Yeah, honestly I think the bigger negative impact on startups is the incredible profitability of these targeted advertising monopolies that has pushed market salaries so high that upper quartile programmers with 3-10 years experience inherently see their value as being $500k-$1M in total comp without any real notion of what kind of business structures can generate the kind of cash flow to justify those salaries beyond just burning VC capital in an oversaturated bull market.
Even though I personally have benefitted from the upward pressure to software engineering comp, as consumers I believe we would have a way better ecosystem of tech products if engineers salaries weren't tied to VC economics.
But engineer compensation has been larger pushed up by the FAANG companies which are highly profitable. There’s some VC fueled companies competing with them like Uber but on the whole engineer compensation went up not due to VC money but because big tech was able to generate millions in profits from engineers. Every FAANG company has a P/E ratio under 30 so these big engineer packages are from strong business fundamentals and profits, not VC economics.
Startups have the ability to compete in ways like better equity deals but by and large they still highly prioritize their investor concerns over hiring concerns as reflected in things like liquidation preferences in ISO and stingy equity grants. Most of the founders would rather ride their startup to the grave then re-evaluate the “standard” terms of their equity compensation approaches which each year have become more favorable for VCs and less favorable for employees.
Even though big tech has many problems and things I disagree with, at the end of the day they respect engineers by paying them their value while startup founders prefer to make engineers second class citizens then bemoan their hiring difficulties.
> But engineer compensation has been larger pushed up by the FAANG companies which are highly profitable.
If you go back and re-read this is exactly my point. Google, Facebook, Amazon have structural advantages that make them more profitable than the majority of useful services ever could be, much of which is based on the unregulated and morally questionable use of massive amounts of user behavior data. This sucks the oxygen out of the room for startups who could provide an honest product for an honest price, but might not be able to get the economies of scale to pay $500k per senior engineer. In other skilled labor professions $100k-$200k is considered well compensated, and that creates a larger sweet spot which enabled more diversity of services. With software + internet the potential for near-zero-marginal-cost global scaling push everything towards a winner-take all mentality, and so small shops providing diverse and higher quality niche products get squeezed for talent.
Again, I have benefitted personally from this dynamic, but I'm also old enough to be saddened at the unfulfilled promise of lower software build and distribution costs that we envisioned at the blossoming of the web and the release of Microsoft's iron grip on software profitability in the late 90s.
GP said "senior", which can be interpreted either literally (as in the title "senior software engineer") or more broadly as software engineers with elevated seniority.
Some data for "senior software engineer" in the US indicate:
"The middle 57% of Senior Software Engineers makes between $117,200 and $203,000, with the top 86% making $375,000"
"The middle 57% of Staff Software Engineers makes between $107,389 and $262,186, with the top 86% making $572,331."
Since levels/titles are truly comparable across companies (nor across time), it's very hard to get a true sense of what those numbers even mean. But I think it's fair to say that you shouldn't expect a median nation-wide "software engineer" salary to match the expectations of the "right person you really want to hire for your position but you can't find".
That surprising to me (perhaps due to bay area bubble), how do I hire people at that rate? Is it entirely about the location? Are the skill set expectations different?
You can do a lot better than that internationally. When I was in the startup founder world my peers were paying their developers about $30K/year, and getting decent (but not great) talent in Thailand, Vietnam, India, Eastern Europe, etc.
The downsides are that all your employees are a.) remote b.) not great English speakers and c.) generally mediocre developers, and this all has negative impact on developer velocity and the caliber of features you can ship. If you're chasing a niche this is often a great trade-off, because it can make your business profitable even at revenue levels that can't support a big-company product. If you're chasing the next big thing this is usually a stupid idea, because somebody's going to raise $50M, hire top-quality ex-FANGs at half a million each, put them in a room together, and win the market before you can ship your first couple features.
I think you will find a lot of these people doing embedded, desktop, or enterprise intranet stuff rather than slick web/mobile products or massively scalable backend APIs. Using dated and uncool stacks. Dated and uncool practices. Windows centric. Hiring more about years of experience with particular framework versions than LeetCode or system design interviews.
Two perrenial favorite pieces on this website include Dark Matter Developers [0] and We Only Hire The Trendiest [1].
Amazon was break even for a long time on the retail segment, and nobody argues that AWS is profitable due to "unregulated and morally questionable use of massive amounts of user behavior data". Amazon's profits come from the fact that so many companies are willing to pay drastically more for AWS than for standard colocation services, even if they're mostly just using compute, disk, network and databases.
"the unfulfilled promise of lower software build and distribution costs that we envisioned at the blossoming of the web and the release of Microsoft's iron grip on software profitability in the late 90s."
Is it unfulfilled? Many of us don't use Windows these days, which is a nice improvement for those who choose other platforms, and the web/cloud has driven build and distribution costs much lower. When was the last time a software startup had to sink money into the logistics of CD burning and boxed retail deals?
I feel like you've neglected that there was a massive lawsuit against big tech where Google, Adobe, Apple, Paypal, and others actively colluded with each other to suppress wages:
It really wasn't until after this lawsuit, along with Facebook actively making better offers, that tech salaries started to skyrocket. I'm the sure the bull market for 8 years didn't hurt either.
> It really wasn't until after this lawsuit, along with Facebook actively making better offers, that tech salaries started to skyrocket.
No, the lawsuit had nothing to do with it. The market exploded because Facebook refused to join the cartel. The lawsuit fined the companies involved risible amounts and no one involved got fired or jail. Irrelevant.
Management and executives are DEFINITELY underpaying us relative to what we bring to the table for them. This is true of every industry going on decades of increasing productivity and stagnating pay. What's new here besides greater awareness and labor churn? Will there be an actual change going forward? Of course the demographics favor workers now, but the laws and politics often don't. Immigration and outsourcing and automation can change that power dynamic very quickly. What're you going to do? Form a union? Start a company? Vote? Quit and work elsewhere? Interesting times we live in.
Maybe that is one of the reason headcounts have ballooned and complexity has increased so much -- an attempt to minimize individual impact. VCs and MBAs famously refer to this as the bus principle: what would happen if the key employee or executive got hit by a bus today? How would the company fare? The metaphor is quite telling in its priors, assumptions, and priorities.
All of my friends and aquaintinces in nursing, tax, retail, and trucking have a few people who are trying to break into programming because of the benefits and pay. Outsourcing, scope creep, and automation exist and are expanding in my industry as well. How long until this drags down programmers as well? With the potential end of this bull marker will programming compensation stop being the highest paid field? I do wonder and doubt.
I suspect that software engineers, as broad as that term encompasses, will eventually see the effects of pay and work which up to now they've been largely insulated from. More work being handed off to you for a minimal or nonexistent pay bumb. Or slower wage growth than we've been accustomed to seeing. That's my prediction anyways.
My other point is that, based upon the revenue and profit generated per employee for many of these mega corporations, software engineers should be paid more, but I think lately we have astronomical pay relative to other industries in the 3-10 year experience mark for most of the roles in the labor market.
Even though I personally have benefitted from the upward pressure to software engineering comp, as consumers I believe we would have a way better ecosystem of tech products if engineers salaries weren't tied to VC economics.