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It seems highly improbable that cash-based Wall Street compensation packages could be offered by Silicon Valley startups. Maybe established companies could, but it would massively increase the fundraising requirements for early stage companies, with probably bad effects on the SV ecosystem.

Perhaps you can argue that startup equity grants should be higher. Would hiring issues be resolved if the average equity grant tripled? Would more talented people in the U.S. pursue Silicon Valley careers if they got 3% instead of 1% to be an early employee?

I can't prove it, but I'd conjecture it would only have a modest effect. The notion of "expected value" of equity is problematic. It's not like it's simply a 3X stronger offer. The bigger issue is whether the company will be worth anything at all.

"That totally blows out my business model!" may be true [+], but is not an objection which should escape the lips of someone who has the word "capitalist" literally in their job title.

[+] I'm agnostic on this. Pinterest just raised, what, $450 million dollars? That's presumably not intended to buy the world's biggest vat of chocolate pudding.

Pinterest is waaay beyond the early stages of startups that Paul Graham focuses on.

It used to be that it did in fact take millions of VC just to get startups off the ground (70s, 80s, 90s). We could go back there. Would it be better for the ecosystem? Would employees have a net gain, or would there be fewer early stage companies & jobs? I don't know, but these are the macroeconomic questions to consider.

The impact would be reasonably small, depending on which sub-slice of the startup ecosystem you are looking at. Paul Graham doesn't advocate jacking up headcount before you have decently functional business fundamentals. The YC model seems to be that (before the product is proven out) development is done by founders, which costs the same no matter what the prevailing wages are. After that, it's either (1) paid by revenues or (2) paid by VC money -- in the latter case the VCs will adjust expectations and/or the amounts they invest, and in the former, they'll just need to get 2x more productive employees, which is well within the band of talent hired by the marketplace today.

I don't think pg says it's founders-only until you prove product-market fit. Usually it takes some hires and seed funding to run some experiments and show proof. Product-market fit is more of a Series A requirement.

If the cash cost of running experiments goes way up, that may very well mean going back to the old way of doing things, where you essentially had to jump straight to VC money just to get off the ground.

Out of curiosity, what are programmer salaries like in Japan, and how is immigration there?

Read and discover:

http://www.kalzumeus.com/2014/11/07/doing-business-in-japan/

(I could pull an answer to your question out of this -- hint, search the page for a dollar sign -- but if you're reading "out of curiosity" you should just get some coffee or something and read the whole glorious thing, because the number is useless without the context, and the context is very different from the USA.)

I'd forgotten about that. On the whole, it looks like, despite lower levels of immigration, Japanese engineers do not earn more than their US counterparts, which makes sense: the economy is complex, with a lot of different things factoring into how much people make.

> It seems highly improbable that cash-based Wall Street compensation packages could be offered by Silicon Valley startups.

Maybe this would force VC companies to be more selective in who they fund, vs "fund 100 and hope for 1 to be the next google".

A first approximation would suggest doubling programming salaries would only change their strategies from "fund 100 and hope for 1 to be good" to "fund 50 and hope for 1 to be good". More selective, sure, but not game-changingly so.

Not sure that would be an improvement. If funding gets tighter and more selective, their selection criteria might become pedigree and connections instead of who has the better idea and team.

The very reason they fund 100 and hope for 1 is that all the analysis and data in the world have not helped narrow likely success criteria beyond 'fund the team.' What's stopping you from starting a VC fund that's REALLY CAREFUL with investments?

> Would more talented people in the U.S. pursue Silicon Valley careers if they got 3% instead of 1% to be an early employee?

IMO, no. The difference between founder and employee #1 is still too large, even though the risk is not significantly higher.

Assume there are two founders, splitting 50/50, then there's a 10% employee option pool, so the founders have 45% each. Moving from 1 -> 3% is not enough incentive, but moving from 1->10% might be.

While I'm willing to be convinced that things like HFT have some value to society ( https://www.chrisstucchio.com/blog/2012/hft_apology.html ) and while there are certainly some lame things that come out of Silicon Valley, on the average, I think I'd rather see more resources flow to the latter than the former.

> Maybe established companies could, but it would massively increase the fundraising requirements for early stage companies, with probably bad effects on the SV ecosystem.

Welcome to running a business. You aren't guaranteed anything. If you can't survive, you die. Tough. That's life.

> $120k base plus an equity grant with expected value in the $X0k range.

Or not even $120k. You'd be surprised at what some SV companies get away with. Take a look at angel list and you'll commonly see wages lower than $100k for experienced developers.

I'd say the only epidemic that exists in the US's technology field is a lack of adequate compensation, not a lack of talent.

Using job ads to gauge market salaries will leave you at a disadvantage. There aren't many engineers in the bay area taking work today at $100k or below. Those that are are usually right out of school, or working for a cause they believe in.

It's very hard to get real data, so I can't really fault you for the lack of a good cite. However, it's not like the companies claiming a shortage are exactly forthcoming with the data themselves. Here's a pretty eye-opening story about a journalist and professor trying to get good data to study the issue

http://blog.sfgate.com/nov05election/2013/09/20/profs-immigr...

I find it remarkable that people make claims of shortages without sharing information about the skill set they need and the compensation they're offering. Well, I don't find it remarkable, in the sense that I don't find PR-speak especially surprising anymore. I guess I should say I find it galling.

I think the true intent of PR-speak like this is to drive the government to subsidize business growth via tax breaks, etc.

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I've not hired as many engineers lately as I'm sure others have, but while I agree with your sentiment, I think you're painting only 1/2 the picture.

Yes, people routinely under-estimate salaries of engineers in the bay area. And I certainly know people at Google and Apple who have comp packages in the neighborhood you mention. But I'm skeptical of calling that the "norm", and even if it is, it's only the norm for RSU-granting, established tech companies. Half the employment for engineers in the area is for smaller companies with ISO grants with Expected Value well below $300k and salaries 25% below your quote.

What's wonderful for engineers in the SFBA is that you have this choice. Take a front row seat at a startup and consistently make $110-130k, go to a huge tech giant like Google and make far more in a more narrowly defined role, or pick some place in the middle. Like Trulia, for example! We're always hiring Android and iOS engineers.

$400k in RSUs over what time period and what vesting schedule?

I agree with you. Generally, there is no shortage of tech resumes on Wall Street - because wages are higher.

Also because there are fewer choices in NYC than engineers have in the SF Bay Area.

Citation needed for this. The New York metro area has more than 2x the population of the Bay Area and an extremely diverse economic base. That makes claims about availability of choice being limited in NYC in comparison to SF pretty hard to believe.

The population of the metro area has nothing to do with it, it's about concentration of the industry. Acting is similar. There are more acting jobs in Hollywood than NYC.

I've seen many studies of tech hiring/jobs across the country. I'm sure you can find any research you're looking for.

The OES does not agree (neither does dice.com's numbers fwiw):

http://www.bls.gov/oes/current/oes_41860.htm#15-0000 http://www.bls.gov/oes/current/oes_35620.htm#15-0000

You're missing 1/2. You have to also add San Jose-Sunnyvale-Cupertino, etc.

Edit: Also, counting the total headcount of ppl writing code in the area is not a measure of how many choices you have in the job market.

For completeness: http://www.bls.gov/oes/current/oes_41940.htm#15-0000

Still doesn't get you into more choice than NYC.

If you don't want to use head count (and I agree there is nuance), what do you want to use? Thus my citation needed request.

It's certainly a hard thing to measure. I'm approaching this both anecdotally and, I believe, logically.

The vast majority of software developers work in IT departments writing line-of-business applications in Java, .Net, etc. Certainly NYC has a vast number of these jobs. But these roles are all very similar. You're working as a cost-center, in a supporting role, for people who ultimately don't care about software. This is true whether you're a developer for Pfizer or Jet Blue or NBC Universal or any of the other companies based in

I really find the hollywood analogy apt. Yes, you can certainly find work as an actor in NYC. But the epicenter of the industry is in Hollywood.

Anyway, happy new year!

My guess is high frequency trading jobs in California pay more than startup jobs in California

also if engineers had fewer choices, wages would be lower, wouldn't they ?

Of course, pay isn't the only motivation behind a career choice. Many engineers take jobs in less lucrative verticals like game development because the work interests them.

That said, if you're an experienced engineer and you told me you wanted to make $200k next year, if you're in NYC I would say "go into finance" which is far more limited than the advice I would give in SFBA which is "go work for just about any publicly traded tech company, or slightly more risky go work for a tech company that seems to have an imminent IPO, or more risky still go work for a well-funded private marquee tech company (many of these companies would overlap with the 2nd group). In the end, it's a much bigger pond.

Look, I'm not saying NYC is void of these types of opportunities. I've got friends who work in the city for Tumblr and Spotify among others. I'm just saying, it's about density. You could take the skyline of SF and put it in a few blocks of lower manhattan. And you could take the tech population of NYC and put it in a "few blocks" of SF.

All that said, the relation to wages is more complicated than you suggest. Less variety doesn't speak to the balance between labor talent and demand.

Less variety should put downward pressure on wages, all things being equal, not upward pressure

All I am saying is, software development wages are too low, especially relative to the demands of the job - that's why there is a perceived shortage. Raise the wages and smart people from other fields will teach themselves to code and join the fray

If Google paid out the same proportion of its earnings as salaries as investment banks do, they would roughly double overall compensation.

That doesn't address the question of whether or not we should increase immigration quotas though.

I don't think there's any question that if the only thing we do to increase the supply of great coders is to increase immigration quotas, then this basically just amounts to a pyramid scheme to further enrich the silicon valley elites at the expense of the public. But pg never says that this is the only thing we should do, he only says that it's one of the things we should do.

I don't necessarily agree with pg's realpolitik view of reality, but I also think a lot of the criticism of this piece is based on things that just aren't there.

I think both are true: we should let more talented people into the country AND there is actually no shortage of programmers - there is a lack of programmers at the prevailing rather low programmer salaries.

It's a pity your thoughtful comment is losing visibility as the submitted story has been flagged off the front page.

Sadly, it hasn't truly been "flagged off", it was done by the volition (or rather, the acquiescence of HN mods). This has happened for almost every immigration-related submission critical of pg's point-of-view. When you call them out for this, they go back to the excuse "the users voted it off!" But that's not really a good response, since they do routinely take the initiative of bringing to life stories that were voted off.

I know things get politically dirty on these kinds of submissions, but the conversation needs to happen -- pg can't just open the lid to say what he wants, and immediately close it. This is our bread and butter on the line, why shouldn't we be able to have this conversation without the submissions constantly getting killed.

That's a rather inflammatory claim to make without a lick of evidence, and attributes a whole lot of agency in story selection to a person who appears to have no current involvement with HN whatsoever.

It's also a drive-by from an anonymous throwaway account.

I would back up my claims with evidence other than my stated observations if HN software wasn't so opaque. And anyway, the burden of proof falls upon the party with the pertinent pattern of the acts which they are being accused of. HN often slowbans folks who don't toe the line (michaelochurch, larrys, rayiner (rayiner was rankbanned precisely because of disagreeing with pg on the immigration issue), etc., as well as manipulates ranking of comments to put YC-funded startups in a positive light. Considering all of this, I'm fine making the accusation, YC-staff has to defend this with solid evidence. Anyway, to be clear, I'm not accusing pg, or really anyone particular of doing anything -- I'm saying HN mods (whoever they may be) are behind this story falling off from #1 to not being on the frontpage in a matter of a minute.

...it hasn't truly been "flagged off"...

To be precise, this thread now has about 80 comments and about 70 upvotes. In the past, at least, HN's software has considered that a "flamewar". Perhaps it's too bad, in this case, since TFA is so much more cogent and reasonable than PG's original self-serving bullshit, but unless you credibly suggest that someone is either inflating comment numbers or deflating upvotes, it is exaggeration to say this has been "killed".

I agree with you, I probably should have been more careful in my word. I should clarify that when I mean "killed", I mean killing either by manually killing, or letting it remain killed. Considering they often exercise their ability to bring around killed stories, they should have brought this one back too.

Often, stories get flagged of by users due to toxic comments that the story attracted. This is one of them.

And consider the possibility that your comment is in the "not intellectually stimulating" category.

I miss the quality and due-diligence of pg's earlier essays. He appears indistinguishable from a Silicon Vally VC now.