Interesting article, but isn't $75,000 a year pretty much slave wages in Manhattan? You could barely afford a small studio apartment for that much, and most likely need to live outside of downtown and commute in every day.
It's hard to live on $75k in Manhattan, but you can live fairly comfortably on that salary in other boroughs or NJ. I would be very surprised if the offer hadn't gone up substantially since this post was written. Nowadays, new grad offers for well-paying companies (Google, Facebook, etc.) are in the ~$100k range for salary, with a bunch of stock and signing bonus thrown in. Fog Creek wouldn't be getting the top 1% of talent if they weren't matching these offers.
I'm not sure about the others, but Google has a sizable NYC office (and a moderate sized Boston office) and allegedly the salaries are adjusted up to account somewhat for cost of living.
Second that. I lived for a year in Manhattan (East Village) while working on my start-up - I had roommates, but I made well under 75k and was just fine. Was still able to do all the things a 25 yr old guy wanted to do. The idea that it takes $75k+ to make it work in Manhattan is a farce perpetuated by big banks selling shitty jobs to naive grads and people who don't know how to budget/ be thrifty on message boards.
But think about the long run: Roommates are great until you hit age 30 or so and settle down and get married and maybe have kids (no pressure here Sean!). At that point Manhattan becomes painful unless you are married into money. Now you could move out to Brooklyn or your startup can avoid older employees (which is illegal), but if you grow your company to over ten people you can hit those issues pretty quickly. Also it's a spectrum -- Manhattan on $60 can work while being in NYC on $25k is a nightmare.
Yup. But they were talking about starting salaries on the Fog Creek thing. $75K right out of college for a young adult opens a lot of doors. But I definitely agree that being 30 with a kid, rather than 22-24, would be a lot harder on $75K.
I hear that. However, the thrust of the article and the focus of my comment is about new grads, people in going through the recruitment -> internship -> job offer cycle
Wages have gone up a lot since then, I would be very surprised if Fog Creek offered less $90,000 these days - that's about what most software companies offers start at. Heck, I hear that Facebook is offering $100,000 base salary for kids right out of school, so by all means they could be paying more. Also of note - the transition from $75,000 to $90,000 just means a wage increase of just shy of 4% per year, which seems expected.
Fog creek is going to be competing with other companies in NYC, not in the bay area. I expect that the majority of candidates on the west coast are not willing to move.
Also consider that Facebook is in a bidding war with Google, MS, and Apple - which has spiked starting salaries in that market.
In many ways, NYC is an even harder market to compete in, due to the financial industry. If you are a good hacker, hedge funds will offer $150k+/year to start - and if you're able to deal the intensity of it, that'll quickly go up. I know guys in their late 20s making over $300k a year writing code for these firms. These are salaries that most software companies can't match, even if they wanted to.
This is why $75,000 a year is not a fair salary. Joel is intentionally hiring college students because they are uneducated about what their real job prospects are if they are willing to move to NYC.
Having worked at Fog Creek, I thought the total compensation was fair. Here, total compensation includes things like never working weekends, never working late, never getting yelled at, never getting phones thrown at you, and all sorts of other perks that probably equate to different dollar amounts for different people. ymmv.
Those things are all worth $0 because they are the baseline for an employer.
When accounting for these things in a total comp calculation, I do it something like this:
$comp = (1 + 2 + 3 + 4 + 5) - (6 + 7 + 8)
where
[1] Salary / cost of living index for area
[2] adjusted value of health care plan
[3] adjusted expected bonuses/profit sharing
[4] retirement contributions per annum
[5] dollar value of stock options given * chance of options
vesting at some worthwhile value (tricky to calculate for startups)
[6] expected hours per week over 40 * .025 * [1]
[7] estimated value of environmental and other stress
[8] cost in time, gas, stress, vehicle wear & tear,
inconvenience of commuting
Now, it may well be the case that other companies that you looked at had large negative values of 6 & 7, which makes Fog Creek look great in comparison, but I think that as a profession we're screwing ourselves in the long run if we think about uncompensated overtime as the norm and working normal hours as some sort of bonus :)
Oh yes, the math certainly turns out the same. I guess I should have been clearer in the last paragraph, that normalizing to 0 or some positive dollar value is more of an issue of mental framing, as though it makes sense to use the type of calculation that I outlined as a guide it's not an infallible one but rather a tool to be used in decision making.
Never working late or on weekends is decidedly not the norm in the tech industry. If you're lucky enough you work at a company that respects "work life balance" and only asks you to stay late or work on weekends on rare occasions. If you only have average luck then you'll be working 50 to 70 hours a week and at a minimum checking email on most weekends.
Never getting yelled at or getting phones thrown at you would exclude every financial firm I've worked at (programming at Morgan Stanley being the sole exception).
$75k out of college is certainly in line with a new grad's fair market value.
If they're exceptional, they can do better - but they'd have to be exceptionally clueless not to be aware of that. I highly doubt any CS student in 2012 is somehow unaware that the market for their skills is sizzling hot at the moment.
Fog Creek is absolutely competing with companies in the Bay Area. I'm not even talking about Google and Microsoft's New York offices.
Maybe west coast candidates won't move but what about all of the people that live in other parts of the country? Most people I know are scrambling to get out of the midwest as fast as they can.
Two people can live incredibly comfortably for $60,000 a year total. Just live in a studio in cheaper Manhattan or a one bedroom in queens. The median family income for nyc is about 54000.
This probably works well for Fog Creek, who have a small crew and very talented senior people (who, importantly, did not get recuited out of school). But I view this as problematic for larger companies. The core problem of course is that students aren't very good programmers yet. They can hack and solve problems, and have a handful of favorite technologies, but they won't have the breadth they need to be really good at things for a few years yet.
The danger is that if you then build a culture where everyone gets recruited out of school, everyone is swimming in the same pool with equally narrow skill sets and no one develops the required breadth. So you get "architects" who know their field really well but can barely write working code on a modern system.
This works great for the true elite who will learn this stuff on their own, of course. But even then recruiting from schools tends to incorrectly bias decisions on things like grades, which correlate at best weakly with hacking talent. You'll miss some of those targets who were slacking off in class working on their own projects.
Actually, some of the biggest of the big guns at Fog Creek did come straight from school. More than one product was built exclusively by people who never worked anywhere else. The whole point of the internship recruiting process is to correct for the high grades only bias.
>The danger is that if you then build a culture where everyone gets recruited out of school, everyone is swimming in the same pool with equally narrow skill sets and no one develops the required breadth. So you get "architects" who know their field really well but can barely write working code on a modern system.
In my experience, that kind of narrow hyperfocus is exactly what most companies actually want -- including startups. Some may think they want breadth, but they actually just want breadth within the narrow specialty they address.
I think Joel is giving his company a little too much credit.
Today's students, if they are really good, have much better opportunity than to work at Fog Creek. They are thinking of companies like Amazon, Facebook, Apple, Google, LinkedIn, etc. that are actually innovating and working on some of the most interesting problems and applications. Not creating VNC "Remote Assistance" clones and help desk software.
Fog Creek does create very good software. But game changing? Or well known? Most people outside of software development wouldn't be able to name an actual Fog Creek product.
I have to concur. Their primary claim to fame is Joel himself. I don't mean to denigrate their products either - and a new grad could certainly do worse - but there are more "meaningful" and challenging opportunities elsewhere (that also happen to pay more).
This is really insightful and a little ahead of its time, and a bunch of companies have picked up this kind of tactic recently, and not just in the software industry.
In September recruiting here at Western University, for example, a bunch of firms host their info sessions at a club, where it's open bar. But students are getting smarter here, and almost everyone looks for internships in third year. Thus, the companies have adapted and several have started recruiting second years. But more than that, firms like KPMG have started running summer programs, where they fly promising students down to Hollywood for an all expenses-paid vacation, to introduce them to the firm.
Let's see who's the first to offer to pay for tuition.
The US military has been offering ROTC scholarships that completely cover all college costs (at least at cheaper schools) for a long time. Of course they also include a multi-year commitment to a job that could include being shot at.
If only every company developed sales funnels like this intern pipeline, there would be many more happy customers in the world.
You could probably launch a business in almost every possible field in the world, charge 50% more than everyone else, not fix a thing about how you do business... except cloning a sales funnel like the one mentioned in this article,(overwhelming your "qualified" prospects with a pleasantly surprising "shock and awe" experience and you would crush the competition, and have prospects lining up around the block begging you to take their money!
It might cost you an extra buck or two upfront, but it will pay for itself in spades in the long run, and as the article points out, greatly minimize your risk by qualifying your prospects before investing in them, and instead spend the money on attracting the top 1% of customers!!!!
I guess the only real question is... This article is 5 years old, what's taking you so long to realize your customers just want to feel special and want an experience they can't resist sharing with everyone out there.
It truly amazes me that there is a guaranteed to work formula here, and yet so many companies spend their marketing dollars trying to attract everbody or the wrong-body instead of investing in the right people at the right time, and making bigger margins, delivering better services and experiences to better customers, who are very happy to pay premiums.
Most important part of the system the article describes: "We use the summer to decide if we want them full-time. So we give them real work. Hard work."
Too many summer internships (see big law, big finance, etc) fail to give employers the information they need to know if there's a fit, and, just as importantly, fail to give top students the information that THEY need to know if this is where they want to spend 70 hours a week for the next 1-3 years.
I agree, this smells a lot like late '00s legal recruiting - throw money, parties, and interesting work at summer associates, giving them and the firm almost no information about the actual long-term fit.
75K for top 1%? Anecdotally an average(not top 1%) fresh grad in companies like Microsoft,Google,FB or (insert any other big co) etc these days get about 80-120K(depending on your negotiation skills,competing offers,school where you went to etc), not to mention ESPP every year,RSUs/options. If any average grad at these companies can make so much, shouldn't top 1% be getting much more?
Also more than the offer, Fog Creek is not known to people who don't follow tech news, read Joel's articles etc. But everyone knows and uses a (insert a big co)'s product and that reputation definitely stands out.
It is possible to live in Manhattan for $70K/year--with roommates. However you should not have any financial shocks. You should not, just to name a personal example, find yourself suddenly needing three dental implants at $2700 each, not including the cost or surgery. You should avoid cabs and use public transportation instead. And you should avoid taking advantage of any cultural activity that isn't free.
One downside of taking lower paying jobs is that employers often decide that you really are worth the lower salary. Programmers can end up doing system administration and desktop work. Perhaps that's not too bad in moderation, but it's very easy to get sucked into an on-call mode. Then again there may be exceptional people who can program in their heads as if they had an office with a door they can close, while some administrative assistant is nagging about corrupted email.
Huh? There are literally millions of people in NYC getting by just fine in NYC making $70k or less. You're not going to live a white-bread suburban dream though.
The funny thing is, NYC has a great public transit system in Manhattan (and an OK system in the boroughs) and lots of access to free or cheap cultural activities. I grew up in Queens and went to the beach, dozens of museums, concerts, etc with my mom.
The vast majority of people, in all sorts of places, and at all sorts of income levels lack the ability to pay for a $15,000 dental procedure.
The same way anyone gets work done--during the day, he does easy shit, and if he has something hard to do, he does it at night and at home when he can't be bothered.
Joel I take it you mean the 1% that apply to you? Small companies (dont take this persoanly) are neaver going to be the first point of call for the true top 1%.
This is decidedly not true. While I wouldn't be so vain as to call myself the top 1% of developers, I've gotten job offers from most major software companies, but one of my criteria for where I accept a job is "do you have fewer than 50 people?"
I want to write code all day, and I want to work on interesting and very hard problems. While this exists at large companies, there are very few jobs at top tier small companies where this doesn't exist.
That seems backwards. At a big company like Google, Amazon, Microsoft, engineers code all day and industry-leading problems. At a small company, there's a lot of setting up servers and customizing UI and evaluating 3rd-party software packages.
Setting up a server in a back room in your office is a much different task than setting up a server at Big Co. scale though, they basically aren't even the same task at all.
I was more implying that if you want to work at the top Organization in the field places like CERN and Bell labs are going to attract the brightest and not a small me to start-up.
I would consider an attempt by a senior Intel guys to split and do a new Traitorous 8 a different case as you would need a huge investment.
