CEO behind Japan’s best-performing stock says his secret is raising salaries
bloomberg.com
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Japan is very very behind in IT/digitalization compared to most western countries. This doesn't just mean it's behind in product portfolio and quality, but that perception of software engineer & managers and still quite behind. The respect that a lot of software engineers enjoys in US/EU is not quite there yet in Japan(and salary often reflect this).
The C-suite usually doesn't have a firm understanding of software/IT world, and instead ends-up hiring a lot of "Scrum-experts/Agile coaches" and hires software engineers from consultancy or recruitment companies for cheap. There's ofc companies that doesn't fall in this category, but for middle-sized companies in Japan (which is the bulk of the economy), this is the true state of things. Middle-men in Japan have therefore been way more encroaching on this, and they have the incentive to not improve the respect/social standing the software engineers have.
"Removing managers" in this article does not mean the same thing as it would in US/EU, conditions are different.
In my last full-on japanese company it was basically impossible to find any developer with more than 3 years experience by accidental design because:
1: No applicants studied computer science in university so they started learning when they joined the company and were assigned a development role.
2: After 3 years they they got promoted to a "manager" level role and stopped doing development. There was no concept of junior developer -> developer -> senior developer progression. If you wanted promotion you went from developer -> manager; it was the same for sysadmins. Their IT and development suffered heavily for it.
A team of 10 "western" style trained senior developers and sysadmins would have been able to do the work of 50 current employees at least for a large overall cost saving even with higher salaries.
Just the way things worked. Japan is indeed very different when it comes to how the workplace works in relation to tech in traditional companies.
Even at 181cm you do have to watch your head though.. I've hit my head many times while going up stairs, and for those who don't know stairs are extremely common because many businesses are split up across multiple floors of a narrow building.
One manager spent 50% of his time keeping an old system he wrote as a developer years earlier from completely falling over because no one else could understand it, byzantine doesn't begin to describe it.
He worked many, many, many hours overtime doing this in addition to his managerly duties but, of course, because this is Japan, he won an award for hardest worker of the year and a trip to Hawaii... which he couldn't take because otherwise the system would fall over.
Do you have any insight into how this works in Japanese companies that do more traditional engineering? I find it hard to believe that companies like Toyota have no senior engineers.
Although I've seen this title on Teams be given to a 28 year old that didn't seem to be Senior quality, but I'm not much more experienced.
I don't have any special insight into Toyota outside of some anecdotal stories from friends though.
The system isn’t all bad. It’s just that it produces general managers at the expense of functional expertise. (The other extreme where 100% of the org’s entire skill set and network is limited to their own silo rarely works outside of Apple) Balance is needed.
Couple of years ago I had to integrate with a newly built api in japan. 2017, and they basically wrote their own web server in Java. Their own xml parsing. It looks like they read the spec for HTML and SOAP and implemented their own variation of it.
It’s the worst integration I’ve ever had to deal with.
If we got a 500 error from their system we had to write an incident report about why our system failed to call theirs. If they tried to call ours and it failed they would call up and we would ask them to “retry the call” and they would ask us to patch the data in our system because they can’t retry.
You get that one who's really damn good at what they do. Just as they are up to speed on your project and working style, they get promoted to manage a group of 10+ engineers.
And then you start again with the next one, hoping that they're as good as the previous one.
There are good people everywhere. You just need to find them, and grow them to where they can shine.
Simple things, like it's better to ask when you don't know than say "yes everything is fine" until it's too late.
Worked pretty well, a few from the team actually ended up immigrating and are still living over here with their families =)
Why do any sort of progression, when you can just have a bunch of skilled people visiting customers to secure contracts, and once projects are started, they can be substituted for an army of juniors? Meanwhile, the seniors go secure more contracts elsewhere.
Basically you get what you pay for. Large consulting companies offer peanuts compared to good software developer salaries. But compared to the salaries you can expect in other fields of engineering if you are an average student (considering the glut of mediocre engineering colleges here)- consulting salaries seem decent.
Create a branch office in India and offer the expected salaries for software engineers and you can find great developers.
Remeber in large traditional japanese companies you don't apply for a job, you apply for a well-known company and then they assign you a role that may or may not have anything to do with what you did at university.
The company I worked at was not a tech company so very few (none? I never saw any) applicants who studied computer science.
On the other hand, don't many western companies outsource IT work as well? Having never worked in US/EU tech industry, I don't see much difference when it comes to outsourcing. (hiring temp engineers is obviously different from outsourcing, but the concept must be the same)
Have you used anything digital in Japan? I find the interfaces to be fast, user friendly, and energy dense. Far better quality than what most of the western software people put out. You might need to clarify what you mean by behind - just business culture?
And then you go on describing the average attitude towards software developers I perceived in the Netherlands… :)
You need official certificates to be allowed to work with high voltage. But the program that controls that machine there, well, it can be written by some Germanistics student who can't find a job in his original field (no offense intended. I know several brilliant programmers who never studied. I just want to illustrate the difference).
If you understand this attitude, you will also understand why the general state of cybersecurity in such companies is such a problem.
They outsourced every possible role in software engineering and IT to India to the bare minimum where all that was left were the devs who worked on the firmware for gov related projects and regulatory concerns meant only US citizens could work on it. For the devs that were left, it was an uphill battle for resources and salaries while it felt like Sales and marketing were put on a pedestal when this company’s entire product was our work.
whatever...
I think you'll find that the people who write control software are mostly Electrical Engineers.
There's this societal idea that "working in IT" is a good thing, but there is no distinction in most people's mind between different IT fields. Most people think that software engineers and people installing printers are more alike than similar.
He ended up moving to San Francisco where he's making 20x what he was making in Austria.
For the rest of the world, or even just the rest of the US, to expect exceptionally high compensation in order to feel respected is unreasonable in my opinion. Software is an incredible tool and I'm glad to still find ways to love it, but as a profession, it's just like any other.
I have felt this way for a while, because I feel we can do a lot more meaningful work within our communities with software than we currently do. But all the developers are instead busy building Nudity in Kettle Reflection algorithms for market place image uploaders while getting rained on by VC money.
Simply becase software development sucks thinking and knowledge from the product/sales/manager silos.
To make things works you have to know much more than many managers do. Effectively you do the digging, the thinking, the analysis, the design - via tooling or via POCs directly, and SDE is the sink who gets everything that other folks didn't think or care.
It's not like Uber driver who drives you where you want. It's more like baby-sitter who also serves like a Virgil, a guide in the hell, and who takes all the risks.
The bubbles that did however did incredibly well compared to the rest of the market. And often crushed traditional companies with a traditional view Software and engineers.
> Software is an incredible tool and I'm glad to still find ways to love it, but as a profession, it's just like any other.
The thing is, software scales almost infinitely. For a doctor to double his output, he'd have to put in twice the hours. For a software engineers to double his. But a 10x userbase growth? Happens overnight at some companies. That's where it's different.
This reminds me of a role I once had back in the late nighties.
I was hired on contract by a multi-national consultancy firm to help out on one of their projects. The need someone to come in with good C programming skills.
When I started I was amazed to find a 70 developers and testers workforce working on the project, most of whom were straight out of university.
A nice earner for the consultancy firm; they were charging their development team out at $150.00 per hour, yet only paying graduate salaries.
It must have been $100+ profit per hour per developer.
At it's worst this pattern is parasitic but at it's best it's mutually beneficial symbiosis -- if we look at the reality of whether the developers could clear the trust barrier (whether it should be there or not is another question) to getting the roles, it becomes a question of what that barrier skip is worth.
BTW, Japan is rife with middlemen taking cuts. If you want to have a chuckle, look into property purchasing in japan/proptech. There are usually 3+ middlemen in the apartment purchase flow here, and fees that you do not see in most other places, ex. "reikin" (AKA "Key Money")[0].
Interestingly in Japan they have "Key Money" and "Lock Change fee", which are two different non-refundable BS fees and they confused me initially. The key money also depends by region, with Kansai having it almost everywhere and in other areas "it depends".
It's hard to guarantee that the labor side wouldn't have been able to land the contract without the labor re-seller, so it's up to your own personal bias to see this as a service or as predatory. Could go either way but on a case by case basis this is subjective in my opinion.
There's not much magic here (well if there is, it can vary greatly), the contracting agencies are middlemen reselling labor that is in various states of compatibility to the company purchasing the labor. Perfectly compatible market actors could be using middlemen when they don't need to, and middlemen are incentivized to make this the case.
The usual questions of whether middlemen are good or bad apply and it's not as simple as it being strongly parasitic or strongly symbiotic in any case, it's more like a spectrum which is why I described it as such.
A bit of anecdata: I know someone who worked for a contracting firm in NYC that hired Japanese developers (and relocated them) to work in the American market and paid them Japanese wages to work at American companies. The Japanese developers were always happy at first because they were blissfully ignorant and didn't know what the company actually charged. Just because the host isn't aware of the parasite doesn't mean it's not being adversely affected -- some hosts just live severely degraded lives with no idea that they're being drained. It's possible to take the stance that labor is simply paying for imperfect knowledge/market conditions but by that logic exploitation might as well not exist, and if that's the argument then we probably disagree on fundamental grounds about lots of things.
> Interestingly in Japan they have "Key Money" and "Lock Change fee", which are two different non-refundable BS fees and they confused me initially. The key money also depends by region, with Kansai having it almost everywhere and in other areas "it depends".
Sure, it's possible that the region a person wants to live in does not have Key Money in Japan, but I wouldn't count that a likely outcome. ~55% of apartments in Tokyo look to require Key Money[0], but I'd argue that even if it's not required, most first and maybe second time renters in Japan will pay it, thinking it's just a cost of doing business. All that changes in the second or third transaction ins knowledge on the renter's part.
[0]: https://resources.realestate.co.jp/rent/what-percentage-of-a...
The thing that still bugs me a little though is the fact that move in costs to the average apartment is 6 months rent. first month + 2 months deposit + 2 months key money + 1 month to realtor. So, a $2.5k a month apartment costs $15k to get started. You can often get 100% of your deposit back when you leave but still, I know lots of people, especially younger people, that saving up 6 months rent to move is hard which suggests it's a barrier to mobility.
Note: I'm comparing to Los Angeles where for large apartment complexes it was often just first months rent + $500 deposit to move in.
Well that's simply the result of having so many middlepeople! :)
The middlepeople figuring out that they should charge a multiple of rent rather than a static fee for the actual amount of work that may not keep up with inflation. A truly elegant solution. Another fun bit is the Guarantors that are sometimes required based on just how much the other side thinks they can trust you (or extract from you, since they often require guarantors they know).
> You can often get 100% of your deposit back when you leave
This I've not seen happen very often, most places will put it right in the contract that they're going to take 0 < x < 5 man out of what you paid just for "cleaning fees" and "AC maintenance" or what not, like an AirBnB would.
> You can often get 100% of your deposit back when you leave but still, I know lots of people, especially younger people, that saving up 6 months rent to move is hard which suggests it's a barrier to mobility.
I can see this, but a friend and I were discussing this the other day and he brought up an interesting point -- it could be that mobility was so common and bustling (maybe during the bubble?) that these middlepeople sprung up as a sort of natural reaction. I don't know the history but it's an interesting theory -- so maybe it's like a bad feedback loop -- middlemen appeared to facilitate lots and lots of real estate deals during a historic real estate boom, but they never geared back down so the friction persists.
Hiring in IT does have a lot of room for taking cuts. Most Japanese companies (even large ones - or rather, especially large ones) are very bad in doing their own recruiting, so they have to pay a lot of upfront fees to headhunters for every direct employee hired. This is another reason why hiring consulting staff can seem cheap on the short term.
They told client, I have 2 years of experience as Informatica developer and charged $50 per hour.
Before joining the project, I had never seen the Informatica tool.
Glad to see I’m not crazy.
Only reason I didn't get sent back the first week was my boss taking a liking to me, same story for the other 30/40 'consultants' starting at the same bank at the same time.
Worse part was the precondition to accepting the graduate consultancy role was a 20k bond that I would have had to pay if I wanted to leave within 2 years of my first contract. While without them I wouldn't have ended up where I am today, at the same time they earned absolutely zero good will from me due to the terrible wage/cost ratio they gave me and the complete lack of any training while I had to take personal responsibility on the client site for my lack of experience.
The boss in the client company (the investment bank)? (Not in the agency that employed you?)
I wonder what your coworkers in the client company thought about you / your skills, in the beginning
It was quite harrowing to be frank, to feel like no one wanted you there but without any choice but to turn up to work under threat of a 20k fee for my 'education' if I quit.
My client was non technical person and we use to get work from Onsite coordinator
They would go a step further and lie that:
-They can quickly expand that team of three mid-level developers to eleven, adding mostly seniors.
-A team of junior to mid developers is comprised of seniors.
-The team is working at FTE on this project and has no other responsibilities.
Currently stakeholders often have to resort to requesting the CVs of all the people involved, but that doesn't shield them from that last trick.
Of course the client is billed $100+/h, while developers can count on around 25-30% of that.
A lot of people got rich like that around here.
Can't the agency provide made up nice looking CV:s?
> client is billed $100+/h
That's interesting, then seems it's not much different from hiring a local person (in western Europe).
> A team of junior to mid developers is comprised of seniors
I suppose the clients usually won't notice? They're often non technical (or at least the managers there?) and don't know what to expect? (If the clients had enough technical in house people, they could do their own recruiting instead, didn't need agencies? Or how does it work)
-Client requires <skill>. Can you add it to your CV?
-I don't know, can I?
Yes! But this is countered by a 30min call with the candidate.
Regarding billing: this is how much SV companies are charged. At the same time they're the ones who fall victim to such practices the most often.
For everyone else the average rate is around $45-55/h and you get what you pay for.
They brought out all of the most highly educated people front and center when bidding a project. People with masters and doctorates in the field. Dozens of them.
Of course they won every project bid.
Then the experienced people leave to front the next big project and the actual work is being done by people fresh out of school combined with outsourced teams.
The result was utter shit every single time, but their sales people had the magic touch and managed to get the clients to sign the weirdest contracts. All missing features and bugs were usually fixed at a hourly rate in a leisurely pace. Pure profit every second.
I worked for a small firm that managed to snag a few of those projects, mostly because of our legend of a salesman. The customers were astonished more than once when we delivered features in weeks, not in months or years. We consulted them during development instead of at end of a quarterly cycle. One time our caffeine-for-blood 10x coder actually coded a full proof-of-concept implementation during the sales meeting discussing the project =)
When they get enough confidence and experience to realize they're underpaid, they'll jump ship to a company that pays senior-level salary (but still bills at very similar rates!), or to a consulting firm that mostly pays commission.
Don't quite agree with myself whether this is an example of a gross inefficiency or just the logical way to train people.
You can find more and contact us if interested https://topics.shiftinc.jp/recruit-daae/
https://www.theregister.com/2015/09/03/apple_wagefixing_clos...
I thought it felt strange to know(although they tried to keep it secret) that one received about 25% of the work one did in terms of salary. This was a hugely profitable business model for a company and in a more competitive economy, such models would be difficult. Apparently, this gentleman realised that if you can cut off these middlepersons there are great opportunities for business, you could double and triple the salaries of the employees and probably still make a profit.
At the time I thought the in-house knowledge and expertise these people would take with them when they moved elsewhere would be a big loss, but then the company was bought and dissolved into a larger parent, and that knowledge mattered exactly zero.
I gathered up a ton of data points to try and prove this here:
https://japan-dev.com/blog/software-developer-salaries-in-ja...
I'm also attempting to keep track of modern companies that operate in Japan and pay globally competitive salaries here:
It's an exciting time for Japan (especially Tokyo).
To me, that raises the question of how to find out if someone from another field, will be able to get good at software.
This CEO mentioned they have training programs -- how do they know if someone from, say, biology and with some basic programming skills, is the right person to hire and maybe join a training program
Chances are that Tange hired well qualified employees tht fit the corporate culture (and fired the ones who didn't fit in), and continued to reward as objectives were met.
Remind me of Netflix and GE 20 years ago.
- The entire japanese job market's wages are depressed[0]
- In 2019, pressure had to come from the PM (not the local unions) to raise the minimum wage to 1000 yen/hour (~$9/hour)[1]
- Engineers are underpaid here, possibly more so than the EU in relation to the US. This is amplified for japanese companies (whether "black"[1] or not)
- With nationalized healthcare and generally low cost of living (even in Tokyo, a "world city"), most workers do not feel the pain of being underpaid sharply. Cultural differences and a propensity to save (more ant than grasshopper, let's say) generally feels like the backstop behind the economy (other than the BOJ's enormous purse and very active involvement).
- There is a sort of inbuilt trust in the society that expresses itself in economic transactions (loan companies can be very trusting, risk is considered low with Japanese applicants, etc) and greases the wheels of commerce most of the time, if all participants are local. There are other factors (sometimes the same ones) that make it difficult/slow down japan but those are well discussed generally.
- "Super Salaryman" is a colloquial term here (I can't find it on wiki or elsewhere) for a salaryman[3] that makes 10 million yen (~$90k) per year
- Japanese companies often provide "free" company housing to new grads to enable them to save while being paid relatively little. Many live with for a bit after graduating (women more so than men) as well without much stigma.
- Company standing/appearances mean alot -- $60k at [large conglomerate] is far and away more prestigious than $80k at [unknown startup] in the eyes of many.
[EDIT] Added some more from a different comment that might be useful.
[EDIT2] - fix the super salaryman yen estimation, confused with 10 million
[0]: https://www.japantimes.co.jp/news/2021/03/17/business/lowest...
[1]: https://www.japantimes.co.jp/news/2019/06/07/national/japan-...
[2]: https://en.wikipedia.org/wiki/Black_company_(Japanese_term)
Japanese companies also give pay bumps eventually of course, and are very loathe to fire (worker rights are strong in japan), with an engineer's salary of "only" 100k (which honestly was being paid to interns at FAANG 10 years ago) you could raise multiple families here.
There is something called a "super salaryman" which is for salarymen who make ~$100k (1 million yen IIRC). Achieving this status is recognizable and makes a lot of things (getting loans, etc) easier -- that should say something about the mindset.
It's still unclear if engineers in American are ridiculously overpaid, or if engineers in Japan and the EU are ridiculously underpaid. I lean towards the latter.
[EDIT] - forgot something, it used to be common practice in Japan to pay people according to life circumstances (getting married, children, etc) or other things (lots of info here[0] though it doesn't directly cover this was something I learned studying in Japan in some undergrad Japanese management course). It would be naive to think people aren't paid slightly differently because of their life situation here though -- it's very easy to rationalize paying someone more because they have more "responsibility" at home/in society, and maybe arguably even morally correct.
[0]: https://www.ilo.org/ifpdial/information-resources/national-l...
why do you only compare to Japan and EU? American engineers get paid more than anyone else (except for EU outliers). I make slightly above 100k in Australia, it's a bit tight with the housing situation and cost of living but it's liveable. Cost of living in the US is lower except for maybe healthcare but engineers get companies pay for them anyway.
I don't have insights into other engineering, but I think software engineers are overpaid. Would I enjoy being overpaid? Of course, but it's hard to say it's fair pay considering what people in other professions are making.
Well those are just the biggest/most relevant tech labor markets I could think of, roughly by GDP. I don't know much about Australia but couldn't comment there, thanks for the insight.
> I don't have insights into other engineering, but I think software engineers are overpaid. Would I enjoy being overpaid? Of course, but it's hard to say it's fair pay considering what people in other professions are making.
I don't think comparing pay across professions makes sense -- why compare a plumber or doctor to what a software engineer does? the outcomes are completely different, the risks are completely different, the upside/profit potential is completely different.
I lean towards considering software engineers as underpaid because the power of automation (whether software or hardware -- because you generally need some kind of soft/firmware to make robots move) is insane. If software engineers were ever paid a percentage of the revenue impact they generate (which is not how markets work, but I digress), software engineers would be paid much much more. I think it might be possible to compare across professions if you think of % of value creation captured let's say but it gets tenuous.
In the end the only "fair" determination is what supply and demand based markets dictate. They're not perfect, but they approximate other forces/influences decently enough. When those aren't enough, governments may need to step in to enact policy.
> you generally need some kind of soft/firmware to make robots move) is insane
The fact that you completely ignore the hardware is very telling. CPU has been improved according to Moore's law in the past few decades, if anything modern software engineering failed to live up to that potential and has been free riding on top of progress in hardware.
It's insane to make robots move but software is a small part of that, there is also mechanical/electrical engineering, battery techs etc. Software sitting at the top of that stack shouldn't takes all the credit. It's very hard to innovate on the lower layers with all the lab work and physical constrains.
Hmnn but doing it that way feels like it would devalue doing things smarter which seems to be more beneficial to society. Single-mindedly incentivizing labor seems like it would skewer efficiency -- I guess like most things the right answer is in the middle.
I'm not sure what you mean by "viral" things but I'm trying to discuss only about work output. If the work output is virality (let's say a social media manager), then it makes sense to measure that way, but usually businesses don't deal in that currency -- they deal in product shipped out or contracts landed, etc. That said, I'm well aware that systems that think themselves to be closest to the capitalist ideal are pretty brutal on the cogs in the machine.
As a side note, it's a red flag for me when I see github projects that are too concerned with stars/going viral, or even when I see presentations about projects that mention stars. Everyone thinks it's silly but everyone keeps doing it -- if only we'd stop then people would start judging projects on things other than adoption. Then again, adoption is the biggest metric for most people, because it generally is a proxy for "availability of free support/feature development", and in that sense I'm guilty of the same.
> The fact that you completely ignore the hardware is very telling. CPU has been improved according to Moore's law in the past few decades, if anything modern software engineering failed to live up to that potential and has been free riding on top of progress in hardware.
> It's insane to make robots move but software is a small part of that, there is also mechanical/electrical engineering, battery techs etc. Software sitting at the top of that stack shouldn't takes all the credit. It's very hard to innovate on the lower layers with all the lab work and physical constrains.
Agreed! There is more than enough value to go around to be shared between all those kinds of engineering -- just because I didn't mention lithography engineers or materials science engineers or people who smelt silicon doesn't mean they don't exist and don't deserve to be paid.
I read history books, I'm not that stupid.
The reason I bring this up is a couple of comments up you said software creates tremendous value, I guess this is true for many other types of innovations too. You proceeded to say software developers need to be paid proportionate to that value and I disagree there.
If we look at salary as incentive I would say that software engineers get enough incentive to do our job. As long as we get paid better than most other professions, society/the economy don't need to pay us more.
While pay should not be based on labour, it should be capped, probably based on the labour. Otherwise every cog in the machine earns some royalty (infinitely, if the machine scales infinitely) and there is no money left for "non-machine".
The bad thing in this industry is work/life balance, we just need to fix that. Although the pay in some countries are atrocious, I'd say that software engineers in most western countries are fine.
Didn't imply you were! I am assuming the best as people do here on HN.
> The reason I bring this up is a couple of comments up you said software creates tremendous value, I guess this is true for many other types of innovations too. You proceeded to say software developers need to be paid proportionate to that value and I disagree there.
> If we look at salary as incentive I would say that software engineers get enough incentive to do our job. As long as we get paid better than most other professions, society/the economy don't need to pay us more.
> While pay should not be based on labour, it should be capped, probably based on the labour. Otherwise every cog in the machine earns some royalty (infinitely, if the machine scales infinitely) and there is no money left for "non-machine".
So I still disagree with this point, but I want to point out that I am in favor of the idea that every cog in the machine earns a royalty on every piece of the process. I believe both machine and non-machine could win in that situation. If you have a new idea (and the funding to go after it, etc) then you get to decide the cap table essentially -- so it's up to you to set rates on the royalties and up to labor to agree/deny. How you'd work out royalties in relation to work done/etc is difficult, but it's something that feels like it can be worked out. Pensions used to be a thing, and they're kind of like that.
> The bad thing in this industry is work/life balance, we just need to fix that. Although the pay in some countries are atrocious, I'd say that software engineers in most western countries are fine.
Weird, I think that work/life balance for software is actually really good -- you're not going to find much work/life balance (or companies that even pretend to care about that) in the blue collar job market. The ability to up and move with transferable skills is really remarkable in tech as well... In short I agree with you that tech has it good, but I don't think it makes sense to restrict that "good" based on the "bad" of other fields -- we don't need to be equal. If workers are getting exploited outside of tech, let's make them less exploited and get them what they're worth -- if tech workers are exploited let's get them what they're worth.
The question of how to determine that worth is the big difference we're at loggerheads about I think, and I don't think it makes sense to judge by amount of "work" done. That very idea is rooted in some sort of moralistic argument that work/expenditure is good/virtuous/worth being paid for, and I don't think that's a shared value. Labor is given meaning by the fruit it produces, and that's how I'm trying to judge the value of labor -- the value it produces (whether immediately or down the line) -- royalties do that rather well compared to our current system.
According to what metric? I suspect most of the stellar SV salaries come from the economic model.
I disagree. The value created is going to be accreted somewhere, and I would prefer that somewhere be the labor that created it rather than the capital funded the creation.
Look at how much some YouTubers make. Due to the Internet, they can reach far more people than before and make far more money. Also, their popularity begat more popularity without commensurate additional work on their part.
The same is happening to tech companies. You have that same power law with a few at the top making a lot of the money. It applies to YouTubers, tech companies, software engineers at those tech companies, etc... The rise of tech billionaires is another manifestation of this.
Of course this is creating a lot of pushback from other parts of society that are sometimes actually losing influence, money, etc... since there is a negative feedback loop on the other side.
You can work very hard (dig useless ditches with shovels) or on very tricky things (write about things nobody cares about, nobody understands and do not matter) and not make things of much value. A society that does that in aggregate is a society that either dies or falls behind.
0: https://www.businessinsider.com/tech-companies-cutting-salar...
1: https://www.zillow.com/home-values/ (12% YoY for two years is scary).
House expensive -> salaries jump -> people have more money to pay for house -> house becomes more expensive.
This is like arguing about the chicken or the egg. More housing supply would help to a point but it would take an order of magnitude change to make a dent in the current self-reinforcing cycle, and probably would need that level of increased production for a period of time.
0. California existed
1. Government investment comes to the valley during the cold war in early SV companies
2. Innovation happens in leaps and bounds thanks to the government checkbook
3. Profit is made hand over fist by some people/groups/entities
4. People/groups/entities from (3) buy more of everything
5. More People & entities come in search of interesting ideas/cutting edge technology/profit/fame/etc
6. return to (3)
Stanford was founded by Leland Stanford, the robber baron who owned the Central Pacific, which built the transcontinental railroad. This has more or less been the cycle since the Gold Rush.
The maximum possible salary doesn't change because of more expensive housing, only your ability to negotiate for a salary rise does. Therefore expensive housing will let you get the maximum possible salary at most.
There is a self reinforcing cycle but it has nothing to do with housing. You're saying that expensive housing is the only factor in salaries which is completely wrong.
The self reinforcing cycle is that developer salaries rise in Silicon Valley, people start moving there, which kicks out existing residents. You can enact rent control and rent prices will stay the same but you still end up kicking people out because nobody is building anything. The reason why it is self reinforcing is that developers living in close proximity results in agglomeration effects, each additional developer makes every other developer more productive.
I've never claimed that rent control works. But house prices would not keep rising if no one had the salary to afford the mortgage. People still do, they're just all concentrated in the one profession, and due to bumper results they can demand more.
You probably couldn't negotiate SV level salaries in, say, Tulsa, and pretty much every large company I have heard of expanding remote work is doing so with geographically adjusted pay downwards from SV. (I never really got the angle of people who thought they would get to have their cake and eat it too with SV-level salary and dirt-cheap COL; employers aren't blind.)
Anyway at the senior levels the pay is even more stupid high in SV, way more than anything you'd need to live on. How high do salaries go in Australia?
Some outliers are Optiver (a prop trading firm) paying 160k (half of which is bonus) and Google paying (up to I heard) 125k to grads. However the number of companies like that in Australia you could count on one hand (Amazon, Atlassian, Canva), so there is nothing to drive average salary up like in SV.
RSU is way less common. There are also cases of double standards such as companies founded in Australia expanding to the US offers way better perks and RSU to US staff but stop offering RSU to new Australian hires.
100k USD (So ~130k AUD)? Even if that's 100k AUD, it's a bit odd to hear that it's "tight" when you're on 100k. I didn't think Aussie's COL was that high.
COL is higher than most countries in the world. It being a remote continent, that should not come as a surprise. Average house price in Melbourne is now AUD 1m or USD 775k
I'm curious why you would think this. In some ways software is a trade, but what makes it unique to nearly any other profession is its multiplicative effect. One software engineer can write a program that improves the productivity of thousands or more people.
What would you pay the person who invented the lever? Now, what you would the pay the person who invents the lever every couple weeks?
If anything, many software engineers are still underpaid.
There are indeed developers working on useful things to society, but they usually work on top of amazing intercom and hardware infrastructures that drive more innovation and deserve more credit than their crappy software.
Speaking as a web developer.
The "multiplicative effect" is easy to translate to economic factors: it's what allows software-based companies to have very high marginal profit. The average net profit margin of a small business in the US is less than 10%, but in scaled, software-centered businesses it's not unusual to be above 30% or 50% due to the zero marginal cost of production.
But for every company like Facebook, Amazon, Oracle, Google etc which understand this and plays to it to shoot for sky-high unit margins, there are N companies like Tata Consultancy, Accenture, Capgemini (or in-house IT departments) which effectively employ software engineers to do non-reusable "glue" tasks where the margin expectation is topping out somewhere between around 10%. These folks cannot pay as much for talent, in part because their stock isn't valued nearly as much, whereas it is a relatively cheap source of compensation for tech companies.
A key to understanding the difference between US and other markets is the 1:N ratio. Software engineers in the Bay Area are gifted with very low ratios, and places where the ratio is higher in my experience have much more depressed software engineering compensation because there are not enough high margin software businesses to drive them.
The market is subject to market failure, manipulation, boom and bust cycles, depressions, can be undervalued, overvalued, etc.
You're right about paying people differently based on life circumstances - but this generally happens in the form of substantial tax cuts for couples with a non/part time working wife (e.g. [2]), rather than by paying them more (although there are some government benefits like a child allowance).
Mostly nitpicking here! Appreciate your contributions to this thread, you're right on the money for the most part
[1]: https://www.nippon.com/en/japan-data/h00759/ [2]: https://www.wsj.com/articles/BL-JRTB-17152
I wonder if this acts as a somewhat hidden subsidy to life whereas for people in many Western countries it is normal to think "there is no way I am living in area X/Y/Z" due to security concerns for them or their families, in Japan you basically don't need to take that into consideration at all. Everywhere is pretty safe (relatively speaking).
This is all speculation and I don't live in Japan, don't speak Japanese, and have never even been to Japan. So it is all based on reading other's views/articles etc.
Even if I am completely wrong here, it is interesting to consider the economic costs of lack of personal security for men and especially women. All the extra costs paid, opportunities missed etc.
There are no "good" or "bad" areas, only "rich" and "poor". If you're a student/minimum-wage worker who can only afford to live in certain areas, you're not forced to deal with the crime/drugs/general shitheads you usually encounter in the "bad" areas in the West.
> This is all speculation and I don't live in Japan, don't speak Japanese, and have never even been to Japan.
So what did you base this speculation on?
As a foreigner living in Japan, I can confirm this is true. Much of japanese society benefits from this homogeneity. Hard to quantify a lot of these benefits and even harder to compare Japan to somehwere as big and varied as the US, but there is certainly grease in the wheels of society as long as you are the average case in japan.
That said extremely homogeneous society is a double edged sword. Personal computing never took off in Japan as much as it did in the US, and the youth here are extremely disadvantaged because of it -- they're proficient with smart phones (roughly around 2010/2011 they gained mass adoption/cleared the popularity/acceptance hurdle) but it absolutely does not feel like there is enough proficiency being built in japan for success in the increasingly digital present and future.
[EDIT] - the proficiency I mean in the last bit is "real" computing -- i.e. using computers to create content, programs, and other useful things, rather than simply consuming it. I'm likely blinded by my own biases, but I see the ability to use photoshop/gimp, after effects, IDEs, terminals as abilities that award more leverage than being really good at using tiktok (which can indeed make engaging content) or drawing apps on iphone/etc.
I assume Canada doesn't primarily use local property taxes to pay for schools. This whole better schools thing is in higher income areas is a self imposed problem in the US.
Are you sure about that? A lot of real-estate listings I see here boast about having good schools.
Just think Silicon Valley.
For instance low elevation areas are usually weak to tsunami, river areas can also flood, and former swamp and artificial terrain can liquify under seisms. There are hazard maps detailing the risks, and avoiding riskier areas will usually cost a bunch.
Buildings also get more expensive depending on their level of resistance against earthquakes.
Sizeable seisms are not that rare (way more than “once in a lifetime” kind of event), so you might still be spending a decent amount of money to try to have a better chance at surviving them.
There's definitely huge variation in quality of areas in Tokyo (more or less parks, more or less access to services etc). Less so now, but many areas had a good amount of crime too! Loads of people don't want to live in areas cuz of the "bad vibes". People get stuff stolen here too! And there's a "good school"/"bad school" thing for certain areas.
But there's a baseline that is still something you can survive with. So yeah maybe you have a shitty environment but it's not "the entire bottom has fallen out" like chunks of the US. The schools have (some) money, and (relatively) clean water comes out of the pipes. And if you make very little money there is some semi-public housing that can fit a family of four.
And poorer families are given cash, not food stamps with 1000 exceptions to them.
All this sociological exoticism (mainly from Americans) is really missing the forest for the trees. A lot of it is the result of giving people some means to survive, even in difficult times. The US would change a lot if it could adopt that attitude.
I's recommend you try doing some back of the envelope logic/math here. I think you'll find the personal security effect negligible (unless you're comparing with south africa).
Even to someome like me who leans towards "race realism" (e.g. racism) this sounds like nonsense and dogwhistling.
There's a very real truth to japan's generally law abiding culture and it's the double edged sword of homogeneity. "good area"s didn't signify anything about race/culture difference to me (I wasn't even thinking of foreigners/non) in the negative, but more about how the basic "shared programming" of japanese culture is generally tilted away from crime/disobedience/singular action and towards law abidance/obedience/group action. If you take a look at how certain systems are set up (online security, in person security, how paperwork is done, etc), it can only exist in a country with very tight cohesion which comes from very tightly held shared values (or at least the appearance of that), whether that's a good or bad thing.
I didn't see that the commenter was implying that the heterogeneous portion was responsible for all the crime, but just that the dominant culture was on average more lawful than another might be, and that since that culture was so concentrated crime in general was lower than you might find in other places -- reducing the need to worry for everyone who lived there.
That said, Japan definitely has that kind of insidious/hard-to-demarcate racism/classism/etc. Japan as I've experienced it is just really good at 'other'-ing groups of people in some way or another and you could see it as a product of the culture, their historically generally xenophobic nature (also culture, I guess), or some other things.
Hidden subsidy? It's not a subsidy. Americans self impose an additional burden on themselves. They want their homes to be expensive because they don't want undesirable people to live near them.
This is common mostry in the anglosphere. In many other countries there is no such difference.
Maybe you got confused because China, Japan and Korea group numbers by powers of 10 000 ("man")? Now a 1000-man (10 million yen, around 90k USD or 75k EUR) salary would be amazing, the average Japanese salary is 3 million yen.
> That's a ridiculously low salary here, fine for a college kid with a part time job ("arubaito") at your local konbini, but not much else.
True -- min wage is 1000 yen, not hard to work out the lowest theoretical yearly salary would be with a 5 day work week. The usual exception of waiters that are below the min wage isn't here since the service sector generally doesn't do tipping.
> Maybe you got confused because China, Japan and Korea group numbers by powers of 10 000 ("man")?
Yup this is exactly it. Can't get used to dealing with that extra order of magnitude.
The worst part is trying to read out loud a number. It's fine when you see a number like 1億6432万4871 and you know exactly where the splits are, but most of the time they will just use commas as thousand separators and write numbers as 164,324,871, and then it becomes really difficult to parse numbers, even for them.
Yep, or trying to figure this out in front of someone you're making a deal with -- normally I'm all alone writing an estimate/invoice when I'm figuring out. Sales in japan is one part of the japanese business experience that I do not do, and avoid every time I can.
Most of the time I just do everything in dollars -- Americans have a reputation for thinking of everything in American terms, so why disappoint? On a serious note though, a lot of local counterparties are fine doing things in dollars here as well.
Anyway, you are lucky, as the dollar/yen exchange ratio is close to 100, so you can drop or add two zeroes and get a good approximation. For us the euro/yen ratio is around 130, such an approximation would introduce too much error.
Is the japanese word for a part-time job really the german word 'Arbeit'? Amusing.
The BOJ is very inactive. Yes, the numbers are big but that money hasn't entered the economy.
I don't mean to sound combative but this is such an extreme statement (in my view) that I'm eager to find which scenario is true. The BOJ is so active that we talk about the progression of the US in terms of "japanification" -- as in the US is going somewhere (in monetary policy) japan has already been. ZIRP, extended forever-QE, messing with whatever rates they needed to, buying JGBs, buying stocks. BOJ is not an inactive central banking institution. This doesn't even take into account the borderline conspiracy theories floating around on the way the BOJ exerts control(summed up by Princes of the Yen[0]).
Could you explain a little more about why you think the BOJ's actions in the last like... 3 decades have somehow not "entered" the economy (which I don't think is synonymous with not affecting the economy)?
I've only ever heard of this TV series[1], about a regular salaryman who becomes a superhero.
Crossing the 1000 man (10 million) yen barrier is a thing though, I just don't know if it has a special name.
That actually fools a lot of websites - like NYTimes and I think WaPost.
Just clear everything upon exit. Works like a charm so far.
Based on what can he guarantee that raises in salary caused the company to grow?
If the formula is so simple couldn't other companies copy that and grow 5500%?
You cannot. It depends if you’re buying commodified labor and selling commodity products. Walmart and McDonalds franchisees are not going to see much difference other than higher labor expenses and reduced sales due to higher prices at competitors.
When I worked as an assistant manager at Burger King, you could see employees that were more productive by a large factor. If paying them more led them to stay longer it would have been a big win.
The best could do the work of 2-3 people, if paying them 1.5x more means they stay, you more profits on lower labor costs.
What is hard to do is create a repeatable process for this. And trusting local management.
I only stayed since I only had to work in the early morning and the work was less than a block from my house. Also the other worker "Dave" was studying robotics at the local college, it was amazing how much the other worker tried to put him down because he did not spend the night after work going out for drinks with them (neither did I).
Looking back, if the store had more workers like myself and Dave, I bet we could have increased the sales 20-50%.
The fact that there are tens of thousands of restaurants not hiring workers like yourself or Dave to increase sales 20% to 50% means there must be something preventing that. Such as insufficient number of workers like yourself or Dave at the wages they can pay and also sell at a low enough price, or the inevitability of workers like yourself to leave for greener pastures, or maybe sales would not go up 20% to 50%.
Either way, the market data is very clear for some businesses that they aren’t able to necessarily differentiate themselves at scale to earn enough profit to offset the costs.
That’s what the current business landscape looks like to me when I see the various restaurant options.
And you would never be able to pay enough to keep them and still sell at the low prices. They will move on to bigger and better things as soon as they can, and the proof is the astronomical turnover in almost the entire mid and low tier restaurant market. There’s a reason it has the widespread reputation of being the least desirable, dead end jobs.
The proof of my statement being true is reality. All the management at retail stores and restaurants and hotels are not stupid, they just know that the market for buyers willing to pay the extra marginal cost required for buying upper tier labor is too small, and that even with the high turnover, most customers are satisfied and unwilling to pay extra to reduce turnover.
It’s similar to how 80% of people’s needs are solved by tools from Harbor Freight rather than festool or snap on or other fancy tool brand.
For example: One reason I said we could increase sales is that repeatedly we suggested putting a menu list further from the order window so people could see and decide what to order before we asked for their order. Management refused to even listen. Often someone would drive up and then spend time reading the menu before deciding what to order.
Compare this to my local Dairy Queen, they have two menu displays. One right beside the order intercom and another two car lengths earlier, I often see people when they drive to the order area give their order right away because they know what they want, they already had time to make up their minds.
The fact is, in most places management sucks at their job.
The other aspects to consider are, are the customers willing to pay the extra marginal cost for the marginal increase in utility, and will objectively, will the cream of the crop stick around for these jobs?
It’s pretty well opined that customer service/retail/restaurant type jobs have the worst quality of life for those working in them. The amount of money needed to offset the quality of life issues at work is simply not possible for most restaurants.
Boeing is a great example where management has spent the past couple decades getting rid of their competent employees to move production to cheaper areas that produce planes which have all kinds of quality control issues (metal shavings left throught the plane, copious wiring faults, numerous structural issues, etc). The new Boeing workforce has minimal experience in aerospace and is not paid enough to stick around long term.
In n Out, Costco, Dick’s, and Burgerville exist in the richer parts of town/country. You can figure out which side of town has more money based on which stores are there.
Replicating his approach would be difficult since it is based upon the premise that engineers are actually creating value for the company and acknowledges that management is a cost centre. That seems to be diametrically opposed to the culture of many businesses. (That's not to dismiss the value of managers since they are necessary for the operation of a business. It's simply a recognition that clients pay for the engineer's product, rather than the management's labour.)
I think having equity incentivizes employees to focus more on the welfare of the company than a fixed salary. I may be wrong though
Increased equity = Push employees to work for company stock growth.
But yes, $1 equity is not same as $1 salary to the employees
Not sure about japan, but in India it is expected that on average as an employee you get a 10 to 15% hike year on year primarily due to inflation pressures.
How would this company be able to afford this if they are both reducing prices for customers while simultaneously increasing base salaries. Wouldn't the employees leave after 2 or 3 years as the hikes would not be possible after sometime?
It seems like the real reason for this firm's success though, is removing multiple layers of contractors. Just hiring skilled engineers and paying them fair rates seems sufficient to shake up the industry. That seems sustainable to me - provided they keep salaries competitive - presuming some of their competitors try a similar approach.
I'm sure there's a direct link between increasing salaries and the prevalence of job-hopping.
But this doesn't come anywhere close to what a software engineer can earn on the highest paying companies here, like Google or Indeed (levels.fyi pegs Google L4 as earning 14-23 million JPY per year, though the dataset is a little bit small).
Even the large local IT-focused companies are competing for talent: Yahoo, Line, Rakuten, Works Applications, Mercari etc. will all pay up to 11m-13m for non-manager software engineers (even though they won't necessarily pay much higher for entry-level engineers). Many well-funded startups are also paying 7m-10m salaries to their engineers.
The pay gaps between different companies in the very same city (Tokyo) for the same position can be quite high. You can read more about it here: https://japan-dev.com/blog/software-developer-salaries-in-ja...
In short, if Shift Inc. is paying around 5m for their engineers, it might help them fight high turnover, but it won't be enough to bring the best engineers. There are companies which are both more well-known and stable and are still paying higher salaries.
These are higher, although probably not representative: Security Engineer (in their 40s): 13 million yen Automation Architect (in their 40s): 10 million yen Q.A. Engineer (in their 30s): 9 million yen.
These salaries are on par with the top paying local companies, but it's quite suspect none of them are registered on a third party site. They might be rather new.
I don't think you can really convince most employers of this though.
These employees are optimizing for free time, not salary. As someone who thinks big tech pays ridiculously more than is necessary for a comfortable lifestyle, if I could work 1 day a week for 1/5 the pay I would (I understand why working so little would likely not make sense, I am just fantasizing).
10x more productive is probably a poor way to phrase what I really mean. 10x more impactful probably captures what I mean better.
I used to work full time (50 hour week including commute) for a company with a really high-performing software culture full time, and quit to do my own thing just before COVID.
I now work about 20 hours a week and pull in a slightly higher wage compared to before. Better yet, any productivity improvements go directly to the bottom line, so I experience more wage growth in a month now than I did in a year back in industry.
Not mention meetings are very painful to schedule, because nobody really wants to take meetings at 7am, 9pm, etc.
The main controversy in the political discussion is around paying low wage workers more.
says the strategy that turned his company into one of Japan’s best-performing stocks may be surprising: He buys smaller firms and boosts their workers’ pay.
Tange’s
Shift Inc., a software tester
, acquires other businesses
near the bottom of the industry supply chain
and
raises their engineers’ salaries.
He says he’s able to do this and still charge competitive prices by
cutting out layers of companies that serve as middlemen in the outsourcing process.
And having more workers leads to higher sales."
The higher pay means he has the pick of the good employees.
The company itself is contracting, they just cut out a huge value-skimping set of middlemen, and the savings involved mean they can simultaneously undercut their competitors while pocketing more money, which is fed into employees' salaries.
Japan is not the US, Japan is a very small country that is basically overpopulated. Not just because it is a small country, but because most of Japan is highly mountainous and building space is just in the valleys.
That makes life extremely artificial there. Engineers are overworked and it is normal for them to live in the city isolated from their wife and children, in an apartment that your employer puts for you and that you just can't get on your own, something similar to health insurance in the US.
The pressure is so high on just one person to sustain the family in a life that is just work and work, and social relationship with work colleagues usually imply drinking a lot, that is extremely easy to burnout.
Burnout means when they try to work harder to sustain their families, they get less productivity, no more. And they risk the total collapse into anxiety crisis, depression or suicide.
It looks what this man is doing is releasing pressure, and productivity increases. Japanese teams are incredible. In Japan they raise you always thinking on the team, not the individual, like in the US, and when it works, it works really well.
The US, or even Europe has nothing to do with Japan environment. The freedom you have in the US is orders of magnitude higher. You don't like an employer, you just change jobs, without social stigma. Engineers could become millionaires. You can work not only in the US, but anywhere in the world speaking English for an American company, the Education system supports you instead of punishing you like in Japan. Taxes are small and population and economy grows instead of population shrinking and getting older and economy stagnating like in Japan.
Yes, those things happen in Japan, but they’re not the norm. At least not in my experience.