9 ms·

Spoiler alert: we mostly are. Engineers with 5 YOE are making $500k+ a year at these companies because they are generating much more than that in revenues and

by cactus2093 5y ago

Spoiler alert: we mostly are. Engineers with 5 YOE are making $500k+ a year at these companies because they are generating much more than that in revenues and profits for the companies. Airbnb is worth $110B. It's not all blinking cursors, there are thousands of little experiments going on all the time. Increasing the number of bookings by 2% here, 3% there. Increasing the average price of bookings. Random extra features here and there to close that one whale of a client. Expanding into corporate accounts. Improving performance by 5% to take a big chunk out of the tens of millions of dollars infrastructure bill. From a 10,000 foot view looking at the product, it always looks like it's 90% done in the first couple of years and then things just coast along lazily. But from a profit point of view, that last 10% can generate hugely outsized returns. It's the power of exponential growth, all those extra late nights and tiny improvements that move the needle just a little bit all compound over time.

wging 5y ago
https://danluu.com/sounds-easy/ https://danluu.com/sounds-easy/ is a good take on this - the central example is for search, but it applies to many more products, as cactus2093's comment (and the article) both point out. (and for what it's worth, I've observed this personally too)
whatshisface 5y ago
An alternate story: In a big company belief that something is worthwhile is better than actual value because market forces, that care about actual value, cannot act on each sub-project out of thousands of projects in the same company independently; but managers, which by definition can only care about their beliefs (idealism rears its ugly head again) do very much act on teams independently. The engineering department will pay $500k+ to engineers who exist only to pervert insufficiently representative metrics just as readily as the market would stop that from happening if they weren't hiding in an autocratic structure hundreds of times larger than the limits of their own abilities to be wasteful. Indeed, there is no reason to think that the market has a greater ability to eliminate waste within a company worth $100B than it has within a communist country (which exists as an entity in international markets) worth the same.
- AdrianB1 5y ago
  There is a lot of waste in companies and there is a lot of waste in communist regimes, but they have very different root cause. Markets cannot eliminate waste fast enough, big companies take forever to react - adjust or die - and countries similarly. Also in most cases waste is not eliminated as first measure, but start with stupid cost reduction in valuable areas, while the real waste will be the last to go. Why? Because most of that waste is on purpose for political reasons in both cases - the communist party member or the nephew of the VP that occupy positions that are not needed or they don't qualify for, that is on purpose. Also $500k engineers should have as the only purpose in life to do engineering, working on projects that are found by management to be important, not to find themselves something to do. Most engineers are bad at business decisions and it would be a waste of time and skills for them to do it anyway. An engineer with business knowledge is no longer an engineer, is a product owner or a senior architect, etc.
Aperocky 5y ago
> Increasing the number of bookings by 2% here, 3% there. I've always felt that there is a dilemma in this space. Any number of small UI features can claim a small increase that are often just noise and curated data (assuming no malicious baking), the cumulative increase isn't even close what the claims stacks up to. The only fundamental way for a business to make more money is to invent actual, new feature and business models. Shifting a box here and there, enlarging an icon just creates a generation of glorified engineers and PMs who are placing their attention entirely on the wrong thing. Yet the success reporting often rewards this behavior and eventually drown the business in fruitless 'noise' endeavors that favors short term gains over actual innovation.
- wging 5y ago
  > Any number of small UI features can claim a small increase that are often just noise and curated data The answer to this is better measurement and statistical analysis, not abandoning the effort entirely. It does take more than "haha, trend line go up" to prove a change had a positive impact, but it can be done.
- greatpostman 5y ago
  Maybe. Without outing myself, I have work on a choke point widget on the front page of a top 10 USA website. We had 30 engineers running these tests all day long. Was common to get 10 million+ increases to the bottom line on very minor changes. This was over a sample size of 100 million page views.
  - yjftsjthsd-h 5y ago
    Did you ever test doing nothing? I assume it's been studied, but I can imagine ways for 10% to actually be noise or seasonal/weekly/whatever variations.
    - hnov 5y ago
      This is called A/A testing and is used to vet the setup.
    - 5y ago
mindwok 5y ago
Thanks for the perspective, I've never worked in this kind of company so I'm glad to hear you feel your talents aren't going to waste.
- weq 5y ago
  Talents been bought and sold to the highest bidder. its sickens me how dumb smart people can be because money. study hard, work on your talent all your life, so a large corperation can have you micro-optimise its addiction-tech to extract every last dollar for shareholders using VC captial to undercut your competitiors til they crumble and make it look like your talented engineers are doing something for society instead of just pumping and dumping.
  - Apocryphon 5y ago
    Bay Area living costs ain’t cheap.
  - dchftcs 5y ago
    Cancer research is hard work where smart people burn themselves out to fight for scraps. Optimizing metrics for bigtech at least easily pays for retirement. I don't know, maybe it's dumb to choose to optimize ads and get paid 500k and still be able to act like the company owes you. The alternative is to save lives, and in return live a life where you constantly have to beg for the next grant, and the people you save are only grateful to the MDs, say PhDs aren't real doctors, and vote for people who either want to cut science budgets or remove meritocracy to destroy your career. Before you complain how people waste their talent, maybe ask yourself what you did to help them. Or broadly how to truly make society reward people who do God's work. Society cares about getting likes, don't want to pay even a little for quality work, so smart people give them a platform to earn likes and show them ads. Everyone is complicit, the worst among them put all blame on "smart people".
  - MrMan 5y ago
    well most of us even the ones that get through the merit filters to work at "tech" companies are not that smart. it will take some kind of breakthrough in human cognition to make an impact on the emergent economies that result from our current neural hard-wiring. right now these fake tech companies are literally the best we can do to keep everything moving forward on an economic basis. Just as we tricked each other into bidding up crypto tokens, we could self-hypnotize to bid up biotech patents or something similar, but we have not yet decided to do that.
quanticle 5y ago
From Dan Luu's excellent blog post on the value of in-house expertise [1]: Another reason to have in-house expertise in various areas is that they easily pay for themselves, which is a special case of the generic argument that large companies should be larger than most people expect because tiny percentage gains are worth a large amount in absolute dollars. If, in the lifetime of the specialist team like the kernel team, a single person found something that persistently reduced TCO by 0.5%, that would pay for the team in perpetuity, and Twitter’s kernel team has found many such changes. If removing a blinking cursor has a 1% chance to increase the booking rate by even 0.1%, , then it's worth it for AirBNB to pay an engineer to implement the change. [1] https://danluu.com/in-house/ https://danluu.com/in-house/
- pabs3 5y ago
  Another article along similar lines: https://berthub.eu/articles/posts/how-tech-loses-out/ https://berthub.eu/articles/posts/how-tech-loses-out/
- thundergolfer 5y ago
  Dan Luu also elsewhere makes the argument that most of the impactful engineering work done in large companies is performed by a small percentage of the engineering group.
  - fivea 5y ago
    > Dan Luu also elsewhere makes the argument that most of the impactful engineering work done in large companies is performed by a small percentage of the engineering group. The keyword "impactful engineering" needs some clarification though. It does not mean there's a 100x guy walking around the office while everyone is slacking off. A specific proof of concept hacked together by a guy in a week might eventually become the company's flagship product. That's impact. However, the thing needs to be rewritten from scratch to become production ready or even deployable, and that takes far more work that does not fit the definition of "impactful". I personally know a principal engineer of a FANG which single-handedly wrote the proof of concepts of more than a few projects that thousands of users use every single day. From his own words following one of his recent presentations, "this needs to be rewritten from scratch as this would get me rejected from our job interviews".
kqr 5y ago
That said, whose life is really improved by those outsized returns from the last few percent? Sure, the major shareholders might see their wealth increase noticeably, but anyone else (even small shareholders through option programmes) will generally not see a big effect. Now, is that additional shareholder wealth really worth the years of engineer effort going into that? Don't get me wrong: airbnb is an amazing service that has improved the lives of myself and other regular people. I'm just arguing that maybe most of the benefit from society happened within the first couple of years plus maintenance and critical innovation as needed, and the rest is suboptimising for the benefit of the few.
- SgtBastard 5y ago
  >Now, is that additional shareholder wealth really worth the years of engineer effort going into that? Where the engineers are partially compensated in stock, RSUs or options? Absolutely. Its not like they're focusing on optimisations at the expenses of other, more dramatic changes.
mypalmike 5y ago
This is a great explanation and reflects my experience working at this kind of large, one product tech company. It's all about searching for growth of all kinds and cutting costs.
Gugabe 5y ago
Generating value within the hypecycle around tech companies =/= developing value in the absolute sense, no?
Bancakes 5y ago
I get a eyelid twitch from that type of engineering. Open source teaches us one thing above all - adapt yourself a little and you gain a lot. Only develop an app to fit the specs, and the users will do the rest. It should be fine to be a little tough around the edges - consumers ought to grow slightly thicker skin.
tarsinge 5y ago
I think there are two levels here. You answered from a financial perspective, and in that case yes they are utilizing talent effectively, in the sense the company is more profitable. But on a larger society perspective the question is still here, is society better (large topic I know) when Airbnb increase their profitability by 2%, is it the best use society can make of these engineers?
- Apocryphon 5y ago
  Does the profitability of the company necessarily correlate with how the talent is being used?
devoutsalsa 5y ago
I’m skeptical this will lead to more savings over time. I’ve been pretty much living in Airbnbs for almost three years, and the site becomes slightly more annoying over time. Leaving a review has become a huge bloated mess. The sight is slow as heck. And driving prices up just makes me more likely to look at alternatives. It’s still good, but it feels increasingly less fast and cheap.
cudgy 5y ago
> Engineers with 5 YOE are making $500k+ a year at these companies because they are generating much more than that in revenues and profits for the companies. AirBnb lost billions of dollars last year, and it has rarely made positive quarterly earnings. Based on your example, the engineers are highly overpaid as there efforts rarely generate a profit. They are being paid by funds from speculators (stockholders and venture capital) that are betting on huge profits in the future. In reality, these engineers are being paid due to labor market forces and extremely focused recruiting policies (eg only hiring those with degrees from top engineering schools or poaching workers from other companies that have similar policies).
- boppo1 5y ago
  The one guy's thesis that we're wasting effort is probably correct, given the valuation is due to low interest rates. What's the Keynes quote about paying people to dig holes?
- TheGigaChad 5y ago
- saiya-jin 5y ago
  it all looks nice and rosy and everybody patting their back about how impactful they are when scales come into play... and then you as a user are just wtf-ing given app because UI has been overhauled yet again, things that worked before are nowhere to be found, there is basically no migration guide. The simple truth that most software engineers don't want to hear is - people are quite conservative in this. If it works once, most folks would be extremely happy to keep using it for next 20 years in exactly same way, as it is. Bug-less has higher priority than shiny (which is highly subjective) and constantly changing.
  - rurp 5y ago
    I believe most users see a tech product as a tool, "The thing that gets you to the thing". Whereas a majority in tech view those tools more as experiences. An experience puts more focus on the process itself, at the expense of the end result. Unfortunately this tech oligopoly landscape doesn't leave users many ways to express this preference, but I often wonder if the culture will change at some point in the future as the industry matures. An aging western population might have an influence here as well, in the long term. Older folks have less tolerance for having to relearn how to do the same thing they already knew how to do for the umpteenth time.
code51 5y ago
The idea that these little experiment wins bring user satisfaction and/or revenue increase is a pure assumption. Employees get so aligned with these experiment systems that obvious faults in statistical approaches go unnoticed. At the end of the day it becomes just a way to put something on your promotion case. In most cases, core product stays the same over the years without significant innovation.
amelius 5y ago
> But from a profit point of view, that last 10% can generate hugely outsized returns. That's because capitalism is a winner-takes-all game. Spending 1000000 manhours to get 0.001% improvement in quality pays off, for exactly this shitty reason.

wging 5y ago

https://danluu.com/sounds-easy/ https://danluu.com/sounds-easy/ is a good take on this - the central example is for search, but it applies to many more products, as cactus2093's comment (and the article) both point out. (and for what it's worth, I've observed this personally too)

whatshisface 5y ago

An alternate story: In a big company belief that something is worthwhile is better than actual value because market forces, that care about actual value, cannot act on each sub-project out of thousands of projects in the same company independently; but managers, which by definition can only care about their beliefs (idealism rears its ugly head again) do very much act on teams independently. The engineering department will pay $500k+ to engineers who exist only to pervert insufficiently representative metrics just as readily as the market would stop that from happening if they weren't hiding in an autocratic structure hundreds of times larger than the limits of their own abilities to be wasteful. Indeed, there is no reason to think that the market has a greater ability to eliminate waste within a company worth $100B than it has within a communist country (which exists as an entity in international markets) worth the same.

AdrianB1 5y ago
There is a lot of waste in companies and there is a lot of waste in communist regimes, but they have very different root cause. Markets cannot eliminate waste fast enough, big companies take forever to react - adjust or die - and countries similarly. Also in most cases waste is not eliminated as first measure, but start with stupid cost reduction in valuable areas, while the real waste will be the last to go. Why? Because most of that waste is on purpose for political reasons in both cases - the communist party member or the nephew of the VP that occupy positions that are not needed or they don't qualify for, that is on purpose. Also $500k engineers should have as the only purpose in life to do engineering, working on projects that are found by management to be important, not to find themselves something to do. Most engineers are bad at business decisions and it would be a waste of time and skills for them to do it anyway. An engineer with business knowledge is no longer an engineer, is a product owner or a senior architect, etc.

Aperocky 5y ago

> Increasing the number of bookings by 2% here, 3% there. I've always felt that there is a dilemma in this space. Any number of small UI features can claim a small increase that are often just noise and curated data (assuming no malicious baking), the cumulative increase isn't even close what the claims stacks up to. The only fundamental way for a business to make more money is to invent actual, new feature and business models. Shifting a box here and there, enlarging an icon just creates a generation of glorified engineers and PMs who are placing their attention entirely on the wrong thing. Yet the success reporting often rewards this behavior and eventually drown the business in fruitless 'noise' endeavors that favors short term gains over actual innovation.

wging 5y ago
> Any number of small UI features can claim a small increase that are often just noise and curated data The answer to this is better measurement and statistical analysis, not abandoning the effort entirely. It does take more than "haha, trend line go up" to prove a change had a positive impact, but it can be done.
greatpostman 5y ago
Maybe. Without outing myself, I have work on a choke point widget on the front page of a top 10 USA website. We had 30 engineers running these tests all day long. Was common to get 10 million+ increases to the bottom line on very minor changes. This was over a sample size of 100 million page views.
- yjftsjthsd-h 5y ago
  Did you ever test doing nothing? I assume it's been studied, but I can imagine ways for 10% to actually be noise or seasonal/weekly/whatever variations.
  - hnov 5y ago
    This is called A/A testing and is used to vet the setup.
  - 5y ago

mindwok 5y ago

Thanks for the perspective, I've never worked in this kind of company so I'm glad to hear you feel your talents aren't going to waste.

weq 5y ago
Talents been bought and sold to the highest bidder. its sickens me how dumb smart people can be because money. study hard, work on your talent all your life, so a large corperation can have you micro-optimise its addiction-tech to extract every last dollar for shareholders using VC captial to undercut your competitiors til they crumble and make it look like your talented engineers are doing something for society instead of just pumping and dumping.
- Apocryphon 5y ago
  Bay Area living costs ain’t cheap.
- dchftcs 5y ago
  Cancer research is hard work where smart people burn themselves out to fight for scraps. Optimizing metrics for bigtech at least easily pays for retirement. I don't know, maybe it's dumb to choose to optimize ads and get paid 500k and still be able to act like the company owes you. The alternative is to save lives, and in return live a life where you constantly have to beg for the next grant, and the people you save are only grateful to the MDs, say PhDs aren't real doctors, and vote for people who either want to cut science budgets or remove meritocracy to destroy your career. Before you complain how people waste their talent, maybe ask yourself what you did to help them. Or broadly how to truly make society reward people who do God's work. Society cares about getting likes, don't want to pay even a little for quality work, so smart people give them a platform to earn likes and show them ads. Everyone is complicit, the worst among them put all blame on "smart people".
- MrMan 5y ago
  well most of us even the ones that get through the merit filters to work at "tech" companies are not that smart. it will take some kind of breakthrough in human cognition to make an impact on the emergent economies that result from our current neural hard-wiring. right now these fake tech companies are literally the best we can do to keep everything moving forward on an economic basis. Just as we tricked each other into bidding up crypto tokens, we could self-hypnotize to bid up biotech patents or something similar, but we have not yet decided to do that.

quanticle 5y ago

From Dan Luu's excellent blog post on the value of in-house expertise [1]: Another reason to have in-house expertise in various areas is that they easily pay for themselves, which is a special case of the generic argument that large companies should be larger than most people expect because tiny percentage gains are worth a large amount in absolute dollars. If, in the lifetime of the specialist team like the kernel team, a single person found something that persistently reduced TCO by 0.5%, that would pay for the team in perpetuity, and Twitter’s kernel team has found many such changes. If removing a blinking cursor has a 1% chance to increase the booking rate by even 0.1%, , then it's worth it for AirBNB to pay an engineer to implement the change. [1] https://danluu.com/in-house/ https://danluu.com/in-house/

pabs3 5y ago
Another article along similar lines: https://berthub.eu/articles/posts/how-tech-loses-out/ https://berthub.eu/articles/posts/how-tech-loses-out/
thundergolfer 5y ago
Dan Luu also elsewhere makes the argument that most of the impactful engineering work done in large companies is performed by a small percentage of the engineering group.
- fivea 5y ago
  > Dan Luu also elsewhere makes the argument that most of the impactful engineering work done in large companies is performed by a small percentage of the engineering group. The keyword "impactful engineering" needs some clarification though. It does not mean there's a 100x guy walking around the office while everyone is slacking off. A specific proof of concept hacked together by a guy in a week might eventually become the company's flagship product. That's impact. However, the thing needs to be rewritten from scratch to become production ready or even deployable, and that takes far more work that does not fit the definition of "impactful". I personally know a principal engineer of a FANG which single-handedly wrote the proof of concepts of more than a few projects that thousands of users use every single day. From his own words following one of his recent presentations, "this needs to be rewritten from scratch as this would get me rejected from our job interviews".

kqr 5y ago

That said, whose life is really improved by those outsized returns from the last few percent? Sure, the major shareholders might see their wealth increase noticeably, but anyone else (even small shareholders through option programmes) will generally not see a big effect. Now, is that additional shareholder wealth really worth the years of engineer effort going into that? Don't get me wrong: airbnb is an amazing service that has improved the lives of myself and other regular people. I'm just arguing that maybe most of the benefit from society happened within the first couple of years plus maintenance and critical innovation as needed, and the rest is suboptimising for the benefit of the few.

SgtBastard 5y ago
>Now, is that additional shareholder wealth really worth the years of engineer effort going into that? Where the engineers are partially compensated in stock, RSUs or options? Absolutely. Its not like they're focusing on optimisations at the expenses of other, more dramatic changes.

mypalmike 5y ago

This is a great explanation and reflects my experience working at this kind of large, one product tech company. It's all about searching for growth of all kinds and cutting costs.

Gugabe 5y ago

Generating value within the hypecycle around tech companies =/= developing value in the absolute sense, no?

Bancakes 5y ago

I get a eyelid twitch from that type of engineering. Open source teaches us one thing above all - adapt yourself a little and you gain a lot. Only develop an app to fit the specs, and the users will do the rest. It should be fine to be a little tough around the edges - consumers ought to grow slightly thicker skin.

tarsinge 5y ago

I think there are two levels here. You answered from a financial perspective, and in that case yes they are utilizing talent effectively, in the sense the company is more profitable. But on a larger society perspective the question is still here, is society better (large topic I know) when Airbnb increase their profitability by 2%, is it the best use society can make of these engineers?

Apocryphon 5y ago
Does the profitability of the company necessarily correlate with how the talent is being used?

devoutsalsa 5y ago

I’m skeptical this will lead to more savings over time. I’ve been pretty much living in Airbnbs for almost three years, and the site becomes slightly more annoying over time. Leaving a review has become a huge bloated mess. The sight is slow as heck. And driving prices up just makes me more likely to look at alternatives. It’s still good, but it feels increasingly less fast and cheap.

cudgy 5y ago

> Engineers with 5 YOE are making $500k+ a year at these companies because they are generating much more than that in revenues and profits for the companies. AirBnb lost billions of dollars last year, and it has rarely made positive quarterly earnings. Based on your example, the engineers are highly overpaid as there efforts rarely generate a profit. They are being paid by funds from speculators (stockholders and venture capital) that are betting on huge profits in the future. In reality, these engineers are being paid due to labor market forces and extremely focused recruiting policies (eg only hiring those with degrees from top engineering schools or poaching workers from other companies that have similar policies).

boppo1 5y ago
The one guy's thesis that we're wasting effort is probably correct, given the valuation is due to low interest rates. What's the Keynes quote about paying people to dig holes?
TheGigaChad 5y ago
saiya-jin 5y ago
it all looks nice and rosy and everybody patting their back about how impactful they are when scales come into play... and then you as a user are just wtf-ing given app because UI has been overhauled yet again, things that worked before are nowhere to be found, there is basically no migration guide. The simple truth that most software engineers don't want to hear is - people are quite conservative in this. If it works once, most folks would be extremely happy to keep using it for next 20 years in exactly same way, as it is. Bug-less has higher priority than shiny (which is highly subjective) and constantly changing.
- rurp 5y ago
  I believe most users see a tech product as a tool, "The thing that gets you to the thing". Whereas a majority in tech view those tools more as experiences. An experience puts more focus on the process itself, at the expense of the end result. Unfortunately this tech oligopoly landscape doesn't leave users many ways to express this preference, but I often wonder if the culture will change at some point in the future as the industry matures. An aging western population might have an influence here as well, in the long term. Older folks have less tolerance for having to relearn how to do the same thing they already knew how to do for the umpteenth time.

code51 5y ago

The idea that these little experiment wins bring user satisfaction and/or revenue increase is a pure assumption. Employees get so aligned with these experiment systems that obvious faults in statistical approaches go unnoticed. At the end of the day it becomes just a way to put something on your promotion case. In most cases, core product stays the same over the years without significant innovation.

amelius 5y ago

> But from a profit point of view, that last 10% can generate hugely outsized returns. That's because capitalism is a winner-takes-all game. Spending 1000000 manhours to get 0.001% improvement in quality pays off, for exactly this shitty reason.