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Comment by thras | Hacker News Reader

The author doesn't get it. It's not about measuring results. Great programmers don't get compensated in proportion to their contributions for the same reason that mediocre CEOs are far over-compensated for theirs.

Programmers have no power over the people who set pay rates while CEOs have a great deal of power.

Being in management gives you leverage. Being in a union gives you leverage. Being a replaceable widget -- even a gold-plated widget that is x10 better than the other widgets -- gives you no leverage.

I hope I've cleared things up for you. Now go out, throw away any Ayn Rand books that you own, and download something by Machiavelli. You'll learn a lot more about the way that capitalism really works.

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Sort of. It's not about who sets the pay rates - otherwise, actors and sports figures wouldn't get their $multimillion salaries, since it's the movie execs and team owners that set the pay. It is about negotiating leverage.

When a company hires a CEO, they usually decide who they want first, and then they negotiate over price. There are few substitutes for their choice - usually, a company will find only a handful of candidates that are suitable for the position. This gives the CEO enormous leverage. There's only one of them, yet there are probably a couple companies that want to have them as CEO, so the price goes up.

Similarly, brand-name actors can drive moviegoers to theaters just by their name alone. There is only one Brad Pitt, but there are several movies that would love to have Brad Pitt star in them. Dakota Fanning gets like $4M/movie, because her name alone ensures the movie would get more attention than it otherwise would. David Beckham got a $250M contract, even though he's kinda washed up, because his reputation means people will watch.

An average programmer is filling a role, however. If they ask for too much money, the company just goes out and gets a different programmer. At hiring time, they don't know who'll be 10x more productive, unless that programmer already has a strong brand behind them.

I'm very curious to know how much "brand name" programmers like Peter Norvig or Guido van Rossum get paid. There are many Python programmers, but there is only one Guido, and many places that want him. I'm guessing I'll never find out, though.

BTW, this is behind a lot of the career advice that Internet celebrities give. Seth Godin's "you should throw away your resume" really means "your personal brand should be strong enough that employers want you and aren't just filling a position." Paul Graham's "work hard at things that excite you" is because if you do so, people will notice (eventually), and then they'll want you for what you've done and not just any old programmer. Marc Andreesen says "set the controls for the heart of sun" because that's the work that people notice, and that'll make you stand out from the crowd.

I'd guess that the guys like Guido, Linus, etc get jobs that a) pay pretty well, and b) Let them do pretty much what they would be doing anyway..

3 years old reference, but gives a ballpark idea of the arrangement for Linus:

http://www.businessweek.com/magazine/content/05_05/b3918001_...

"For his part, Torvalds has been amply rewarded for his role, but he's no Bill Gates billionaire. OSDL pays him a salary of nearly $200,000. In addition, he sold initial public offering shares that he got as gifts from a couple of Linux companies, including VA Linux Systems. That helped him afford his house and put money away for his daughters' educations."

According to Wikipedia, the VA Linux and RedHat stock options were worth around $20M. That's an awfully nice house. ;-)

Anders Hejlsberg got a $3 million signing bonus from Microsoft when he left Borland.

http://delphi.about.com/od/delphifornet/a/conspiracydnet_2.h...

Programmers have no power over the people who set pay rates while CEOs have a great deal of power.

Actually they do: they can turn down an offer to work at any existing company and start their own instead. And many do. (That's how capitalism really works.)

Scroll down to nostrademons' comment. I think that it answers your point.

I get what you're saying, but thras's point still stands. You're just using the word "programmer" in two slightly different senses.

thras was using it to refer to a role - a non-management role - and in that sense a programmer does have a lot less ability to influence the people who set pay rates.

You're using it to refer to an actual person who can try to change the role he occupies, in your example by starting a company.

Programmers have no power over the people who set pay rates while CEOs have a great deal of power. Yup, I think that around about covers it. I would have phrased it a little differently though. Basically, in just about any endeavour, you only get the really big reward if you sell your product directly to the people that use your product. So, music artists sell directly to the people that listen to the music (well, they earn a percentage share of direct sales). Startup founders also sell their products directly to the end user.

But as soon as you become an employee, earning a salary, you aren't selling directly to the end user, you are selling your skills to your company, which then produces a product that is used by the end user. Or worse still, you are selling your skills to a company that produces a tool that is sold to another company that is finally used to do something deemed useful by the end user. The longer that chain is, the less likely you are to get paid what you are worth if you are above average. Why? Because the entity that is buying your product doesn't actually care about the product, so if you have made it three times better than it would have been without you, don't care - just as long as it meets the minimum specification necessary to be able to sell it to the next person in the chain. On the other hand, if you are selling directly to the end user, they certainly appreciate the product that goes above and beyond minimum spec - insert Apple/Ferrari story here...

I can think of only one special case exception to this rule, and that is sports stars - and they are a special case because they are the only market where you actually have to beat the competition to be considered as performing. That means that there is a massive advantage in having someone on your team's payroll that is just slightly better than the other guy - you only have to be slightly better to win, and winner takes all.

An exceptionally brilliant programmer I know was working at a telecom. Since he was so good, he could complete his week's assignments in one day, so he'd go home until the weekly status meeting. His boss was dead set against him -- it was "only fair" that he should suffer as much as everyone else.

I'd bet money the conversation went a lot closer to, "Uhm, no. You're paid to work 40 hours a week."

Any line of reasoning that begins with "since I'm so good" and ends with "being here is suffering" sounds like there's probably some jackassery going on.

Honestly, a manager who was ok with him going home after one day would be stupid. Then he's giving them no additional benefit for his fabled skills, and their best developer wouldn't be there most of the time and the rest of the team would probably resent it.

Instead of the manager forcing him to sit at his desk for 40 hours a week, he should be giving this guy more autonomy. You don't keep good developers by squelching their abilities or freedom, they'll get fed up and leave.

That missed the point though. He wasn't asking for more autonomy, apparently. He was asking to work less. A good developer that's not getting any more done than the other developers doesn't add value.

A good developer that gets as much work done as the other developers adds at least as much value as they do. More, if the work is quality.

Was he really asking to work less? He was getting equivalent results and asking for less useless ass-in-0seat time. I know for a fact that a guy like that reacts well to more autonomy. Doesn't matter so much what the developer asks for in this case. It's how the manager reacts when discovering talent like that. In this case, it was an epic fail for management.

A devious manager would praise this guy, raise his pay 25%, but quietly give him double the work. A really devious one would find some way to document the resulting increase in productivity and take the credit.

But the really insightful one would let this guy try to find ways to make the whole group more productive or reduce its bug rate.

Uh, he didn't use "suffering" in his conversations. That is just a description of the manager's philosophy. The most relevant factor wasn't the work accomplished and the quality. It was serving time.

It's not surprising that a manager would feel this way. But surely the obvious solution was to give the programmer more challenging things to do?

Why does this require a solution though? Why is it a problem? If as the manager you're focused on productivity and not time spent, there's nothing wrong with him working 1/5th the time so long as his productivity rivals his colleagues. Maybe he doesn't want to work 5 days a week? Maybe his priorities aren't 40 hour work weeks. If you are unable to replace him with someone who'll perform better, then why make it in an issue?

And why should his colleagues be any more jealous of him then they are of the CEO who makes tons more, or anyone else who gets paid more or works less for that matter?

There are 2 problems: 1) Having a clear way to measure productivity. 2) Stodgy ideas most manager's have about time spent, instead of production.

Why does this require a solution though? Why is it a problem?

It's a problem because the company culture (probably) won't tolerate it, but instead will act to preserve itself at all costs, including the cost of reduced productivity. So when I said "obvious solution" I should perhaps have added "within the parameters of the existing culture".

I sympathize with your values, but the idea that you can change a corporate culture to make it recognize productivity in a more rational way is a fantasy. It's actually a harmful fantasy because it deceives many creative people into spending their time and energy on environments that will never fully recognize them.

To paraphrase what Max Born said about science, new models are accepted in the market not because companies change, but because old companies die.

Edit: Having a clear way to measure productivity wouldn't change a thing. If maximizing productivity were the value driving behavior, things would already be different even without a measure.

Programmers have no power over the people who set pay rates while CEOs have a great deal of power.

Being in management gives you leverage. Being in a union gives you leverage.

I hadn't thought of this. Personally, I see programmers as workers that should be in small, elite groups, like surgeon wards. OTOH, surgeons have a cartel that programmers do not.

As do actors, where the productivity varies even more widely.

Quite right about doctors and lawyers. In fact I was going to mention their professional organizations as an example. Requiring certifications, all for the public good of course, is one of the best ways to inflate wages.

Johnnie Cochrane and celebrity plastic surgeons don't earn 30× as much as other doctors and lawyers because their compensation is set by a guild; if anything, guilds tend to assign scale and frown on those who charge more (and prosecute those who charge less). They earn 30× as much because people are willing to pay 30× as much for their services.

I think the relative value they charge relates to what other people are charging. A hair dresser might charge 50x what other hairdressers charge, but in the back of peoples heads they compare the price to other hair dressers and not doctors. If your 10x as good you can charge 5 - 50x as much, but not 50,000x as much without a lot of brand advertising.

"Without a lot of brand advertising"? How many ads do you think Tom Cruise buys to promote his personal "brand"? I think the relevant thing is the reputation, not the advertising that might or might not create a better reputation. The reputation is why Tom Cruise makes 50 000× as much as the actor in the community-theater play down the street from you. (Assuming they're even getting paid.)

When a producer is negotiating a contract with Tom Cruise, I don't think it enters his mind how much unknown actors in community theater make. I think he's thinking about how many people bought tickets to see the last Tom Cruise movie and his estimate of how many of them went because of Tom Cruise.

I don't know enough about hairdressers to know whether the same thing applies to them. It does apply to fashion designers, and in some cases it seems to apply to programmers.

After sarah paulin chose her glasses that brand become unusually popular. I don't think the idea it was "Free" advertising really matters the effect is the same. Tom Cruise has a long history of exposure which is part of why he is paid that much. But, you could also consider he the idea he is worth 50,000x as much because he increases the movies revenue and he helps the movie get financed.

In most cases I suspect "brand" acts like a multiplyer so Apple's HDD might be worth 1.25 times as much as another just because of the reputation. IBM might be 30% better and have 2x the brand so they charge 2.6x what other consultant companies charge etc. Clearly major movies have great hairdressers but they don't get to charge 50,000x as much because a lower increase in value and a lower level of brand recognition.

PS: This get's confusing when considering something like breitling watches where a lot of the value comes from the price tag and not the physical watch. When someone knows you spent 250,000 on your watch they know you have money even if they can't see your car / house etc.

Wages are not effected by leverage or productivity. Productivity only matters when figuring out how many laborers you should hire. Leverage is just a weird way of masking the fact that higher paid workers are in low supply and high demand. Leveraging can only exist in instances where supply is low and demand is high!

1) The supply and demand of labor determines wages.

2) The factors that determine where you might lie on the demand curve for labor are: skill level, education, experience, reputation, etc.

3) The higher up the Demand curve, these factors become in shorter supply because it is hard to level up in real life. (MMO reference, sorry.)

4) The higher the demand of skills, experience, reputation, education, etc. >>> the lower the supply of labor will be >>> the higher wages will be.

What would the union be, though? 99% of programmers would not be overly ecstatic at 10x payments for stars. Are you suggesting a Rockstar Programmer Union, MENSA qualification required to join?

Perhaps what Rockstar Programmers need are Agents.

A consulting company that only hired good programmers, and billed exorbitant rates perhaps?

It would probably only work as a partnership.

There is a Rockstar Programmer Union already. It basically consists of the programmers who network, are excited about their craft, and start or join companies that do innovative things with software. Wages for programmers in that group are significantly higher than for those who just join any old software development group that they find through Monster.com, and then never talk to anyone outside the company.

I met someone at a fencing club that was a programmer for a health care software company. He was my age, graduated a year earlier, and his salary was half what mine was (we were both on our first jobs out of college). I didn't know programmer salaries could go so low, for college grads. And his skillset was completely ghettoized - the company used a proprietary programming language and involved lots of domain specific knowledge. I suspect the difference was that I got my job through a friend of a friend that I'd met on the C2 Wiki, while he took the first available job he could find upon graduation, probably through Craigslist or Monster.

>the company used a proprietary programming language and involved lots of domain specific knowledge

FogBugz developer?

Heh, no. Probably shouldn't mention the specific company...it was a Boston-area firm that's big in the medical billing software space.

Exactly what power does the CEO hold over the board of directors (most of whom are independently wealthy anyway)?

They treat the CEO well because he's their buddy.

Wages are negotiable. You don't like your pay rate? Work somewhere else.

Ditto for CEOs.

So craftsmen are now "widgets"? That's an absurd idea.

This reasoning doesn't explain why sports stars make so much money.

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