very far.
Now, 60 years later, everyone has huge material wealth built up -- the legacy of decades of labor and productivity. So first of all there's just a lot more money sloshing around to be spent. Money is spent easier now -- do you remember how tightfisted your parents were about money? Because it was scarce! Now it's easy -- even they are more casual about it.
And then, what is there to spend on? You don't need another dishwasher. So you spend on leisure activities, luxuries, intellectual/social goods. Things that don't require huge amounts of manual labor. Things that can be recorded and replayed, and everyone is willing to pay a couple dollars for.
The people who produce things for that market are of course gonna be the ones who luck out.
But the pendulum swings back and forth, and I'm sure it will again for us some time. Go to another country, and the pendulum is on the opposite side.
I can do this because security skills are a very long tailed distribution. Does that make me 10x to 60x?
> The 10x programmer is a myth, it's just that corporate collaborative software development practices routinely produce teams of >10 that get less done than a single competent developer working independently
My theory is this is one of the main benefits of hiring a consultant. They can cut through bureaucracy.
Pretty much every large company has a lot of good things that they aren't doing because of their dysfunctional internal bureaucracy that causes them to disregard good proposals (and sometimes intentionally sabotage them for reasons of internal politics) until they are re-packaged by some expensive consultants for top management blessing.
Over the years, I didn't come to the conclusion "I want to be insulated from non-technical problems" (which is an easy thing to achieve) but rather "I want to be involved in solutions that are technically trivial, but solve organizational issues". Because those are the ones where the most leverage and meaning exists.
Some 10x engineers have legitimately exceptional technical abilities that stand on their own, but the critical skill for many (most?) is being really good at smoothly fixing broken engineering processes and organizations from first principles. A handful are good at both.
The main benefit of hiring a consultant is that management can blame them for uncomfortable changes.
Ten years later and I'm now adrift in some weird role between an engineer and program director with zero accountability. I just go from Zoom meeting to Zoom meeting knocking down bullshit and connecting the right people in a big company. I've essentially become a giant tube of organizational lube. Feelsbadman.
Hey honey, happy Valentines day!
Reality is in security is we've spent a career navigating, negotiating, and implementing the real power relationships that the technology facilitates. These are performance, economic, legal, business, organizational, environmental, institutional, etc.
The difference between an Olympic medal and fourth place is often just hundreths of a second. Similarly small differences in luck can mean the difference between being classed as "10X" and being classed as "mediocre".
Usually the difference between a high performer and a mediocre one is a combo of talent and leadership. You can’t have one without the other.
No Olympians are mediocre performers, even if they come in 4th place.
Every Olympian would be at least a 10X performer relative to an average person in their sport.
Then there are the professional white collar careers. That pay above average salaries and employee millions. accounting, engineers, law.
Can software development really switch to winner take all? I have my doubts.
Ironically, given the examples in the article, Baumol's example of cost disease was musicians.
I am not aware of Marshallian economics, but I was under the impression that prices (wages) moved along supply and demand curves, and do not have anything to do with production.
So concepts like efficiency and elasticity don't matter? The supply and demand curves for different goods and services varyfor specific reasons. Those reasons are worth studying, and sometimes naming.
Supply/demand is one such way. Another is related to elasticity. If a given job can produce $1.00 of value but the next person qualified for that job only expects $.90, someone should be expected to create that job and capture the surplus. And this should continue until the value produced by the next such job is right at the value produced by that job. So you often expect that the wage of a job should be the value produced by that job, at least at the margin.
Baumol's Cost Disease shows how when one job's value increases, the wage in jobs that require similar skills can see a growth in wages beyond the degree to which it's value increases - that is, the first job following the model described above causes another job to stop following that model and instead be lifted into a supply/demand model.
> Baumol's cost disease (or the Baumol effect) is the rise of salaries in jobs that have experienced no or low increase of labor productivity, in response to rising salaries in other jobs that have experienced higher labor productivity growth.
To me, this seems like the same as
1) the supply of people willing to provide labor x at price y is reduced because the same people have an opportunity to provide labor z at a price > y.
2) supply of people willing to provide labor x for price y is reduced, therefore buyers have to pay a price > y for the same amount of labor x
I do not understand what makes this a surprising phenomenon or which “cost” is moderating the effects of supply and demand. People have better opportunities, therefore supply of labor is decreased, therefore assuming if demand does not go down proportionally, then prices will rise.
For some jobs, demand will not keep up with the rising price and the number of jobs will greatly decrease or cease to exist, such as horse buggy drivers.
Somebody had to look at this phenomenon from outside that narrow micro-economic perspective before it became "obvious" (only in retrospect) to others. That happened to be Baumol and Bowen. Why not use one of their names as a convenient handle for a concept they studied and brought to others' attention? We give "fancy" names to algorithms and even whole systems in computing too, even when their details can be similarly derived from first principles. Do you think we should shun those in favor of purely descriptive names as well?
As an illustration, if milk was just discovered to be useful to make cheese, and the demand for milk rises proportionally more than the supply of milk, then the price of milk would rise. As far as I know, there is no specific name for this “phenomenon”, but there is if you substitute labor for milk?
Edit: I sort of see the significance if the claim is that increases in productivity in other sectors will necessarily lead to decreases in supply of labor which will cause prices to rise overall, but is that true?
I can envision a scenario where increases in productivity are putting more people out of work quicker than it is causing people to be in demand, causing wages to stagnate or fall (in real terms)? It might even be happening now.
That is literally what Baumol and Bowen wrote about. I suggest you look to their papers for the evidence. Even those who posit that Bowen's Rule accounts for a greater share of cost increases in education (trivial to find many papers on this) accept that Baumol's Cost Disease exists. It might not be necessary or happen all the time - nobody but you claimed such - but it's definitely real in some industries or professions.
https://www.advisorperspectives.com/dshort/updates/2020/09/1...
Is it possible that increases in productivity in other professions can reduce demand for labor in other professions (automation), increasing the supply of workers, which then suppresses wages in other professions? Would that not run counter to Baumol’s cost disease?
I appreciate your time in engaging in this discourse. I’m not sure if I will have time to read their papers, but I was interested if there was a simple explanation for why I am wrong that it didn’t pass my initial smell test.
Names are very efficient pointers / handles for concepts. It seems like a useful term to me.
I doubt that if you surveyed a random selection of economists from the 1950s, they would have been able to describe the phenomenon.
The author understands that SWEs relocate right? And that while remote work is "modern" many companies are completely internationally located.
Yet the same company, e.g. Google, pays very different salaries in US, Canada, and Germany.
In sports, billions of people compete from childhood on a physical competition with exactly the same rules where performance is completely objective and immediately visible. People only want to watch the very best, so as long as you have global distribution of live feeds, then of course all the money is going to very tiny set of top performers.
With actors/musicians, it's not 100% objective, but it's still directly based on audience appeal, and you can pretty quickly determine who has popular appeal and draw a through line from various business models to what the superstar can economically be paid.
However in the vast majority of businesses, it's a team effort there is no direct connection between individual contributors and customer choice. The closest role for this would be sales, but even in that case they're selling the product and the brand, not themselves. Furthermore, effective contribution usually requires a fair amount of ramp-up and domain knowledge. As a hiring manager it's incredibly difficult to know who will be a 10x-er before hiring—even if you have reliable inside information from other companies, you don't have a guarantee it will pan out in your environment. Certainly there are some superstar engineers with specific well-known expertise, and they do get outsize offers, but there are very few such roles that require "the top global expert in X niche" and while engineers can get 7 figure offers for these, there's not enough of a through-line to revenue for it to rise to the level of superstars in other disciplines which are more or less a direct function of the size of global attention and discretionary spending they command.