The decisions made at the executive level regarding Netflix will have a much greater impact on each shareholder's value than the decisions made regarding Squid Game's creative direction. I mean it's not even a question. Now could you find someone to do as good a job as an executive for less? Maybe but when you have a 180 billion dollar company why are you going cheap here to save a few bucks? The wrong executive can be utterly disastrous, and a lot of what I think stockholders are paying for is risk reduction.
C-level folks make huge strategic and tactical mistakes _all the time_. They are humans. Amazon has burned tens of billions of dollars on dead-end consumer electronics devices (fire phone?). Facebook is shoveling money into a burning pit trying to convince people to wear goggles for eight hours a day so that they can beam ads directly into our eyes using lasers. Huge companies fail and flounder for decades before toppling over under the weight of incompetent, highly-compensated leadership - this is the norm, not the exception.
The assertion that paying more money to the folks at the top has yielded commensurate returns is really not backed by ... anything at all, as far as I can see.
What if you examine the dead horsed mantra of “improving shareholder value”? Does their compensation reflect their ability to have improved shareholder value?
Actually another comment links to an article about:
“CEO Pay and Performance Often Don’t Match Up:
The S&P 500 CEOs who received the biggest pay increases scored middling shareholder returns”
I feel like that entire study is flawed because you can't just compare stock performances straight up.
You have to look at how the same stock would of performed with a different manager.
There are many factors outside of management's control that will dictate the return on a single stock. But don't confuse that with the fact that management decisions do have an impact and can make a large difference.
If they can't control a substantial portion of the downside risk, they shouldn't be allowed to take credit for the full upside, either.
The problem with the executive compensation ratchet of the past few decades is that it is completely divorced from any actual measure of C-level impact. If things go bad, not their fault - if things go well, it couldn't possibly have happened without these strong leaders at the helm.
Who said they don't? Who says those stocks wouldn't have performed considerably worse without good management? That's what I am getting at. Just because a stock goes down does not imply bad management or vice versa. But again that doesn't mean that management decisions don't matter, they can matter a lot.
Amazon and FB are not the norm, especially FB which is controlled by one person. These are tech companies trying to win market share in emerging sectors, and pulling the plug when they fail to get a foothold. Amazon created an entire industry (Cloud) that it's the dominant player in, totally tangential to its main business as durable goods retailer with this strategy, and it's the company's main profit center now.
I can't imagine a shareholder in either company also thinking you know...these guys at the top of both companies have been paid too much, the various right and wrong decisions they've made turned Amazon and FB into the 4th and 7th most valuable pubicly traded companies in the world in 20 years. They should have paid their c-suite half and become what? Still the 4th and 7th most valuable companies in the world? We know this why?
At the end of the day it's a very hard job, and no one has any idea who the hell is good at it. Prior performance is a good signal, but who knows really? Why would you go cheap when the potential for billions of dollars in wealth destruction/creation is at risk?
If you are able to deliver a better result than "Person X" who is paid more than you, and if you get a chance to deliver that result, won't you demand to be paid more than the "Person X"?
And for the company who is paying, who already seems to agree to pay that much for "Person X"'s result - would likely to be happy to pay you the same or more since you are delivering more
Where am I wrong? Isn't this just capitalism? Help me understand :)
If you voluntarily say I need only half the pay of "Person X" aren't you basically being charitable or just sacrificing what you could potentially get? I am not saying that doing this is wrong (probably morally right) but this is probably rare.
You don't seem to understand that there is nothing preventing mediocre applicants from asking for more money than better applicants. How much a person asks to be paid may or may not have anything to do with their actual ability to deliver results. And in fact, what has been empirically shown is that applicants who ask for and receive outsized compensation are actually worse performers on average.
Ok, probably you and I are talking about different things.
But on your point, what's the root cause of this issue? Why do people hire people with outsized compensations when the other option is empirically proven?
The problem with this is that it presumes there's significant actual skill being exercised at the top level that is unique to the very wealthy who already make up most executives.
Note, I'm not saying "being a top exec takes no skill"; I'm saying "many people have the skills required, they're just rarely given an opportunity to demonstrate them in the same way." (I'm also saying "many execs do not have any significant skill to bring to the table; all they have is connections and money".)
Essentially, you're repeating a variant of the Just World hypothesis—that people who have skills that are relevant to high-paying jobs must be highly-paid, and people who are highly paid must be skilled enough to warrant it.
Neither of those propositions holds up to actual scrutiny.
I don't think he is disputing your claim that there are many people with the skillset to run Netflix that have never had the opportunity to demonstrate it.
The problem is that if they have never had the opportunity to demonstrate it then how do you find them in the first place?
+1 to everything you say. Actual scrutiny will probably yield more optimized results that costs less.
Some of the variable factors that will make the actual scrutiny extremely hard are human emotions such as desire, ambitions, ego, time, impact to morale [employee, shareholder, customers]
No the board is just lazy and has no real plan for if the CEO keels over.
Imagine if how long it takes the board to find a replacement CEO was how long it took to restart a failed server ... They just don't have contingency plans and so they shovel money at the CEO to ensure that the fact that they don't have a contingency isn't a problem.
If the CEO changes often the media will quickly portray that as the biggest problem - "The company that cannot find a CEO that will stick" and the shareholder value will be destroyed.
I completely agree that the whole thing is influenced heavily by how its going to "look" - perception.
But being in a Disney situation where your CEO (Iger) wanted out and choose a poor replacement for himself. (Note: Iger choose a poor replacement not the board, they're useless). And now Disney stock is at the same value in 2023 as they were in 2015.
If the Disney board actually had a plan on who a replacement CEO should be they wouldn't be in this problem.
Of course you can. People that get highest salary are best at one thing. Getting highest salary, that's their job and they're amazing at it. Their actual performance doesn't matter. They can destroy the company and next one will hire them for even more. There are numerous examples.
Because a few bucks compounded by the marginal next best CEO might be a major improvement for shareholder.
The real reason boards don't cheap out is because no one has ever[1] got fired or sued for paying top dollar for the best when things go to crap and everyone else is pointing fingers
"it's to retain talents"... except most of these people sit on the board of each other's companies and vote each others outrageous compensations... retaining talents my ass...
The big question is why do other societies (I'm not American) not value engineering. And when I say "value", I mean "with money".
Some professions push society forward and create long-term wealth. In my mind these are professions where you make decisions with skin in the game, persuade others to do things a better way, and all of STEM. Leadership, sales, engineering, science.
Other professions exist to describe what these prime movers do, or to maintain their work, or to support the people doing it. This is also vital and every society needs this too, but it's just not as important.
So, if in the USA they pay engineers 3x better than in other countries, the question is: what the hell is the rest of the world thinking?
Countries like India, China, Israel, and South Korea also have tech industries that can pay EU level salaries (and in Israel's case US level) despite a cost of living comparable to Eastern Europe (excluding Israel).
The reason is those counties and the US have an oversized software+hardware industry with a very mature VC+PE+IPO market within the tech sector or a pipeline to the US's financial sector, and are thus able to make 8-9x multiples of revenue based on a single IC.
Most of the EU doesn't have software+hardware companies with comparable revenue multipliers. That said, in certain niches (eg. Pharmaceuticals, Finance, Defense) in some regional employment markets like those in the UK, Denmark, Netherlands, and Ireland might be able to offer US comparable salaries (not SV level but a decent $70-100k base)
> what the hell is the rest of the world thinking?
— “Who wants to work that hard for nothing?”
— “We’re a tech company? What do we actually do? Something that: atomizes social relations; enables the violation of people’s privacy and rights; or simply plays hot-potato with funny money? Yeah, pass. My friends and family would think I’m a chancer.”
— “What you’re doing goes against local laws and ethics. You can’t do that here.”
— “A business should help the country and its people; not the people that built it.”
— “Spending all my free time to become marginally more knowledgeable and skilled than my coworkers/‘competition’? I’d rather spend time with my friends and family — or a hobby.”
— “Money? What am I gonna do with money — buy a house? Then what.”
STEM professions are important, but I disagree that they're not valued enough. If anything, the US is overvaluing them compared to the rest of the world.
Education and health professionals are much more valuable to society, and it's criminal how little they're paid in general. Sure, they ultimately depend on STEM fields, but without them our societies would literally collapse. The "prime movers" as you put it depend much more on health and education professions than the other way around.
We only need teachers because they generate STEM grads. No science would mean 90% of the value in education is gone. There's obviously value in learning history and English, but it's nothing transformative.
Until recently, the medical profession was literally leeching people until STEM stepped in with germ theory etc. The life expectancy value of going to the doctor was negative!
The US pays salespeople, leaders, entrepreneurs, and engineers a ton of money. And it shows in the results.
> We only need teachers because they generate STEM grads.
Only? No professions would exist without teachers. Education is fundamental to our society, and has been for millenia. There's nothing more transformative than a good education.
> No science would mean 90% of the value in education is gone.
Again, I'm not saying that science is not important. It plays a critical role in driving other fields forward. But I'd argue that an average teacher and health care worker are more valuable to society than an average IT professional, while the discrepancy in pay between them is abysmal. We only care about health care workers in times of crisis, but then quickly forget about them when it's not trendy to call them "heroes" anymore.
> Until recently, the medical profession was literally leeching people until STEM stepped in with germ theory etc.
I'm not talking about scientific breakthroughs that push other fields forward. Those obviously deserve the merit and recognition they have received. I'm talking about the value of the average working class professional in these fields, and their relative salaries.
> The US pays salespeople, leaders, entrepreneurs, and engineers a ton of money. And it shows in the results.
What results? How is a software "engineer" working for an adtech or social media giant to build spyware valuable to society exactly? Or yet another startup peddling their bullshit product designed to lure in investors and make their shareholders rich? Or the sleazy sales people making all those deals happen? You're telling me that this is somehow more valuable than health workers literally saving people's lives, or teachers building future professionals?
One group lives in luxury, while the other can barely make ends meet working a much more stressful and laborious job. This shows in the results, alright.
Thinking that somehow our profession is more important is indicative of the tech bubble we're in. But I'm not surprised to see such mentality on this forum.
This belief is a big part of why we have such a crisis of culture and politics today.
Education in civics and humanities are vital for understanding our culture, other cultures, ourselves, other people, our relations to them, and how best to participate in our society and government.
Education in practical skills—the kind that used to be taught in "home ec" courses—is vital for being able to navigate this world safely and effectively—things like how to make basic foods, how to balance finances, etc.
I agree that there's a lot of value in civics as you call it. I'm not saying it should be cut out.
But if it weren't for leaders, salespeople, and STEM, we'd still be throwing rocks at sabre-tooth tigers; naked, hungry, sick, and hoping for the best.
Nearly every good thing in our world exists because we invented it, or invented a way to use a natural thing. Everything in home ec and all of bookkeeping were created and spread by prime movers.
The past few centuries of economic growth were ushered in by the industrial revolution, a staggering increase in global wealth culminating with people so rich that they have time to question the value of STEM, and with so few problems that they think what we're living through right now qualifies as a political crisis.
I love how STEM has basically just been reduced to TE (and maybe M, but it’s more of a tangential thing) colloquially. My understanding that the “S” in particular are not very valued, and that there’s way more supply than demand in most of the sciences.
My salary is decent, but our family paid $48k out-of-pocket for medical care last year, and our kids enter college soon; some colleges in the US are over $60k/year now. In Europe, my salary would be lower... but so would my medical and college costs.
$2400/month premiums ($2800 this year), $4k in copays (capped), uncovered compounded medications, an out-of-network provider because the in-network ones have a year's wait, dental/braces/vision, etc. (Plus mileage/parking incurred with a medically complex family.)
If your base of comparison is Berlin, then Tier 1 metros in the US can come out to 3-4x as expensive, but Germany also has pretty bad wage stagnation so ymmv
I agree (Munich, Hamburg, Frankfurt, and Cologne-Bonn take the cake in DE economically while Berlin is a relative newcomer), but when Americans talk about Europe, the image that comes to mind is going to either be Berlin or maybe Paris (yes Ireland+UK are Europe as well, but they aren't exactly treated as European in the American zeitgeist).
That said, Berlin is definetly much cheaper than other cities due to the Cold War. It's basically Western+Central Europe's Austin.
I know this is supposed to be a "self-awareness jab" at HN commenters, but you should really take a look at the stock market. 7 of the top 10 companies by market value are American tech companies. If anything, American IT workers are severely underpaid compared to the profits these companies are raking in.
These companies are raking record profit because they've managed to place themselves as de facto monopolies in their respective areas. The software world is a winner-take-all in nature, where the last man standing becomes a super profitable monopoly (SV prefers the term "the moat" instead of monopoly). It has little to do with the workers of these companies and everything with the lack of regulation of the tech sector.
But that means the work being done at those companies is more valuable than the work being done elsewhere, and so it makes sense that those companies would pay more (because marginally better employees will add even more value than they cost, due to the org's over-size leverage of that work). That in turn raises salaries for all workers in the same market.
That very well may be true, but I would rather the workers still get paid concomitant to the profits the corporation is raking in rather than even more wealth being accumulated by the capital class running these corporations.
I think you mean well. Though this comment does remind me of situation during Silicon Valley Bank collapse. Many startup founders were shocked to discover how large part of America hate these hardworking entrepreneurs for no fault of theirs.
This I/O is pretty important, IMO, as Google's reputation for being the best cloud for data science is on the line with ChatGPT eating their AI position and BigQuery's waning developer pull. Data is a large driver for companies to use Google Cloud, and without that they're in big trouble, IMO.
Hopefully this I/O gives folks more compelling reasons to use Google Cloud.
I can't believe they're still selling so many of them. $220 billion yearly revenue is at least 220 million iPhones sold a year. Where are all these people buying new iPhones? I don't think they're really gaining market share in the US at least, so unless it's overseas market share growing people are just replacing their perfectly good phones from a few years ago for reasons I can't comprehend. I mean that's 3 out of every 100 people in the world buying an iPhone just in the last year.
1. It continues to be true that a new phone is noticeably faster and has a noticeably better camera than a 3-year-old phone (regardless of how gross the reasons are).
2. Phones break.
3. Phones are lost.
4. Phones are given away.
5. Some batteries in the batch lose capacity faster than they should.
6. New phones are given as gifts to people who might have gone longer before buying a new phone with their own money.
7. Features.
Even regardless of all that, three doesn't seem unreasonable if you have the money. I seem to be able to go about five years before the battery life and performance become too painful (though it's hard to get an average with data points that far apart), and my tolerance for those issues is probably higher than a normal person.
There are certainly reasons I can comprehend. I guess it's just hard to see how those reasons lead to 100-200 million people who already had an iPhone getting a new one. I'm sure if I added all the reasons up it would seem obvious but it really does feel mind boggling at first that they're still able to sell so many after all these years.
On the earnings call, Tim’s answer to a question noted that the iPhone active install base is over 1 billion (of the over 2 billion total active devices).
At a replacement rate of 200 million per year, that’s 5 years to turn over the iPhone active install base. Replacing a 5 year old phone sounds pretty reasonable.
> replacing their perfectly good phones from a few years ago
In many cases, they're not 'perfectly good'. Apple does backwards compatibility longer than most, but at some point, those old phones can't function as smart phones. Banking and health apps will require newer OS, and newer OS eventually means new device (for better or worse).
I just bought a 'new' iphone - used/refurb. Tru-depth camera broke. Replaced it ($170!). Whole phone broke a week after that anyway, out of warranty, and ... they offered to sell me a replacement for $399 (iphone 12 mini). I bought a refurb 13 mini from a 3rd party for $420, then got a $35 refund for minor cosmetic damage. That doesn't count in Apple's numbers, but I almost did. My 2.5 year old iphone mini wasn't "perfectly good" any more.
Also, for better or worse, people have multiple. Your employer may provide you with a work phone, and you'll have 2. It's not as prevalent as it used to be, but I still know a few folks who have a 'work' phone separate from personal.
It's still a lot of phones, no doubt. I don't plan to replace/upgrade mine for at least another 2 years, but my wife may need a new one should something happen to her iphone 11 in the next couple years.
> In many cases, they're not 'perfectly good'. Apple does backwards compatibility longer than most, but at some point, those old phones can't function as smart phones. Banking and health apps will require newer OS, and newer OS eventually means new device (for better or worse).
To add to this, each annual release of iOS does typically add a new feature or two that works only on the newest model(s). Sometimes, this is enough to generate an upgrade.
There's also a large amount of people that essentially "rent" their phone through a consistent upgrade pipeline via their carrier or Apple directly (basically never paying off the device directly).
Judging by iOS version market share [1] at least 95% of iOS devices were produced in the past 6 years (as the older ones don't support iOS 16). Given apple's 2 billion installed device base a 6-year replacement cycle yields 333 ("repeating, of course") million devices per year. Of course, some of those aren't iPhones, but also 6 years is probably longer than most people's replacement cycle.
I think you are on to something. Financial journalists should look in more detail.
I am in no way saying the results are not correct. But there are all kinds of smart ways to report revenue, like mandating your suppliers to stock your product and reporting those as sales.Same way car vendors report sales, when the cars in reality are still sitting at the dealers showrooms.
From my random data sample of 20 contacts, around 80% have Android phones and the other 20% with iPhones, nobody upgraded in the last two years...
I wonder if we swapped out "greatest" for "most successful", if that would/could be a true statement. Or, of course, what criteria we could even agree could substantiate the claim.
Soap is the greatest product in human history. Nothing else even comes close, and many great inventions can be considered only possible due to it.
It has saved more lives than any other invention.
Thousands of times more (not an exaggeration) than the Polio vaccine and Penicillin combined -- and is largely credited for the making cities less deadly and allowing Babylon to exist (and have so many other advances for humanity)
This feeling is often dismissed as illusion but I dare say that it is a reality.
I've been here 10+ years, first as a lurker. It is devolving. Some threads are still brilliant but the amount of low-effort replies has been steadily growing.
I didn't use to abandon thread so much. Now I'm tired of skipping greyed-out blocks.
From the outside looking in, founder CEO’s like Steve Jobs and Elon Musk are enigmas. They are able to convince the most brilliant human beings to devote their lives to them. That’s their real talent. Their belief in their mission is so strong and their confidence is unshakable. I wonder what mix of nurture and nature produces human beings like this. Out of billions of people, a handful are born this way.
Elon is listening to the music inside his own head. He has the right people working for him, and he's often mistakenly seen as the person who takes all the credit, but he's sitting on the work of countless engineers who work painstakingly to create his product range. As for Jobs, again, sitting on the work of countless designers and product people who make Apple what it is. Jobs & Musk are only genius tier people insofar as they piggyback on others hard work.
That's what they said? Knowing when to invest both time and money into certain products and concepts and knowing what areas need the most investment from engineers and designers (simplicity for Jobs, speed and convenience for Tesla and AMZN [in different ways]) is how you attach your name and success to actual products making a big impact on peoples' lives. Would these products exist without the founders putting in the initial effort to build POCs and get VCs and investors onboard? Would the industry be x years behind without them?
And? You can demonstrate your complete lack of knowledge of something basic in one area, and understand some extremely complex things in another.
Ben Carson (a US presidential candidate from 2016) is one of the most brilliant neurosurgeons in the world, and yet he derailed himself often by bumbling about his conspiracy theories about pyramids in Egypt being used as rice silos. He showed himself a fool on a number of public occasions. And yet, he understands all complexities involved in being a great neurosurgeon better than heavy majority of experts in his field.
No, I mean he has demonstrated a lack of basic knowledge with programming itself, but he's making large architectural decisions and firing the people warning him about it.
