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Like you, I am a co-owner of a bootstrapped, profitable, conservatively managed technology company. I am happy to have built what I have. But I can't find a whi
by malchow 11y ago
Like you, I am a co-owner of a bootstrapped, profitable, conservatively managed technology company. I am happy to have built what I have. But I can't find a whit of pleasure at the prospect of a disastrous reversal in private technology financing. There are a lot -- a lot -- of bad deals receiving favorable financing from out-of-touch or non-traditional institutionals. That's true. And painful but non-combustive reversals are part of the functioning of markets, sure.
But SV remains the one place in the world where smart investors with genuine science and technology backgrounds are willing to play the long game with entrepreneurs. I spend a lot of time in London and New York. The generally hidebound nature of their investment cultures, which make perfect sense when you're doing an Exotic Pet Vet Tax-Free Rollup, or a Midwest Refrigerated Storage Debt-Chummed Dividend Fête, would never have made a bet on Google, Oracle, Nvidia, PayPal, Oculus, to take a few at random.
So while there are a good dozen $1b liquidation preference-cap companies that are fundamentally silly, wishing for a tidal reversal in private tech funding isn't a good idea. VC qua asset class is important.
- deleted 11y ago[deleted]
- e40 11y agoWhy I want the bubble to burst: I can't afford to pay Google, et al and unicorn salaries. My bootstrapped, profitable, conservatively managed company isn't swimming in cash. 10 years ago the pay we offered was competitive, but now... salaries (+ benefits) have gone through the roof.
- khuey 11y agoComp is being driven by Google, Facebook, Apple, etc, generally not unicorns.
- cft 11y agoBut before this bubble, as a bootstrapped startup one could beat Google by offering very early stage employees an attractive mix of cash and a lot of stock: Google's stock options are not that attractive since it has gone public. Now on paper you cannot beat the offerings of the unicorns, since they also offer cash and stock options. From experience, the existence of unicorns made the life for a bootstrapped startup in San Francisco very difficult. In our office building in SF, we had probably about 6 bootstrapped companies in 2012, now only mine is left: the other 5 moved elsewhere (most are still open). The smaller offices were joined and the companies were replaced by the larger funded ones. Also the building was bought by a more greedy landlord.
- mylons 11y agoGoogle's stock is very attractive. employees are generally paid in actual stock, and not options. there's a huge difference between options, and stock. options in a startup, especially since ~95% of startups fail, are generally worthless.
- cft 11y agoI am talking about very early employees. What is the typical dollar amount in RSUs or stock a new engineer after MEng is getting in Google?
- mylons 11y ago>$100k over a few years at the initial date of the grant. You can roll the dice all you want on startup options or take RSUs with actual value
- rhino369 11y agoThey may be the leaders, but they have to compete so fiercely because VC money is employing a lot of engineers and programmers. If that VC money stops, there will be an oversupply of labor. And prices will fall.
- frandroid 11y agoI wouldn't say an oversupply of labour, but much less competition for the currrent supply, for sure.
- malchow 11y agoOurs has offices mainly in South Bend, Indiana and Denver, Colorado. ;)
- e40 11y agoI wish I could relocate, but I can't. As I mentioned in other places, because I'm in the SF Bay Area, people from low cost of living areas expect us to pay SF Bay Area salaries, even when they telecommute. I agree, if I was in a low cost of living place, that wouldn't be the case. I just wish it was, though.
- philsnow 11y agoAs an example of the cost of living in South Bend, I easily afforded an apartment in the converted Studebaker family guest home, around the corner from the Studebaker mansion. On my grad student stipend.
- habitue 11y agoGoogle and Apple are very different from a unicorn. They are profitable public companies, and they'll still be around even if all the unicorns suddenly disappear.
- e40 11y agoSee rhino369's reply: https://news.ycombinator.com/item?id=10946880 https://news.ycombinator.com/item?id=10946880 He's spot on.
- fapjacks 11y agoLow wages are one of the biggest reasons (if not THE reason) we're in so much trouble in this country to begin with.
- darkr 11y agoYeah, but I don't think the wages paid to developers in SV (or pretty much anywhere in the western world) would be classed as 'low'.
- e40 11y agoWe're talking about premium developers here. People making $150K/yr or more. I literally had people stolen by Google that were offered more than $250K/yr. You are talking about something completely different than the rest of us.
- lmm 11y agoGoogle aren't paying those salaries out of dumb VC money. They're paying them because developers can generate that much value for them.
- vadym909 11y agoNot really- but Google probably thinks they might be able to. Applying it's monopoly power, Google can easily charge more for its services if required. If it's moonshot projects fail to generate returns or its monopoly is threatened, then it may have to resort to Microsoft style 10,000 layoffs to readjust. Till then they can outspend you and anyone else to get what they want. We are in the Developer's market- in time we will be in Employer's market. Cycle of Life.
- nradov 11y agoYou did not have people literally "stolen by Google". People don't belong to you.
- e40 11y ago
- nilkn 11y agoI'm pretty sure there are, even right now, plenty of decent developers who would take seemingly lower salaries in exchange for working in a much lower cost of living area, provided the company itself is still fairly modern and forward-thinking both technically and culturally. This is doubly so if you're not in need of Google-caliber talent. Then you're not even directly competing with Google et. al. in the first place. No matter what the actual number is, if your salary translates into a sales pitch that looks like "comfortably afford a 3-4 bedroom house in a beautiful neighborhood, and enjoy an easy 15 minute commute by car while your kids go to a safe, reliably decent public school nearby", then you're going to get people interested. Relocating outside of major hyper-expensive tech hubs shouldn't be seen as a failure. It should be seen as opportunity. There are reasons to be in San Francisco, and there are just as many reasons not to be in San Francisco or anywhere close to it.
- e40 11y agoI'm pretty sure there are, even right now, plenty of decent developers who would take seemingly lower salaries in exchange for working in a much lower cost of living area, provided the company itself is still fairly modern and forward-thinking both technically and culturally. You would think, right? The last two offers I made where to people in very low cost of living places. I offered them our "Bay Area, not Google $$ salary" and they both said they expected Google salaries and turned down the offer. Until that point, everything had been clicking perfectly. EDIT: last three people.
- sanderjd 11y agoI know it's awkward, so I understand if you don't answer, but even wide number ranges would make this a lot less abstract. What is the range of "Bay Area, not Google $$ salary", and what do you alternatively think is reasonable and affordable to you?
- e40 11y agoSalaries of $125/yr were turned down. They were looking in the range of $150-175/yr. They where in areas where the $125/yr was equivalent to $75k/yr. We were looking at experienced developers only. As I said elsewhere, we had a developer poached from Google for $250k.
- btilly 11y agoA good chunk of that is not the bubble. It is due to ending the anti-poaching collusion between top tech companies that had been letting companies keep salaries down.
- e40 11y agoThis is wrong on two levels: 1. That was deemed illegal and they've stopped. 2. Salaries are not being kept down in SV. The whole topic here is that they are out of control. Have you actually tried to hire anyone? I have. Even people that telecommute from low cost of living areas want SV salaries. I've had to go outside the US for my last 2 hires.
- sanderjd 11y agoI think you're getting downvoted because you seem to have misunderstood the parent commenter. They were saying the same thing as what you're saying here. Ie. that salaries are high because "that was deemed illegal and they've stopped".
- btilly 11y agoYou misunderstood me. I'm saying that the fact that they stopped means that we should expect salaries to go up. Because they were artificially lowering salaries before, and now they stopped that.
- trhway 11y ago>Why I want the bubble to burst: I can't afford to pay Google, et al and unicorn salaries. My bootstrapped, profitable, that is called market economy. Whoever can use programmer more efficiently and thus pay higher salary would get that programmer. In a big picture, using a resource less efficiently means pretty much wasting it. Do you make revenue per programmer like Google? If not, may be you need to look at where is a waste in your business process. Your employees wanna be productive and as result wanna do a lot of money for you and the themselves. You owe them efficient organization of business. > 10 years ago the pay we offered was competitive, the point of technology industry is to facilitate the process of natural selection out of anybody anywhere who hasn't changed in 10 years. I'm not trying to offend you. I've been sitting in my current BigCo for 4 years already, and see how i myself starting to be the candidate for being selected out if don't do something in the near future. 10 years is a historic epoch in the industry. The industry did look completely different back then.
- jazzyk 11y agoTrue, but imagine how many more new Google-like companies VCs could have helped to create if they hadn't spent money on silly "Uber for Pets" start-ups. It almost seems like investing in early stage, but serious companies is a thing of the past. Now, it is more like "pump-and-dump".