4 ms·

> It sounds like capital markets are saying, we like this cost structure. Continue it and take more money. The capital markets care about the bottom line, not

> It sounds like capital markets are saying, we like this cost structure. Continue it and take more money. The capital markets care about the bottom line, not about internal cost structure. So for example, a company with 100 devs and 1 CEO looks exactly the same to "capital markets" if the CEO makes $105m and each dev makes $100k, or if the CEO makes $5m and each dev makes $1.1m. There's quite a large room to change the current cost structure without eating into the margins. Beyond that, those margins at tech companies tend to be quite wide, giving even more room for flexibility.

sandworm101 8y ago
True for the market, but markets dont actually give you the money. An investor (or rep) signs the check. When they show up they do indeed look at the structure and decide if they are happy or not with the pay structure.
- dunpeal 8y ago
  Investors aren't some mysterious and capricious force that storms into your office and throws a fit over random reasons. They care primarily about one thing: their Return on Investment. If the company becomes more profitable by shifting more comp to developers, then the investor will support that wholeheartedly. Tellingly, some of the most profitable companies right now are those paying their developers the best, e.g. FAANG. Suggesting that paying developers more is a good move, financially, for the employer. Anecdote: I was involved in the hiring process of a certain tech company. The entire company had "engineers are a scarce resource, use sparingly" as a key principle. There were many rules about how to apply that, and people regularly got yelled at by the CEO for violating said rules. Fast forward to a hiring spree. The company was hiring for a particular non-technical position, as well as for engineering. They tell me how much they're paying each position. Pay is the same. The non-technical position had about x20 candidates than open positions. The engineering position had roughly 25% less, before screening out unqualified candidates and those who didn't pass technical interviews. Same pay. Doesn't compute.
IMTDb 8y ago
The capital markets care about the bottom line, not about internal cost structure. > When you are raising money, the market very much cares about the cost structure.
- dunpeal 8y ago
  And who says "the market" wants engineer's relative share of the comp pie to stay exactly as it is? TFA and all other evidence points to the opposite conclusion: that engineers are becoming some the most valuable resource in the organization, the demand for them is only increasing, so they should be paid accordingly. Therefore, as an investor I'd be quite happy to see my engineers paid very competitively, thus ensuring their retention and performance.

sandworm101 8y ago

True for the market, but markets dont actually give you the money. An investor (or rep) signs the check. When they show up they do indeed look at the structure and decide if they are happy or not with the pay structure.

dunpeal 8y ago
Investors aren't some mysterious and capricious force that storms into your office and throws a fit over random reasons. They care primarily about one thing: their Return on Investment. If the company becomes more profitable by shifting more comp to developers, then the investor will support that wholeheartedly. Tellingly, some of the most profitable companies right now are those paying their developers the best, e.g. FAANG. Suggesting that paying developers more is a good move, financially, for the employer. Anecdote: I was involved in the hiring process of a certain tech company. The entire company had "engineers are a scarce resource, use sparingly" as a key principle. There were many rules about how to apply that, and people regularly got yelled at by the CEO for violating said rules. Fast forward to a hiring spree. The company was hiring for a particular non-technical position, as well as for engineering. They tell me how much they're paying each position. Pay is the same. The non-technical position had about x20 candidates than open positions. The engineering position had roughly 25% less, before screening out unqualified candidates and those who didn't pass technical interviews. Same pay. Doesn't compute.

IMTDb 8y ago

The capital markets care about the bottom line, not about internal cost structure. > When you are raising money, the market very much cares about the cost structure.

dunpeal 8y ago
And who says "the market" wants engineer's relative share of the comp pie to stay exactly as it is? TFA and all other evidence points to the opposite conclusion: that engineers are becoming some the most valuable resource in the organization, the demand for them is only increasing, so they should be paid accordingly. Therefore, as an investor I'd be quite happy to see my engineers paid very competitively, thus ensuring their retention and performance.