7 ms·

African tech workers push back on U.S. startup built to help them

55 points by kantrowitz 6y ago

injb 6y ago
I'm not sure what the actual story is here. The important bit seems to be: "“The one third is fictitious,” Andela CEO Jeremy Johnson told Big Technology in a candid interview last week. Some developers make less than a third of what clients pay, some make more, varying by country and seniority level. But the number never accurately described how Andela compensates its developers. “We absolutely bear responsibility for the miscommunication,” Johnson said. “Without question.”" - CEO So that's it? They miscommunicated what their developers get paid? The article doesn't allege any wrongdoing on the part of the company, beyond making this mistake, or suggest that anyone is being paid unfairly. The title line "....but life inside the company can be less than ideal." might as well say "it's a perfectly normal company, nothing to see here". Did I miss something?
- genericone 6y ago
  I'm outraged that you're not outraged.
  - DeonPenny 6y ago
    You have that right but its a bit presumptuous
    - skavi 6y ago
      I assume they are being facetious.
- realtalk_sp 6y ago
  It seems like it's about the optics in the present BLM-heavy climate. But you're absolutely right that the market sets rates. And did no one wonder why the hell Andela would exist and be so valuable if there wasn't significant arbitrage to be had? They're a business not a charity. I'm reminded of a story about child laborers and Nike. In an almost Kafkaeque twist, locales where this was happening ended up experiencing significant economic setbacks when Nike decided to close up certain offending factories. This is just another classic case of people reacting emotionally, biasing towards their own set of experiences and points of view.
  - seph-reed 6y ago
    > They're a business not a charity I think maybe the world is starting to feel like companies that take more than they give back are ultimately parasitic and abusive. For a long time it has been considered completely okay to maximize profit over all else, but if corporations were people they wouldn't be very community oriented peoples. Much more on the manipulative and greasy gross spectrum, and maybe that's just going out of style? Also, they kind of were acting like a charity, so that could be part of it too.
    - seibelj 6y ago
      What’s wonderful about a free, liberal society is that we can all make our own choices. For example, you can work at a business that operates more like a charity, while I can choose to work at a business that is laser-focused on maximizing profit. That is just my preference.
      - 0_gravitas 6y ago
        > you can work at a business that operates more like a charity, while I can choose to work at a business that is laser-focused on maximizing profit unlikely unless you have a good degree of financial security or are relatively 'in demand'
    - Nasrudith 6y ago
      The very way that value is looked at by most people is incorrect and it shows. Not just through rates of bankruptcy and overspending even when circumstances are clearly far outliers in their favor. There are a lot of old myths believed on a deep level like the idea of a universal fair price, fair profit margin, and zero sum benefit from trades where if anyone is making a profit it must be doing so at somebody's expense. All of them are wrong. If operating under those fallacious zero sum models companies always look parasitic if they survive, regardless of what they contributed and what would or wouldn't have occurred in their absense.
  - caymanjim 6y ago
    I've spent much of my career as a software consultant. I usually make about 1/3 of my client billing rate. The rake is high. Part of that is normal overhead of employer-side taxes, benefits, expensable items (hardware, business lunches, continuing education), infrastructure/support (office space, office staff/HR/non-owner management). We can generously call that another 1/3 of the client bill rate. That leaves the final 1/3 to the company for profit and business development. There's nothing remotely unusual about this arrangement.
- as300 6y ago
  I think a sort of understated factor here was the messaging associated with the company and its lofty mission statement - which seemed like it was to kick off a technology movement on the African continent. If you watch the ad in the video they claim to want to "make Africans into global technology thought-leaders" and create an impact that "goes beyond their lifetimes." They tried to brand themselves as an agent for massive social changes when in reality they were just another consulting company - big name investors notwithstanding. If I got fooled by their PR BS I wouldn't be too pleased.
  - mtgp1000 6y ago
    On the other hand they're investing in Africa where I don't believe anyone else is. I don't think opportunities for Africans to learn/practice software development in their native country are very common. Moreover while their salary is low compared to western devs, it's still (apparently? Article not clear) high for Africa, where wealth inequality is extreme, mind you, so their "low" salary probably goes a really long way. I imagine they also hire inexperienced workers, so this sounds like a legit opportunity depending on what they're doing. I suppose the crime here is misleading investors as to the proportion of funds that go to salary...but I don't know what they're doing with the money, and unfortunately they might be passing on more of it than some popular charities. Article needs work perhaps.
    - deleted 6y ago
      [deleted]
- femiagbabiaka 6y ago
  You think it’s acceptable for a company to capture two thirds of the value generated by a worker?
  - ALittleLight 6y ago
    What portion of the value that you produce does your employer capture?
    - femiagbabiaka 6y ago
      I have no idea, that’s the exact point. If I found out, and it was 2/3rds, I’d be just as angry.
      - owyn 6y ago
        Facebook also pays 1/3 so.... ? https://www.bizjournals.com/bizwomen/news/latest-news/2019/07/facebook-makes-more-profit-per-employee-than-other.html?page=all https://www.bizjournals.com/bizwomen/news/latest-news/2019/0...
        femiagbabiaka 6y ago
        And Zuck is a billionaire, you don't think that's messed up? The wealth distribution that lead from the success of the company consolidated itself overwhelmingly in the hands of maybe 4-5 people, despite tens of thousands contributing to the creation of that same success.
        ALittleLight 6y ago
        I'd work at Facebook if the salary (plus benefits, coworkers, and mission) appealed to me. My compensation wouldn't become unappealing just because other people made more.
  - injb 6y ago
    Acceptable to whom?
- Barrin92 6y ago
  >I'm not sure what the actual story is here. The important bit seems to be: the mismatch between reality and aspirations when it comes to these ventures, and I guess a broader point about private entities engaging or even substituting proper developmental policy and how often the results are straight up bad. Given the heavy PR that these firms are engaged in it's obviously important to get an accurate view of what reality looks like. It reminds me of Yang's venture for America with a similar mission (albeit in the US rather than outside of it), which ended with barely any job creation and even a suicide at one of his incubators, but still it was used extensively to promote this new class of 'social' entrepreneur activity.
DeonPenny 6y ago
I think this is a example of fire fast, hire slow. The fact is they saw since 2014 that their "Bench" had to many junior engineers. I find its not money but a lack of opportunity that breeds complete resentment in people, and thats exactly how it played out. The only line that disturbed me is this one. “Why is it the private sector that needs to come in and innovate? Why can't schools, governments, etc, do that job?” If I had any advice for these junior engineers is for one of them to start their own company to solve this problem because an individual can solve this problem not a government. Life's hard but it would only take one of you to find a solution to make at least some of those people life easier.
prepend 6y ago
Isn’t 1/3 higher than most offshore body shops? Last firm I used was a few years ago and our gross rate was $45 with devs getting between $4-12.
- robjan 6y ago
  Even onshore it's about going rate for most of the consulting firms. The 200% markup pays for holiday, sick pay, insurance, CPD, office space and time on the bench
- jake_morrison 6y ago
  Ratio of bill rate to salary of 2.5 to 3.5 is pretty typical in consulting companies. Billing has to cover lots of things, e.g. training, utilization, supervisors, sales, office, computers, accounting, etc. I expect they have particularly high overhead relative to the costs of labor in Africa.
jake_morrison 6y ago
The company seems to be mixing up things that should be separate. The major challenges when you have a lot of junior developers is having enough seniors to manage them and work that is appropriate for them to do. Andela raised a lot of money based on social justice capital, which is fine. The problem is that consulting is not a particularly good way to spend it. The best strategy, I think, is to combine a school, consulting company and a venture capital operation. The school may be more or less self supporting, paid for by students or with scholarships. It can be challenging keep programmers engaged as teachers, as they can make good money for less hassle, and they need to have a particular set of interpersonal and teaching skills which is rarer in programmers. Subsidy can help to set up the school and pay teachers well. The consulting company is a for-profit enterprise, and needs to have the right balance of skills, not too many juniors. The best graduates of the school may be hired by the consulting company. The VC operation funds business opportunities executed using local tech teams. The business side might be local, targeting an opportunity in Africa, or remote. The VC provides seed funds for a large number of projects, and the consulting company executes. The seed round gives them money to develop an initial product and test the market. Then they are evaluated and may get another round or shut down. If they move forward, then the developers continue working full time with the startup, otherwise they go back into the consulting pool for another project. This provides a nice, sustainable synergy between the parts. The consulting company gets a continuous stream of projects without a lot of risk. The school graduates get practical experience supervised by seniors, then a potential full time job. The seed VC gets early access to good deals, and some will work out well. The system is financially self supporting, but can take advantage of subsidies or overseas investment. The key problem in all of this is actually delivering projects with junior people, which means you need to make it attractive for senior people to get involved and stay engaged. They need to be paid well or have some significant share of the upside. With the virus, we are entering a new age of remote work which will open up opportunities for people around the world. It is difficult for companies in the US to identify, nurture and manage remote talent in emerging markets. In some sense, that's the primary value of the consulting company, but it needs to be part of an ecosystem.
- paulcole 6y ago
  > they need to have a particular set of interpersonal and teaching skills which is rarer in programmers This is a very Western belief and one that is rooted in a lot of bias. Maybe people who have a particular set of interpersonal and teaching skills aren’t becoming programmers because the people entrenched in the field don’t value interpersonal and teaching skills?
golemiprague 6y ago
> Brilliance is evenly distributed, but opportunity is not This is based on what? Maybe "some brilliance exists almost everywhere" might be more accurate, but evenly distributed? there is too much evidence to show that it is not.
lgleason 6y ago
I remember when this first started, back then it was apparent that this was a for profit coding school/low cost outsourcing play. They tried to get an in into some volunteer tech training work I was doing down in South Africa, but I turned them down because it seemed exploitative. The social justice angle pulled in all of the people who were too naive to look past the hype. Nice to see that people are finally waking up to this. There are lots more where that came from including in the US not for profit space that use lofty mission statements as a thin veil for the upper middle class and rich to line their pockets in the name of otherwise noble causes.
neilv 6y ago
There's a long and brutal history of Western countries and businesses exploiting African people and resources. Is Andela an NGO/charity, or it is a VC-backed unicorn-track startup? If it's a startup, have the employees been getting equity? The article mentions some employees taking a pay cut to join.
- TomMarius 6y ago
  Why would they get equity? Are you getting equity in any other software house?
- jariel 6y ago
  Giving people jobs when there are other options is opposite of 'exploitation'.
aaron695 6y ago
If we try really hard we can destroy this company. Fingers crossed I guess? To go in and create professional ecosystem's like IT in places where it doesn't exist is a NGO's fantastical dream, it might be possible for Andela to pull this off, but hit pieces like this, where they are just doing industry standard don't help. Personally I'd bet against Andela, much as we want them to succeed, without an existing ecosystem, IT developers just can't get off the ground. People talk about self learning IT, but so much of that works because of the people around them, without the critical mass it's not possible. You can't just magic it up online either. If you could find a process that gets it to work, that'd be pretty amazing and world changing, but it's probably related to getting MOOCs to work, it's still missing something.
lsllc 6y ago
I have no doubt that they were exploited. Not necessarily because they were based in Africa but because they came from a position of inequality. In my career, I have worked with very over paid and not so good engineers and I've also worked with very underpaid and very good engineers from "poorer" countries such as Israel, India, China or Iran who have been highly exploited (e.g. in the US on an H1B, they are contractors that we are paying $120/hr for but it turns out they are only getting ~$20/hr). As far as the "market" is concerned, it's just arbitrage. Buy low/sell high. It doesn't matter who you are or where you come from, you will be exploited.
ejanus 6y ago
I think their core problem is that they moved so fast and they don't have defensible and unique product. They grabbed people off the street and attempted to turn them into coders. That can't work! Engineers are not made in the classrooms(diligent message) but people with great ability and curiosity. This kind of mentality cannot be developed when they package IT and DevOp as shortest cut to enormous wealth. I would not blame Andela for everything happening out there. Most of the developers have never worked with US based companies before. They don't understand the rigor, efficiency, and cold blooded capitalism of such enterprises. Capitalism hears one message, and that message is profit and value creation for shareholders. I see opportunities for the continent if they try to develop locally and solve local problems. Why can't Andela pivot to consultancy and compete with the likes of Wipro and Tata? Disclaimer: I am African(live there) and I have no relationship with Andela.

55 points by kantrowitz 6y ago

injb 6y ago

I'm not sure what the actual story is here. The important bit seems to be: "“The one third is fictitious,” Andela CEO Jeremy Johnson told Big Technology in a candid interview last week. Some developers make less than a third of what clients pay, some make more, varying by country and seniority level. But the number never accurately described how Andela compensates its developers. “We absolutely bear responsibility for the miscommunication,” Johnson said. “Without question.”" - CEO So that's it? They miscommunicated what their developers get paid? The article doesn't allege any wrongdoing on the part of the company, beyond making this mistake, or suggest that anyone is being paid unfairly. The title line "....but life inside the company can be less than ideal." might as well say "it's a perfectly normal company, nothing to see here". Did I miss something?

genericone 6y ago
I'm outraged that you're not outraged.
- DeonPenny 6y ago
  You have that right but its a bit presumptuous
  - skavi 6y ago
    I assume they are being facetious.
realtalk_sp 6y ago
It seems like it's about the optics in the present BLM-heavy climate. But you're absolutely right that the market sets rates. And did no one wonder why the hell Andela would exist and be so valuable if there wasn't significant arbitrage to be had? They're a business not a charity. I'm reminded of a story about child laborers and Nike. In an almost Kafkaeque twist, locales where this was happening ended up experiencing significant economic setbacks when Nike decided to close up certain offending factories. This is just another classic case of people reacting emotionally, biasing towards their own set of experiences and points of view.
- seph-reed 6y ago
  > They're a business not a charity I think maybe the world is starting to feel like companies that take more than they give back are ultimately parasitic and abusive. For a long time it has been considered completely okay to maximize profit over all else, but if corporations were people they wouldn't be very community oriented peoples. Much more on the manipulative and greasy gross spectrum, and maybe that's just going out of style? Also, they kind of were acting like a charity, so that could be part of it too.
  - seibelj 6y ago
    What’s wonderful about a free, liberal society is that we can all make our own choices. For example, you can work at a business that operates more like a charity, while I can choose to work at a business that is laser-focused on maximizing profit. That is just my preference.
    - 0_gravitas 6y ago
      > you can work at a business that operates more like a charity, while I can choose to work at a business that is laser-focused on maximizing profit unlikely unless you have a good degree of financial security or are relatively 'in demand'
  - Nasrudith 6y ago
    The very way that value is looked at by most people is incorrect and it shows. Not just through rates of bankruptcy and overspending even when circumstances are clearly far outliers in their favor. There are a lot of old myths believed on a deep level like the idea of a universal fair price, fair profit margin, and zero sum benefit from trades where if anyone is making a profit it must be doing so at somebody's expense. All of them are wrong. If operating under those fallacious zero sum models companies always look parasitic if they survive, regardless of what they contributed and what would or wouldn't have occurred in their absense.
- caymanjim 6y ago
  I've spent much of my career as a software consultant. I usually make about 1/3 of my client billing rate. The rake is high. Part of that is normal overhead of employer-side taxes, benefits, expensable items (hardware, business lunches, continuing education), infrastructure/support (office space, office staff/HR/non-owner management). We can generously call that another 1/3 of the client bill rate. That leaves the final 1/3 to the company for profit and business development. There's nothing remotely unusual about this arrangement.
as300 6y ago
I think a sort of understated factor here was the messaging associated with the company and its lofty mission statement - which seemed like it was to kick off a technology movement on the African continent. If you watch the ad in the video they claim to want to "make Africans into global technology thought-leaders" and create an impact that "goes beyond their lifetimes." They tried to brand themselves as an agent for massive social changes when in reality they were just another consulting company - big name investors notwithstanding. If I got fooled by their PR BS I wouldn't be too pleased.
- mtgp1000 6y ago
  On the other hand they're investing in Africa where I don't believe anyone else is. I don't think opportunities for Africans to learn/practice software development in their native country are very common. Moreover while their salary is low compared to western devs, it's still (apparently? Article not clear) high for Africa, where wealth inequality is extreme, mind you, so their "low" salary probably goes a really long way. I imagine they also hire inexperienced workers, so this sounds like a legit opportunity depending on what they're doing. I suppose the crime here is misleading investors as to the proportion of funds that go to salary...but I don't know what they're doing with the money, and unfortunately they might be passing on more of it than some popular charities. Article needs work perhaps.
  - deleted 6y ago
    [deleted]
femiagbabiaka 6y ago
You think it’s acceptable for a company to capture two thirds of the value generated by a worker?
- ALittleLight 6y ago
  What portion of the value that you produce does your employer capture?
  - femiagbabiaka 6y ago
    I have no idea, that’s the exact point. If I found out, and it was 2/3rds, I’d be just as angry.
    - owyn 6y ago
      Facebook also pays 1/3 so.... ? https://www.bizjournals.com/bizwomen/news/latest-news/2019/07/facebook-makes-more-profit-per-employee-than-other.html?page=all https://www.bizjournals.com/bizwomen/news/latest-news/2019/0...
      - femiagbabiaka 6y ago
        And Zuck is a billionaire, you don't think that's messed up? The wealth distribution that lead from the success of the company consolidated itself overwhelmingly in the hands of maybe 4-5 people, despite tens of thousands contributing to the creation of that same success.
        ALittleLight 6y ago
        I'd work at Facebook if the salary (plus benefits, coworkers, and mission) appealed to me. My compensation wouldn't become unappealing just because other people made more.
- injb 6y ago
  Acceptable to whom?
Barrin92 6y ago
>I'm not sure what the actual story is here. The important bit seems to be: the mismatch between reality and aspirations when it comes to these ventures, and I guess a broader point about private entities engaging or even substituting proper developmental policy and how often the results are straight up bad. Given the heavy PR that these firms are engaged in it's obviously important to get an accurate view of what reality looks like. It reminds me of Yang's venture for America with a similar mission (albeit in the US rather than outside of it), which ended with barely any job creation and even a suicide at one of his incubators, but still it was used extensively to promote this new class of 'social' entrepreneur activity.

DeonPenny 6y ago

I think this is a example of fire fast, hire slow. The fact is they saw since 2014 that their "Bench" had to many junior engineers. I find its not money but a lack of opportunity that breeds complete resentment in people, and thats exactly how it played out. The only line that disturbed me is this one. “Why is it the private sector that needs to come in and innovate? Why can't schools, governments, etc, do that job?” If I had any advice for these junior engineers is for one of them to start their own company to solve this problem because an individual can solve this problem not a government. Life's hard but it would only take one of you to find a solution to make at least some of those people life easier.

prepend 6y ago

Isn’t 1/3 higher than most offshore body shops? Last firm I used was a few years ago and our gross rate was $45 with devs getting between $4-12.

robjan 6y ago
Even onshore it's about going rate for most of the consulting firms. The 200% markup pays for holiday, sick pay, insurance, CPD, office space and time on the bench
jake_morrison 6y ago
Ratio of bill rate to salary of 2.5 to 3.5 is pretty typical in consulting companies. Billing has to cover lots of things, e.g. training, utilization, supervisors, sales, office, computers, accounting, etc. I expect they have particularly high overhead relative to the costs of labor in Africa.

jake_morrison 6y ago

The company seems to be mixing up things that should be separate. The major challenges when you have a lot of junior developers is having enough seniors to manage them and work that is appropriate for them to do. Andela raised a lot of money based on social justice capital, which is fine. The problem is that consulting is not a particularly good way to spend it. The best strategy, I think, is to combine a school, consulting company and a venture capital operation. The school may be more or less self supporting, paid for by students or with scholarships. It can be challenging keep programmers engaged as teachers, as they can make good money for less hassle, and they need to have a particular set of interpersonal and teaching skills which is rarer in programmers. Subsidy can help to set up the school and pay teachers well. The consulting company is a for-profit enterprise, and needs to have the right balance of skills, not too many juniors. The best graduates of the school may be hired by the consulting company. The VC operation funds business opportunities executed using local tech teams. The business side might be local, targeting an opportunity in Africa, or remote. The VC provides seed funds for a large number of projects, and the consulting company executes. The seed round gives them money to develop an initial product and test the market. Then they are evaluated and may get another round or shut down. If they move forward, then the developers continue working full time with the startup, otherwise they go back into the consulting pool for another project. This provides a nice, sustainable synergy between the parts. The consulting company gets a continuous stream of projects without a lot of risk. The school graduates get practical experience supervised by seniors, then a potential full time job. The seed VC gets early access to good deals, and some will work out well. The system is financially self supporting, but can take advantage of subsidies or overseas investment. The key problem in all of this is actually delivering projects with junior people, which means you need to make it attractive for senior people to get involved and stay engaged. They need to be paid well or have some significant share of the upside. With the virus, we are entering a new age of remote work which will open up opportunities for people around the world. It is difficult for companies in the US to identify, nurture and manage remote talent in emerging markets. In some sense, that's the primary value of the consulting company, but it needs to be part of an ecosystem.

paulcole 6y ago
> they need to have a particular set of interpersonal and teaching skills which is rarer in programmers This is a very Western belief and one that is rooted in a lot of bias. Maybe people who have a particular set of interpersonal and teaching skills aren’t becoming programmers because the people entrenched in the field don’t value interpersonal and teaching skills?

golemiprague 6y ago

> Brilliance is evenly distributed, but opportunity is not This is based on what? Maybe "some brilliance exists almost everywhere" might be more accurate, but evenly distributed? there is too much evidence to show that it is not.

lgleason 6y ago

I remember when this first started, back then it was apparent that this was a for profit coding school/low cost outsourcing play. They tried to get an in into some volunteer tech training work I was doing down in South Africa, but I turned them down because it seemed exploitative. The social justice angle pulled in all of the people who were too naive to look past the hype. Nice to see that people are finally waking up to this. There are lots more where that came from including in the US not for profit space that use lofty mission statements as a thin veil for the upper middle class and rich to line their pockets in the name of otherwise noble causes.

neilv 6y ago

There's a long and brutal history of Western countries and businesses exploiting African people and resources. Is Andela an NGO/charity, or it is a VC-backed unicorn-track startup? If it's a startup, have the employees been getting equity? The article mentions some employees taking a pay cut to join.

TomMarius 6y ago
Why would they get equity? Are you getting equity in any other software house?
jariel 6y ago
Giving people jobs when there are other options is opposite of 'exploitation'.

aaron695 6y ago

If we try really hard we can destroy this company. Fingers crossed I guess? To go in and create professional ecosystem's like IT in places where it doesn't exist is a NGO's fantastical dream, it might be possible for Andela to pull this off, but hit pieces like this, where they are just doing industry standard don't help. Personally I'd bet against Andela, much as we want them to succeed, without an existing ecosystem, IT developers just can't get off the ground. People talk about self learning IT, but so much of that works because of the people around them, without the critical mass it's not possible. You can't just magic it up online either. If you could find a process that gets it to work, that'd be pretty amazing and world changing, but it's probably related to getting MOOCs to work, it's still missing something.

lsllc 6y ago

I have no doubt that they were exploited. Not necessarily because they were based in Africa but because they came from a position of inequality. In my career, I have worked with very over paid and not so good engineers and I've also worked with very underpaid and very good engineers from "poorer" countries such as Israel, India, China or Iran who have been highly exploited (e.g. in the US on an H1B, they are contractors that we are paying $120/hr for but it turns out they are only getting ~$20/hr). As far as the "market" is concerned, it's just arbitrage. Buy low/sell high. It doesn't matter who you are or where you come from, you will be exploited.

ejanus 6y ago

I think their core problem is that they moved so fast and they don't have defensible and unique product. They grabbed people off the street and attempted to turn them into coders. That can't work! Engineers are not made in the classrooms(diligent message) but people with great ability and curiosity. This kind of mentality cannot be developed when they package IT and DevOp as shortest cut to enormous wealth. I would not blame Andela for everything happening out there. Most of the developers have never worked with US based companies before. They don't understand the rigor, efficiency, and cold blooded capitalism of such enterprises. Capitalism hears one message, and that message is profit and value creation for shareholders. I see opportunities for the continent if they try to develop locally and solve local problems. Why can't Andela pivot to consultancy and compete with the likes of Wipro and Tata? Disclaimer: I am African(live there) and I have no relationship with Andela.