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I've definitely felt the challenge of hiring in a startup as a result of these kinds of numbers. I'm curious what others think will come of this seeming bubble

I've definitely felt the challenge of hiring in a startup as a result of these kinds of numbers. I'm curious what others think will come of this seeming bubble in compensation.

throwaway84742 8y ago
Why “bubble”? Their business is more profitable than crack cocaine, and their profit per employee is over a million dollars. Seems like fair compensation for once.
askafriend 8y ago
Why is it a bubble when they have an incredibly successful business that prints money where the people building the service are being rewarded for helping build such a successful outcome?
- adamnemecek 8y ago
  There might be some regulatin coming their way.
  - briandear 8y ago
    Which will make their business even more solid as it will make it harder for new entrants.
    - adamnemecek 8y ago
      Not really no. Not all regulations are like that. These will most likely go after fb very directly.
    - Lionsion 8y ago
      That's sloppy thinking. Here's and example why: what if a new regulation new banned targeted advertising? That would kneecap FB's business model and unique value proposition while making it easier for new entrants, since they won't have to compete with FB's now-legally-useless data trove.
- dx034 8y ago
  Because that was exactly the argument banks used before 2008. Not that salaries in Finance are low now but a lot of the excesses have been cut back following the crisis. Banks also made a ton of money pre-2008 but that didn't come out of nowhere. So far, there has been no industry that just continued making high margins over decades without any cut backs. I doubt tech will be the first one.
  - icebraining 8y ago
    But the industry as a whole doesn't have these margins or salaries; only the top dogs do.
    - dx034 8y ago
      Pre-2008 not all banks were hugely profitable. Some investment banks were and some smaller companies. The tech sector isn't that dissimilar. Salaries in SV show that not only Google and Facebook are willing to pay $200k+ for engineers, most of the industry will (and usually can). As tech can't print money, these salaries must come from somewhere. And at some point those sources won't be able or willing to provide it. Maybe that's a soft landing, maybe harder. I don't know but as I said previously, I'd be surprised if tech's the first industry in centuries that channels wealth into the hands of few (including SV landlords) without any consequences.
      - icebraining 8y ago
        Salaries in SV show that (...) most of the industry will (and usually can). Yeah, that's what I doubt. SV is not the tech industry as a whole. The average salary for a software developer in the US is less than half than that, and if we removed those top outliers, it'll be even less. So I'm skeptical that this is out of the ordinary; doesn't seem that different from other well-paid white-collar professions like lawyers.
        f00biebletch 8y ago
        And, even in SV, most of the industry cannot; certainly the AirBnB/uber/lyft's of the world can, but the smaller companies seem to be falling behind (based on anecdotal conversations at least).
TangoTrotFox 8y ago
It's not a bubble by any stretch of the imagination. Facebook pays a lot because they have to pay a lot to get quality people to want to work at Facebook. Compare this against companies like SpaceX where the median compensation is quite awful for the industry made even worse by the area (compensation is well below $90k in most cases). This poor compensation is made even more peculiar at a glance by the incredibly high standard of employee they have. But they have these incredibly well qualified people lining up outside the door wanting to work for them. Of course refuting my argument is companies like Netflix. I don't entirely understand why they pay so much. But at least just taking examples like Facebook and SpaceX, compensation is mostly just based on supply and demand - rather than massive ongoing bubble of inflating salaries.
- zerr 8y ago
  Exactly. Same goes for game industry. As for Netflix - you get to paid premium for taking a non-reliable job - they brag about their high turnover rate in their "culture" deck.
- f00biebletch 8y ago
  I admire the Netflix philosophy- ruthlessly capitalistic.
fergie 8y ago
Its not a bubble. $240k is a reasonable salary for a professional with good grades from a good university working for a highly profitable private company. In fact as long as there is such a gap between revenue per employee, and compensation per employee, there will only be upward pressure on pay and conditions. In reality, software engineering salaries outside of established tech environments are kept artificially low because there is no "guild of software engineers", and therefore anybody can get hired no matter what level of skill they have. I too run a software startup. The most common and serious error I see in my fellow startup founders is expecting to build better technology with worse pay and conditions. You might be able to wrangle something decent out of some poorly qualified yet smart people, but its a bit of a long shot.
- tonyedgecombe 8y ago
  Its not a bubble. I'm pretty sure it is and I'm quite looking forward to seeing it burst.
  - Kephael 8y ago
    When I attended Facebook university day, 100% of the students I spoke with were from top schools. The majority I spoke with were from Ivy League Universities, of the non Ivy League students, one was from MIT, two from UMD, one from UCLA, and one from UT Austin. This is not a bubble, this is them hiring the best. I have been in class with students who chose to enter software engineering at major companies rather than investment banking.
    - f00biebletch 8y ago
      Although that notion of "the best" has been deeply challenged by slack, e.g. https://www.theatlantic.com/technology/archive/2018/04/how-slack-got-ahead-in-diversity/558806/ https://www.theatlantic.com/technology/archive/2018/04/how-s...
      - Kephael 8y ago
        I could never get an interview at Slack, but they are not hiring the best. Their compensation is far too low.

I've definitely felt the challenge of hiring in a startup as a result of these kinds of numbers. I'm curious what others think will come of this seeming bubble in compensation.

throwaway84742 8y ago

Why “bubble”? Their business is more profitable than crack cocaine, and their profit per employee is over a million dollars. Seems like fair compensation for once.

askafriend 8y ago

Why is it a bubble when they have an incredibly successful business that prints money where the people building the service are being rewarded for helping build such a successful outcome?

adamnemecek 8y ago
There might be some regulatin coming their way.
- briandear 8y ago
  Which will make their business even more solid as it will make it harder for new entrants.
  - adamnemecek 8y ago
    Not really no. Not all regulations are like that. These will most likely go after fb very directly.
  - Lionsion 8y ago
    That's sloppy thinking. Here's and example why: what if a new regulation new banned targeted advertising? That would kneecap FB's business model and unique value proposition while making it easier for new entrants, since they won't have to compete with FB's now-legally-useless data trove.
dx034 8y ago
Because that was exactly the argument banks used before 2008. Not that salaries in Finance are low now but a lot of the excesses have been cut back following the crisis. Banks also made a ton of money pre-2008 but that didn't come out of nowhere. So far, there has been no industry that just continued making high margins over decades without any cut backs. I doubt tech will be the first one.
- icebraining 8y ago
  But the industry as a whole doesn't have these margins or salaries; only the top dogs do.
  - dx034 8y ago
    Pre-2008 not all banks were hugely profitable. Some investment banks were and some smaller companies. The tech sector isn't that dissimilar. Salaries in SV show that not only Google and Facebook are willing to pay $200k+ for engineers, most of the industry will (and usually can). As tech can't print money, these salaries must come from somewhere. And at some point those sources won't be able or willing to provide it. Maybe that's a soft landing, maybe harder. I don't know but as I said previously, I'd be surprised if tech's the first industry in centuries that channels wealth into the hands of few (including SV landlords) without any consequences.
    - icebraining 8y ago
      Salaries in SV show that (...) most of the industry will (and usually can). Yeah, that's what I doubt. SV is not the tech industry as a whole. The average salary for a software developer in the US is less than half than that, and if we removed those top outliers, it'll be even less. So I'm skeptical that this is out of the ordinary; doesn't seem that different from other well-paid white-collar professions like lawyers.
      - f00biebletch 8y ago
        And, even in SV, most of the industry cannot; certainly the AirBnB/uber/lyft's of the world can, but the smaller companies seem to be falling behind (based on anecdotal conversations at least).

TangoTrotFox 8y ago

It's not a bubble by any stretch of the imagination. Facebook pays a lot because they have to pay a lot to get quality people to want to work at Facebook. Compare this against companies like SpaceX where the median compensation is quite awful for the industry made even worse by the area (compensation is well below $90k in most cases). This poor compensation is made even more peculiar at a glance by the incredibly high standard of employee they have. But they have these incredibly well qualified people lining up outside the door wanting to work for them. Of course refuting my argument is companies like Netflix. I don't entirely understand why they pay so much. But at least just taking examples like Facebook and SpaceX, compensation is mostly just based on supply and demand - rather than massive ongoing bubble of inflating salaries.

zerr 8y ago
Exactly. Same goes for game industry. As for Netflix - you get to paid premium for taking a non-reliable job - they brag about their high turnover rate in their "culture" deck.
f00biebletch 8y ago
I admire the Netflix philosophy- ruthlessly capitalistic.

fergie 8y ago

Its not a bubble. $240k is a reasonable salary for a professional with good grades from a good university working for a highly profitable private company. In fact as long as there is such a gap between revenue per employee, and compensation per employee, there will only be upward pressure on pay and conditions. In reality, software engineering salaries outside of established tech environments are kept artificially low because there is no "guild of software engineers", and therefore anybody can get hired no matter what level of skill they have. I too run a software startup. The most common and serious error I see in my fellow startup founders is expecting to build better technology with worse pay and conditions. You might be able to wrangle something decent out of some poorly qualified yet smart people, but its a bit of a long shot.

tonyedgecombe 8y ago
Its not a bubble. I'm pretty sure it is and I'm quite looking forward to seeing it burst.
- Kephael 8y ago
  When I attended Facebook university day, 100% of the students I spoke with were from top schools. The majority I spoke with were from Ivy League Universities, of the non Ivy League students, one was from MIT, two from UMD, one from UCLA, and one from UT Austin. This is not a bubble, this is them hiring the best. I have been in class with students who chose to enter software engineering at major companies rather than investment banking.
  - f00biebletch 8y ago
    Although that notion of "the best" has been deeply challenged by slack, e.g. https://www.theatlantic.com/technology/archive/2018/04/how-slack-got-ahead-in-diversity/558806/ https://www.theatlantic.com/technology/archive/2018/04/how-s...
    - Kephael 8y ago
      I could never get an interview at Slack, but they are not hiring the best. Their compensation is far too low.