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$290k per month is $3.5M per year. A software engineer at Google earns, on average, $127k per year [1]. We multiply that by 1.4 [2] to obtain a cost per employ

by gberger 11y ago

$290k per month is $3.5M per year. A software engineer at Google earns, on average, $127k per year [1]. We multiply that by 1.4 [2] to obtain a cost per employee of $177k. This means that according to this estimation, Spotify pays for 20 Google software engineers. [1] https://www.glassdoor.com/Salary/Google-Salaries-E9079.htm https://www.glassdoor.com/Salary/Google-Salaries-E9079.htm [2] http://web.mit.edu/e-club/hadzima/how-much-does-an-employee-cost.html http://web.mit.edu/e-club/hadzima/how-much-does-an-employee-...

npalli 11y ago
Note, google cloud requires hardware.
jpatokal 11y ago
Remember that at Google, like in most other big companies in the Valley, baseline salary is only one part of total compensation: stock grants and bonuses are also quite significant. On the other hand, this blog only estimates the cost for Pub/Sub, when Spotify is using a whole slew of other Google Cloud services as well.
- dmytton 11y ago
  It'll be interesting to see what other numbers Spotify release in subsequent blog posts for the other services they're using. Hopefully some cost calculations can be run for those, too.
accountatwork 11y ago
> A software engineer at Google earns, on average, $127k per year [1]. We multiply that by 1.4 [2] to obtain a cost per employee of $177k. That ignores RSUs, signing bonus, and other bonuses, which make up the majority of the compensation package for senior engineers. Even at entry level, total comp (ignoring insurance, cost of office space, free food, and other things that aren't directly paid to the employee) is over $127k/yr. A baseline new grad offer last fall included $180k of stock, or $45k/yr, on top of a six figure salary plus a $50k signing bonus. This probably goes without saying, but new grad offers can go significantly higher if the new grad has strong competing offers, and senior offers start out even higher and have a much larger range.
jonknee 11y ago
Note that this is an estimate for just one feature of Spotify, not of their total hosting bill.
eloff 11y ago
So I don't get this. 1gbps and 2 million events/s could be comfortably handled on a single beefy 10gbps server. Add a second for failover. That's maximum $20K/year which is far cry from $3.5 million. How does this even begin to make economic sense? The economy of the cloud has never made sense to me, since it's cheaper to overbuy your capacity by 5x in dedicated machines than use AWS or GCE. After just one year you've paid for all your capital expenditures and then you're minting it. For a startup the appeal of the cloud is obvious, but for a big established company with known technical requirements I don't get it at all.
- lobster_johnson 11y ago
  Virtualizing your server resources is essentially outsourcing a whole lot of sysadmin work to a vendor. Dedicated servers create a different kind of lock-in: Dynamically scaling up dedicated servers is like laying down the tracks while the train is moving. Acceptable to some, but not to a company like Spotify.
  - eloff 11y ago
    You outsource some of the sysadmin work, but not all of it. Cloud servers have plenty of their own failure cases, some of them unique. Physical hardware is actually quite reliable and if you follow the same practices you should in the cloud - namely automatic failover, eliminate single points of failure, etc then the differences decrease. Dynamically scaling load is only really interesting if the load is extremely variable. You could just buy 5x the dedicated hardware, which will likely be able to serve 10x the traffic and may still end up paying less. Who cares if it sits idle most of the time. Now Spotify, like Netflix probably has extreme variance in load, much more so than a normal company. So maybe the cloud works for them. But that's not a common situation at all.
    - _delirium 11y ago
      It's definitely common for IT staffing costs to increase rather than decrease with a cloud transition, at least so far. Part of the problem is that you often are trading off sysadmins (relatively cheap) for engineers (relatively expensive), as you reengineer your system to run on top of ephemeral, distributed cloud servers, with new failure cases and new technology stacks. This is often justified on the basis that a large chunk is one-time engineering cost that will pay for itself in the long run. But that's a speculative bet, especially considering how much technology churn is happening so far (e.g. a bunch of companies that invested heavily in early 2010s cloud stacks are now re-investing in Docker). It's possible things will stabilize enough for such companies to eventually lay off many of their distributed-systems engineers and devops staff, and go more into cloud-autopilot mode with low IT headcount and lower staffing cost than pre-cloud-transition. But I don't think many companies are there yet, and I wouldn't bet a lot of money on it myself.
jldugger 11y ago
> This means that according to this estimation, Spotify pays for 20 Google software engineers. If hardware were free, sure.
deleted 11y ago
[deleted]

by gberger 11y ago

npalli 11y ago

Note, google cloud requires hardware.

jpatokal 11y ago

Remember that at Google, like in most other big companies in the Valley, baseline salary is only one part of total compensation: stock grants and bonuses are also quite significant. On the other hand, this blog only estimates the cost for Pub/Sub, when Spotify is using a whole slew of other Google Cloud services as well.

dmytton 11y ago
It'll be interesting to see what other numbers Spotify release in subsequent blog posts for the other services they're using. Hopefully some cost calculations can be run for those, too.

accountatwork 11y ago

> A software engineer at Google earns, on average, $127k per year [1]. We multiply that by 1.4 [2] to obtain a cost per employee of $177k. That ignores RSUs, signing bonus, and other bonuses, which make up the majority of the compensation package for senior engineers. Even at entry level, total comp (ignoring insurance, cost of office space, free food, and other things that aren't directly paid to the employee) is over $127k/yr. A baseline new grad offer last fall included $180k of stock, or $45k/yr, on top of a six figure salary plus a $50k signing bonus. This probably goes without saying, but new grad offers can go significantly higher if the new grad has strong competing offers, and senior offers start out even higher and have a much larger range.

jonknee 11y ago

Note that this is an estimate for just one feature of Spotify, not of their total hosting bill.

eloff 11y ago

So I don't get this. 1gbps and 2 million events/s could be comfortably handled on a single beefy 10gbps server. Add a second for failover. That's maximum $20K/year which is far cry from $3.5 million. How does this even begin to make economic sense? The economy of the cloud has never made sense to me, since it's cheaper to overbuy your capacity by 5x in dedicated machines than use AWS or GCE. After just one year you've paid for all your capital expenditures and then you're minting it. For a startup the appeal of the cloud is obvious, but for a big established company with known technical requirements I don't get it at all.

lobster_johnson 11y ago
Virtualizing your server resources is essentially outsourcing a whole lot of sysadmin work to a vendor. Dedicated servers create a different kind of lock-in: Dynamically scaling up dedicated servers is like laying down the tracks while the train is moving. Acceptable to some, but not to a company like Spotify.
- eloff 11y ago
  You outsource some of the sysadmin work, but not all of it. Cloud servers have plenty of their own failure cases, some of them unique. Physical hardware is actually quite reliable and if you follow the same practices you should in the cloud - namely automatic failover, eliminate single points of failure, etc then the differences decrease. Dynamically scaling load is only really interesting if the load is extremely variable. You could just buy 5x the dedicated hardware, which will likely be able to serve 10x the traffic and may still end up paying less. Who cares if it sits idle most of the time. Now Spotify, like Netflix probably has extreme variance in load, much more so than a normal company. So maybe the cloud works for them. But that's not a common situation at all.
  - _delirium 11y ago
    It's definitely common for IT staffing costs to increase rather than decrease with a cloud transition, at least so far. Part of the problem is that you often are trading off sysadmins (relatively cheap) for engineers (relatively expensive), as you reengineer your system to run on top of ephemeral, distributed cloud servers, with new failure cases and new technology stacks. This is often justified on the basis that a large chunk is one-time engineering cost that will pay for itself in the long run. But that's a speculative bet, especially considering how much technology churn is happening so far (e.g. a bunch of companies that invested heavily in early 2010s cloud stacks are now re-investing in Docker). It's possible things will stabilize enough for such companies to eventually lay off many of their distributed-systems engineers and devops staff, and go more into cloud-autopilot mode with low IT headcount and lower staffing cost than pre-cloud-transition. But I don't think many companies are there yet, and I wouldn't bet a lot of money on it myself.

jldugger 11y ago

> This means that according to this estimation, Spotify pays for 20 Google software engineers. If hardware were free, sure.

deleted 11y ago

[deleted]