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If so, then more of us should go work for ourselves. Put our money where our mouth is. If we're truly creating so much more wealth for these companies than we

If so, then more of us should go work for ourselves. Put our money where our mouth is. If we're truly creating so much more wealth for these companies than we take in salary, it should be easy (ish) to turn that into more money for ourselves, even if large companies don't want to do that. And if working for ourselves doesn't instantly turn into way more cash, perhaps we're not creating as many billions in actual value as we think we are?

larrik 16y ago
There's no reason to assume that a programmer on her/his own is worth the same as s/he is in the right position at the right company. A team can (and should) be worth far more than the sum of it's members. Reading HN a lot can make us forget that being a great programmer doesn't make you great at business.
- angelbob 16y ago
  I would argue that in that case, the business guys are creating a lot more of those billions in value than we generally credit them with.
  - timr 16y ago
    Let me make reduce the cognitive dissonance for you: being a good hacker doesn't make you lucky, and that's the difference. Nobody admits it, but a lot of the secret of creating a sustainable business boils down to luck, not being a "great business guy". Our industry is set up to reward risk-takers disproportionately...when they succeed. It's a lottery, but we like to justify the disparity in compensation post hoc by assuming that there's corresponding disparity in skill that somehow created most of the value.
    - praptak 16y ago
      "Our industry is set up to reward risk-takers disproportionately..." But then we're back to square one: why don't you become a risk-taker yourself? It's easy to paint oneself as an underpaid creator of millions of dollars in value, but for this to be possible someone had first to take a risk and then succeed. And in case of failure - would you, an employee who gets such a dispropotionately small share of generated value, be so eager to increase your share in the generated loss? I wouldn't and that's why I don't see much value in the "created value" argument.
      - timr 16y ago
        "But then we're back to square one: why don't you become a risk-taker yourself?" Who says I'm not? Most of the time that people take risks, they fail. That's why it's called "risk", and not "guarantee". " would you, an employee who gets such a dispropotionately small share of generated value, be so eager to increase your share in the generated loss?" That's a straw man. Created value isn't allocated in strict proportion to risk of loss, and you don't have to take more risks to get paid more. If that were true, the people who funded a startup would get 99% of the upside, because they had the most to lose. (Also, doctors and lawyers wouldn't get paid squat. Anybody who knows a doctor or lawyer will tell you that that they're just about the most risk-averse people on earth.) The real answer is that compensation is about market forces. The people with the money are only willing to pay as much as the people who create value demand to be paid.
- staunch 16y ago
  Your mistake is conflating working for yourself with working alone. Every startup founder works for himself and very few do it alone.
rudiger 16y ago
Let's apply this to feudalism: If we (the serfs) are truly creating so much more wealth for these lords than we take in salary, it should be easy (ish) to turn that into more money for ourselves, even if the lords don't want us to do that. The problem with this logic, of course, is that it's tough for a salary-worker to build a company that makes "way more cash" than they can get working for a salary.
- angelbob 16y ago
  In feudalism, the downside of that approach was that if you went off on your own, armies would generally come and (at best) repossess the land or (at worst) kill you. As a programmer, you don't have quite the same issues. Where do you see the monopolized resources and/or forced prevention of exit being for us? We're not exactly medieval serfs that way, and starting a software-based company is, as pg repeatedly mentions, way cheaper than it's ever been.
orijing 16y ago
I respectfully disagree with your analysis. Let me explain why through an example. Suppose you have two options, A and B (seen below): A: Work for large company Z which reaches 100 million people already through a $10 product. You make an incremental improvement that improves sales 1%. You have now made $10m contribution to the company. B: Work for yourself. You found a startup that is getting half a million unit sales a year (pretty good, right?), and you double sales somehow. You've only produced a $5m value despite doubling the output. The answer is that often big companies are much more levered and each unit of input can create much more output (primarily because of breadth of resources and reach) than if you were to work by yourself. Your value is how much you can contribute. Your highest value is your value at the company where you can contribute the most. By a reasonable application of some auction theory, you would expect that your market pay (including costs you can't see like payroll taxes) should be approximately what your second-highest value is. (Because if it were higher, the highest-value place can lower it and you'd still be working there, and if it were lower, the highest value place may not have you)
chc 16y ago
So if my services securing your leaky billion-dollar Java app are worth hundreds of thousands of dollars (versus the money you'd lose in case of a breach), that must mean that if I create FizzBuzz and secure it, it should be worth a billion dollars to people. Is that the math you're using? Because it sounds like it, and it doesn't work. You might not be able to create wealth in a vacuum, but that doesn't mean the wealth you create in the right context isn't real.

larrik 16y ago

There's no reason to assume that a programmer on her/his own is worth the same as s/he is in the right position at the right company. A team can (and should) be worth far more than the sum of it's members. Reading HN a lot can make us forget that being a great programmer doesn't make you great at business.

angelbob 16y ago
I would argue that in that case, the business guys are creating a lot more of those billions in value than we generally credit them with.
- timr 16y ago
  Let me make reduce the cognitive dissonance for you: being a good hacker doesn't make you lucky, and that's the difference. Nobody admits it, but a lot of the secret of creating a sustainable business boils down to luck, not being a "great business guy". Our industry is set up to reward risk-takers disproportionately...when they succeed. It's a lottery, but we like to justify the disparity in compensation post hoc by assuming that there's corresponding disparity in skill that somehow created most of the value.
  - praptak 16y ago
    "Our industry is set up to reward risk-takers disproportionately..." But then we're back to square one: why don't you become a risk-taker yourself? It's easy to paint oneself as an underpaid creator of millions of dollars in value, but for this to be possible someone had first to take a risk and then succeed. And in case of failure - would you, an employee who gets such a dispropotionately small share of generated value, be so eager to increase your share in the generated loss? I wouldn't and that's why I don't see much value in the "created value" argument.
    - timr 16y ago
      "But then we're back to square one: why don't you become a risk-taker yourself?" Who says I'm not? Most of the time that people take risks, they fail. That's why it's called "risk", and not "guarantee". " would you, an employee who gets such a dispropotionately small share of generated value, be so eager to increase your share in the generated loss?" That's a straw man. Created value isn't allocated in strict proportion to risk of loss, and you don't have to take more risks to get paid more. If that were true, the people who funded a startup would get 99% of the upside, because they had the most to lose. (Also, doctors and lawyers wouldn't get paid squat. Anybody who knows a doctor or lawyer will tell you that that they're just about the most risk-averse people on earth.) The real answer is that compensation is about market forces. The people with the money are only willing to pay as much as the people who create value demand to be paid.
staunch 16y ago
Your mistake is conflating working for yourself with working alone. Every startup founder works for himself and very few do it alone.

rudiger 16y ago

Let's apply this to feudalism: If we (the serfs) are truly creating so much more wealth for these lords than we take in salary, it should be easy (ish) to turn that into more money for ourselves, even if the lords don't want us to do that. The problem with this logic, of course, is that it's tough for a salary-worker to build a company that makes "way more cash" than they can get working for a salary.

angelbob 16y ago
In feudalism, the downside of that approach was that if you went off on your own, armies would generally come and (at best) repossess the land or (at worst) kill you. As a programmer, you don't have quite the same issues. Where do you see the monopolized resources and/or forced prevention of exit being for us? We're not exactly medieval serfs that way, and starting a software-based company is, as pg repeatedly mentions, way cheaper than it's ever been.

orijing 16y ago

I respectfully disagree with your analysis. Let me explain why through an example. Suppose you have two options, A and B (seen below): A: Work for large company Z which reaches 100 million people already through a $10 product. You make an incremental improvement that improves sales 1%. You have now made $10m contribution to the company. B: Work for yourself. You found a startup that is getting half a million unit sales a year (pretty good, right?), and you double sales somehow. You've only produced a $5m value despite doubling the output. The answer is that often big companies are much more levered and each unit of input can create much more output (primarily because of breadth of resources and reach) than if you were to work by yourself. Your value is how much you can contribute. Your highest value is your value at the company where you can contribute the most. By a reasonable application of some auction theory, you would expect that your market pay (including costs you can't see like payroll taxes) should be approximately what your second-highest value is. (Because if it were higher, the highest-value place can lower it and you'd still be working there, and if it were lower, the highest value place may not have you)

chc 16y ago

So if my services securing your leaky billion-dollar Java app are worth hundreds of thousands of dollars (versus the money you'd lose in case of a breach), that must mean that if I create FizzBuzz and secure it, it should be worth a billion dollars to people. Is that the math you're using? Because it sounds like it, and it doesn't work. You might not be able to create wealth in a vacuum, but that doesn't mean the wealth you create in the right context isn't real.