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Hiring graduates at $200k is a major part of where the money goes when you’re spending billions on unprofitable software projects.

by pavlov 4y ago

mschuster91 4y ago
I'd wager that astronomical housing costs are the biggest factor in these absurd salaries, followed by healthcare. In the end it's a circle of money, from investors to mega-companies to their employees to their landlords which are again part of the investor class. Healthcare is just the same.
- deleted 4y ago
  [deleted]
- neilparikh 4y ago
  > I'd wager that astronomical housing costs are the biggest factor in these absurd salaries, followed by healthcare. The causal relationship is in the opposite direction: high salaries cause high housing costs. Law of rent gives a theoretical explanation of this, but we can see this empirically too: rents go up in cities after tech companies with high salaries start opening up offices there, not before. There are also plenty of places with low rent that have higher tech salaries than places with higher rents (compare essentially any US city to Toronto). > In the end it's a circle of money, from investors to mega-companies to their employees to their landlords which are again part of the investor class. At least in California, there's not that much overlap between tech company investors and landowners. The housing ownership is much more distributed, and often to "mom and pop" landlords. This is the flow of money in Silicon Valley (expressed in a slightly comic manner): https://twitter.com/nextdoorsv/status/1400165321609199620 https://twitter.com/nextdoorsv/status/1400165321609199620 It's a bit different in other locations with more consolidation in land ownership, but even there, I doubt there's much overlap (I have less knowledge of housing dynamics outside California, because they actually change, so I'm just guessing here).
  - mschuster91 4y ago
    > Law of rent gives a theoretical explanation of this, but we can see this empirically too: rents go up in cities after tech companies with high salaries start opening up offices there, not before. I think it's actually both - when tech companies enter a new town, they tend to hire boatloads of people, placing pressure on local housing markets, and thus raising prices - and landlords or people willing to sell and relocate to take a quick and easy profit know that the new class of people has substantial money to pay. What I was referring to was stuff like [1] or [2] - investors with no real option to park "dumb money" (aka funds that are structured to invest into low-ish risk markets) have discovered that soaking up residential real estate is a good way to invest that money. [1] https://www.nytimes.com/2022/04/23/us/corporate-real-estate-investors-housing-market.html https://www.nytimes.com/2022/04/23/us/corporate-real-estate-... [2] https://www.businessinsider.com/investors-bought-third-us-homes-january-john-burns-real-estate-2022-4 https://www.businessinsider.com/investors-bought-third-us-ho...
initplus 4y ago
Those projects aren't unprofitable because production costs are too high. The projects are unprofitable & failing because Facebook is struggling to execute on their grand plans, and are having their traditional core business eaten by a more nimble upstart competitor (TikTok). I'm sure FB would love to be able to spend 2x on salaries if it came with a guarantee of turning the metaverse into a successful business venture, or of grabbing all the attention hours currently flowing to TikTok.
roncesvalles 4y ago
It could very well be that they didn't pay enough. My hypothesis for why tech pays so well is because success depends very heavily on the quality of the talent, and a few people can be the difference between billions of dollars in lost money vs. a machine that makes billions of dollars in annual recurring income. It's hard to claim that a project failed because its budget was too big.
- yobbo 4y ago
  Income = Revenue - Expenses

Hiring graduates at $200k is a major part of where the money goes when you’re spending billions on unprofitable software projects.

by pavlov 4y ago

Hiring graduates at $200k is a major part of where the money goes when you’re spending billions on unprofitable software projects.

mschuster91 4y ago

I'd wager that astronomical housing costs are the biggest factor in these absurd salaries, followed by healthcare. In the end it's a circle of money, from investors to mega-companies to their employees to their landlords which are again part of the investor class. Healthcare is just the same.

deleted 4y ago
[deleted]
neilparikh 4y ago
> I'd wager that astronomical housing costs are the biggest factor in these absurd salaries, followed by healthcare. The causal relationship is in the opposite direction: high salaries cause high housing costs. Law of rent gives a theoretical explanation of this, but we can see this empirically too: rents go up in cities after tech companies with high salaries start opening up offices there, not before. There are also plenty of places with low rent that have higher tech salaries than places with higher rents (compare essentially any US city to Toronto). > In the end it's a circle of money, from investors to mega-companies to their employees to their landlords which are again part of the investor class. At least in California, there's not that much overlap between tech company investors and landowners. The housing ownership is much more distributed, and often to "mom and pop" landlords. This is the flow of money in Silicon Valley (expressed in a slightly comic manner): https://twitter.com/nextdoorsv/status/1400165321609199620 https://twitter.com/nextdoorsv/status/1400165321609199620 It's a bit different in other locations with more consolidation in land ownership, but even there, I doubt there's much overlap (I have less knowledge of housing dynamics outside California, because they actually change, so I'm just guessing here).
- mschuster91 4y ago
  > Law of rent gives a theoretical explanation of this, but we can see this empirically too: rents go up in cities after tech companies with high salaries start opening up offices there, not before. I think it's actually both - when tech companies enter a new town, they tend to hire boatloads of people, placing pressure on local housing markets, and thus raising prices - and landlords or people willing to sell and relocate to take a quick and easy profit know that the new class of people has substantial money to pay. What I was referring to was stuff like [1] or [2] - investors with no real option to park "dumb money" (aka funds that are structured to invest into low-ish risk markets) have discovered that soaking up residential real estate is a good way to invest that money. [1] https://www.nytimes.com/2022/04/23/us/corporate-real-estate-investors-housing-market.html https://www.nytimes.com/2022/04/23/us/corporate-real-estate-... [2] https://www.businessinsider.com/investors-bought-third-us-homes-january-john-burns-real-estate-2022-4 https://www.businessinsider.com/investors-bought-third-us-ho...

initplus 4y ago

Those projects aren't unprofitable because production costs are too high. The projects are unprofitable & failing because Facebook is struggling to execute on their grand plans, and are having their traditional core business eaten by a more nimble upstart competitor (TikTok). I'm sure FB would love to be able to spend 2x on salaries if it came with a guarantee of turning the metaverse into a successful business venture, or of grabbing all the attention hours currently flowing to TikTok.

roncesvalles 4y ago

It could very well be that they didn't pay enough. My hypothesis for why tech pays so well is because success depends very heavily on the quality of the talent, and a few people can be the difference between billions of dollars in lost money vs. a machine that makes billions of dollars in annual recurring income. It's hard to claim that a project failed because its budget was too big.

yobbo 4y ago
Income = Revenue - Expenses