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The most valuable information for the average HN reader, especially younger colleagues who have only been in the workforce for the last decade, is that the ~70%

• jerf 4y ago
  That's the most important post HN may see today, for a lot of people. Hope for the best, prepare for the worst.
• jimhi 4y ago
  Always good advice to budget and prepare for the worst, but wow this is a big stretch from the article. Of the large salary companies - Amazon, Google, and Microsoft are in the cloud space. Google doesn't make most of its profits from cloud. Netflix and Facebook don't sell these services at all. Dropbox and Digital Ocean (and sort of Cloudflare) are also in the cloud space and aren't known for such salaries. It's possible everything is in a bubble from the low interest rates. My prediction is Adtech is far more likely to be in a bubble than cloud computing. The productivity gains and small number of people who can fill the role for cloud are going keep it dominate probably for a long time even in a recession.
  • _fat_santa 4y ago
    > My prediction is Adtech is far more likely to be in a bubble than cloud computing. It's always so hard to nail down AdTech, to the outsider it seems like a world filled with bots and bad data and fueled by FOMO. Probably a good chunk of Google's revenue comes from companies that don't really need to advertise, but do so anyways so they won't loose their "competitive edge"
  • r0m4n0 4y ago
    What makes you think adtech is in a bubble? I only ask because it is has been around for a few decades now, has steadily been on an incline while old advertising methods has slowly been on a decline. Those trends are more likely here to stay… The pandemic fueled weird economics everywhere but I don’t think we will see falls below pre-COVID
    • jimhi 4y ago
      Startups have to show growth and/or revenue. They dump most of their funding into advertising. Many are spending more than the lifetime value of their customers (if that can even be calculated at their stage at all). Interest rates go up -> VC Money goes down -> Advertising budgets go down Online advertising is "theoretically" better than other advertising. You can track exactly how it converts to sales or not. It is still the best way to advertise in my opinion so will beat out any other method for sure.
      • r0m4n0 4y ago
        Interest rate increases are causing money to move around for sure. I’m just not convinced startups are the primary buyer of these online ads. Hell I would barely even consider them a drop in the bucket. Im sure basically every Fortune 500 and brick and mortar store have hefty online ad spends now a days. I suppose we will see soon enough
        • jimhi 4y ago
          True - that's my guess anyway
        • Macha 4y ago
          Yeah, this isn't the dotcom era when internet ads was mainly startups buying ads on Yahoo thereby inflating their own value and Yahoo's value. The standard online advertisers are the standard advertisers these days (apart from a few smaller islands like podcasts or integrated sponsors on youtube), so it'd be a bigger recession to impact adtech, and the impact there is more likely to be in line with the impact to the rest of the economy than disproportionate popping.
  • moris_borris 4y ago
    Last year I worked as a dev at an ad tech firm that apparently had a money printer. The amount of waste, particularly in their cloud architecture, was staggering. Prestigious office in a very expensive city. I noticed that they hired from big-name companies known for being staggeringly wasteful like Uber. Just one company, sure, but it did make me wonder about adtech in general.
    • ramesh31 4y ago
      >Just one company, sure, but it did make me wonder about adtech in general. The margins are so insane that it just doesn’t matter. They are trading engineering time for time to market.
  • crmd 4y ago
    Every square inch of the tech sector has been inflated by the past 14 years of almost free capital.
• biohax2015 4y ago
  This is just incredibly frustrating and disheartening to read. How is one supposed to plan for a future in this career when your lifestyle can just disappear overnight?
  • pbowyer 4y ago
    > This is just incredibly frustrating and disheartening to read. How is one supposed to plan for a future in this career when your lifestyle can just disappear overnight? Plan like everyone else in your country who has to deal with this uncertainty on significantly lower salaries. Budget. Save. Trim expenditure. And enjoy your career because you chose it as a career, not because it allowed you a lifestyle.
    • brundolf 4y ago
      And also don't panic, because nobody knows the future (especially in tech), despite the OP's confidence. Nobody knows the future in either direction.
      • jerf 4y ago
        I want to highlight this. I do probably a lot more "prep" than the average HNer is, but it's not out of panic. It's just a cold engineering assessment of costs & benefits. A lot of prep is just moving forward purchases and storing easily stored things, so the real cost is minimal if you have the space anyhow. And not spending all your money is a good plan anyhow; it has been for a long time and will continue to be. Even if you knew 100% the economy is fine and will be fine for the rest of your life, there's still good reason to prepare because you may have problems, health problems, natural disasters, maybe just the desire to take three months off work to prevent burnout, any number of reasons you should try very hard not to live paycheck to paycheck no matter how little you make. And then, when you are prepared, you can be more calm about a lot more things. Yes, it's possible for the Zombie Apocalypse to hit and make a mockery of all my prep... but because I'm more-or-less ready for more realistic scenarios, I'm also more chill about the possibility of them happening. And they may not, in which case frankly I won't have wasted many resources anyhow, any more than it's a waste to buy an insurance policy that you never get to collect on.
• xadhominemx 4y ago
  Another unhinged HN comment ripped straight from ZeroHedge. Loss making venture funded startups are a small part of cloud revenues. The overwhelming majority of cloud revenue and gross profit comes from stable and profitable enterprise customers who have a 15 year plan to exit the majority of their on prem footprint, and interest rates have little bearing on these plans.
  • throwaway894345 4y ago
    As someone who doesn't understand finance or economics very well, both the parent comment and yours were interesting, but I don't know why you have to use such an adversarial tone. Your point seems like it stands on its own, no need to go into attack mode.
    • xadhominemx 4y ago
      OP probably considers it a compliment to be compared to zero hedge, so I don’t consider my comment to be aggressive
      • throwaway894345 4y ago
        There's no charitable way to interpret "unhinged" and "ripped straight from" as anything other than aggressive. Note that I upvoted your original comment despite the hostility because I thought the substance was interesting.
        • crmd 4y ago
          Bubbles by definition don’t exit unless the majority of market players temporarily believe that the current trajectory is the new normal and not an anomaly.
        • arrosenberg 4y ago
          You are replying to someone whose s/n is literally ad hominem.
  • 4y ago
• Retric 4y ago
  Buying excessive housing is a huge waste, but locking in a mortgage can be a major win. Moderate inflation quickly makes high mortgage payments irrelevant, 6% inflation is a 44% discount over a decade. On top of this if you lock in a fixed mortgage today your rates can only drop after refinancing. In the end major financial decisions have many tradeoffs, but the micro optimizations are less important than having a high savings rate. If you make 150+k and make reasonable choices more money hits serious diminishing returns.
• vkou 4y ago
  If you believe we're in a high-inflation economy, your recommendation is incorrect, as the real cost of mortgage payments very quickly gets eaten by inflation. If you believe we're in a low-inflation economy, you may want to have an argument on that subject with folks that don't. :)
• kypro 4y ago
  Lol, so many doomers around at the moment. Central bank interest rates don't really matter much for investors or borrowers. Typically investors would use the 10y treasury yield as an approximate risk free rate and apply a risk premium to that calculate their required ROI. Central bank interest rates only matter to banks. For the last decade 10y treasury yields have ranged from around 1.5% - 3%. And as recently as 2018 they were around 2.8% - 3.1%. Today the 10y treasury yields around 4.2% which is meaningfully higher, but I think people are vastly over stating the impact of this. It's also quite possible the 10y yield is currently peaking and will move down over the next year. The long-end of the yield curve typical moves with inflation + economic growth expectations. I'm not committed to any side of this argument but I will say there is good reason to believe inflation pressures are likely to trend lower globally over the next several decades because of global demographic trends and slower rates of productivity growth. This is why interest rates probably haven't been as recklessly low over the last decade as many people in 2022 like to suggest - they've needed to be as low as they have been to prevent deflation and economic contraction. Similarly to investors, companies don't borrow at the Fed funds rate, they borrow at a premium to what the treasury market yields. So while corporates will need to borrow at a slightly higher rates to fund growth going forward, I again think people are vastly over stating the impact of 1-2% higher borrowing costs. That said, it's totally reasonable to expect margins to fall as industries mature - especially when there is a lot of competition in that industry. I do believe cloud margins will contract slightly over the next decade, but I'm not convinced pricing is in a bubble either. Firstly, investors (collectively) are far from stupid. If you think the market is wrong and that you're the only one to see these risks then you probably haven't been humbled by the wisdom of markets enough. Cloud company will be growing for many years to come and valuations today imo do already allow for some margin contraction. But we've seen this all before... As OP mentioned SSL certs used to be ridiculously expensive, now you can get them for free. I personally remember having to pay several hundred dollars a year for a VPS, dedicated IP and SSL cert back in the mid 2000s. Hell, it cost about a $100 a year just for a domain + decent webhosting back then. I mean if pricing is in a bubble today then you should have seen it a decade ago... Finally, when it comes to mortgages obviously it's important to ensure you can afford your repayments even if the unexpected happens, but as a long-term borrower inflation is your friend. Even if real wage growth for software engineers decline the likelihood of significant nominal wages declines for software engineers is practically zero. As an example while the real wages of cleaners and factory workers may have declined in real terms over the last few decades, in nominal terms they're making more than ever, and that's really all that matters in terms of servicing debts.
• acchow 4y ago
  The money printing inflated salaries. But they also inflated the prices of the most expensive thing we spend that salary on - real estate