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Is anyone surprised? It's really eye-opening working at a startup making a huge impact and the company is valuated in the hundreds of millions with only a few e
by hexator 3y ago
Is anyone surprised? It's really eye-opening working at a startup making a huge impact and the company is valuated in the hundreds of millions with only a few engineers. And you just make like $150k, a tiny TINY fraction of the value. Even if you make more than most workers, you're still getting robbed of the true value of your labor.
- marknutter 3y agoPeople often forget to factor in the value of risk. The reason engineers who join startups rather than found them make a fraction of what the founders make is because they didn't take on the initial risk of starting the company, which they are of course free to do anytime they like by starting their own company.
- serverholic 3y ago[dead]
- lejoko 3y agoThere is usually another reason (and I share it) : they don't have enough money to start their own company without it being too big a risk. It is an order of magnitude easier to take risks when you already have enough money so that your family is not at stake...
- marknutter 3y agoYou're only proving my point about the value of being able to take on risk.
- lejoko 3y agoI don't see how. You said that engineers can take risks if they want. I say that: 1. a lot can't take any risk at all, even if they'd be willing to, since they have no money. 2. the level of the risk you take depends enormously on your initial wealth. Wealthy founders take a lot less risk than founders who invest their life savings. And when you get to the other side of the investment, when you win, the money you earn does not depend at all on the level of risk you took. But when you lose, it totally depends on it. the risk is not the same for everybody.
- marknutter 3y agoWhat you're saying effectively boils down to "being rich is better than being poor". Risk is still risk, and it has a market value, whether or not you want to acknowledge it.
- tshaddox 3y agoWho do you think is taking on risk with downside that is remotely comparable to an individual engineer losing 2 years of salary?
- marknutter 3y agoIf I invest my life savings into founding a startup and it fails, I lose my life savings. The engineer I hired to help build the company loses nothing.
- lejoko 3y agoIf I invest pocket money (the same amount as you, or even more) into founding a startup with you and it fails, I lose pocket money. The engineer we hired together to help build the company loses his job and may find himself with serious problems because of that. Risk is in the eye of the beholder...
- marknutter 3y agoYou as the founder also lose your job though..
- lifeonlars 3y agoI don't think you are accurately critiquing the point made above. It is right that founders have a vastly different risk/reward tradeoff to employee engineers. I don't think that is the socialist engineers' argument. Suppose there are 3 people involved in a startup: the founder, the engineer and the investor. The engineer gets $300,000 for 2 years' work. The founder gets $200,000 for 3 years' very intense work + $10 million if the startup succeeds. The investor puts in capital, does no work, and gets $40 million if the startup succeeds. It is arguable that the founder and the engineer are getting a comparable amount but with a different risk profile. The socialist argument is that the person who only provides capital is overpaid for doing that. Whether that argument has an economic justification, or just a political or moral justification, and whether you believe that argument, is another matter. But it is clear that, if the investor got less, there would be more to pay both of the people who contribute work. Perhaps a source of confusion is that successful founders often go on to become investors with the money they have collected, for example Paul Graham or Marc Andreessen. You could also argue that someone like Mark Zuckerberg, while still nominally 'working' as CEO, has gone from being a founder in Facebook the product to being an investor who provides capital for various Facebook the company projects, and that perhaps much of his wealth was accumulated in the second stage.
- marknutter 3y agoIn the vast majority of cases, the startup will not succeed, and the investor will lose their investment, while the founder will make $100,000 less than the engineer and lose credibility as a founder in the process. The engineer loses nothing other than the potential future income they might have received if the company had succeeded, and they will likely just find another job.
- lifeonlars 3y agoObviously to the investor, only the average case over a large number of investments matters.
- pseudalopex 3y agoMany founders had failed startups before. A significant loss of credibility is not the vast majority of cases in my experience. And paying themselves less than engineers is not universal either.
- throwaway585793 3y ago[flagged]
- Swizec 3y ago> you're still getting robbed of the true value of your labor. But as someone who has tried creating value from scratch (by starting businesses) … my god having a job is so much easier. Making $200k+ as a software engineer is a piece of cake compared to scraping together $50k of fully captured value.
- slt2021 3y agothen one can simply create his/her own startup, bear all the risks (99% of startups fail) and reap all the rewards. market should have found equilibrium, otherwise there is literally free money on the table. why would engineer work for 150k when he/she can create startup with multi-million valuation?
- lifeonlars 3y ago> then one can simply create his/her own startup, bear all the risks (99% of startups fail) and reap all the rewards. How does that work? Most of the rewards go to the owners of the capital. That's literally the central idea of socialism.
- slt2021 3y agoyou don't have to raise capital at unfavorable terms. Plenty of bootstrapped startup founders out there or founders who raised at very favorable terms (like raising 50+ mln with just a powerpoint, not even a POC of a product). or alternatively - plenty of dual class stock holders (Zuckerberg is prime example), where you still retain control of company, while benefitting from cheap VC and public capital
- eastbound 3y agoAs long as engineers are ok with returning 2 years of their pay if their work doesn’t allow the company to double in size, I’m perfectly ok with doubling or decupling the salary of said engineer.
- jsharf 3y agoDo founders return the salary they pay themselves if their company doesn’t double in size? The answer is no, so I don’t see why software engineers should be held to higher standards.
- parthianshotgun 3y agoFounders are simply better and more evolved human beings, the exalted ones, isn't it obvious? /s
- throwaway585793 3y agoNon sequitur. Sarcasm doesn't make you funny or witty. This isn't reddit.
- parthianshotgun 3y agoIrrelevant. See? I can do it too.
- eastbound 3y agoFounders do invest savings into creating the company, and can be condemned to prejudices if they fail to manage money properly. And every startup is managed at the edge of bankruptcy all the time, so founders can easily be found guilty of mismanagement.
- Aunche 3y agoA lot of founders have worked for free or have already invested a lot of money in their company. If you want a salary and external investment, you better be prepared to part with much of the stake in your company.
- deleted 3y ago[deleted]
- nateabele 3y agoOn the other hand, 150k is an astronomical sum for most people on the planet—and no one is being forced into accepting that as a market rate, or even living in a high-rent city, particularly post-COVID. I still don’t understand this idea that labor supposedly has some sort of intrinsic value. The value is derived from the labor being done in the context of a system created by someone else. As others have said, if you want to reap the full value of your labor, you’re free to go it alone.
- green_man_lives 3y ago> The value is derived from the labor being done in the context of a system created by someone else. When property ownership is indefinite and transferrable between generations, then capital accumulation becomes about whoever did it first. Yes there is occasional disruption, but a guy like Micheal Bloomberg did the labor 40 years ago and has had people working for him ever since. I think the idea is that we ALL stand on the shoulders of giants, and rather than holding all of the gains ourselves, they should be spread so as to give other people the opportunity to make something of themselves.
- prottog 3y ago> When property ownership is indefinite and transferrable between generations, then capital accumulation becomes about whoever did it first. If this is true, the richest people in this country should be named Washington or Jefferson, or perhaps more recently, Carnegie or Vanderbilt. Instead, we have the likes of Bezos or Musk, the latter of whom wasn't even born here. Bloomberg was born to a bookkeeper, hardly the stuff of generational wealth. Empirical evidence suggests that it's actually pretty hard to remain at the top of the leaderboard across many generations. I agree with the idea that we all stand on the shoulders of giants, but I dispute the picture you paint that the wealthy are "holding all of the gains [themselves]". Salaries get paid, taxes get paid, new ecosystems are made upon which future wealth can be built. There is no compelling evidence that makes me believe that more redistribution on top of what we already have (which is already quite a bit, contrary to popular belief that the US is a low-taxes-on-the-rich, low-social-benefit nation) would result in better outcomes for the median person.
- ralusek 3y agoThe value of your labor is a function of (what you do for them, what they do for you, what you can do without them, and what they can do without you). Why the value of your labor isn't (total profit of company / how much of the labor you think your work represents) is because you're not the only person that could have done that, and there are plenty of people who would do it for less. This exercise is being carried out millions of times per day, and the terminal value of this exercise is $150-$300k for most engineers in the area. The flip side is true, too. If the value of your labor is truly what you say it is, and all it takes is a few engineers like yourself to produce that high valuation of the total company, what are you doing employed somewhere where your work is so undervalued?
- BeetleB 3y ago> Even if you make more than most workers, you're still getting robbed of the true value of your labor. I used to think that way too. For years. Until I realized that's never been how labor is valued. Ever. Let's dispense with this fantasy. There's also a disconnect. Very few people value what they buy in stores this way. We don't care what it cost to manufacture what we buy. We just care what other stores sell it for. If all the other stores are selling it cheaper, then this store is charging more than it's worth. People pay for product. People pay for services. To first order the pricing model is the same. And of course as another commenter said: Try starting your own business and earning 150k. I bet 95% of readers here are incapable of it. Ignore unicorn startups and listen to How I Built This. It's quite common that for several years the founders earn little. All they have is equity they can't liquidate. For years they have to pay employees a lot more than they themselves make and give them employee rights that they themselves don't have. If you look across all businesses in the US, earning 150k puts you better off than 90% of business owners. The deck is in favor of employees, not business owners.
- groby_b 3y agoSo close. SO CLOSE. The deck is in favor of massive inequality. This expresses in different ways. For many employees, it's exploitative workplaces. (These exploitative places are very often large companies - it turns out smaller companies usually have a sense of "together" that makes this harder). For many new businesses, it's an extremely harsh environment with low survival rates. A large part of that is that the environment is controlled by large companies and their owners. There's a price to massive scale, and it seems we've chosen to pay it as massive inequality.
- BeetleB 3y agoYes engineers are on the side that's benefiting from the inequality. Virtually all societies with less inequality pay engineers less.
- thsbrown 3y agoPreach! Been a self employed game developer for almost 10 years now. I think a lot of people fail to realize how incredibly hard it is to make a product (even a great one) and make a reasonable profit from it. It takes a lot of patience, learning and failure. Even after 10 years I still feel like there's so much more to learn to get to where I want to go.
- deleted 3y ago[deleted]
- Aunche 3y ago> valuated in the hundreds of millions with only a few engineers. And you just make like $150k It's telling that you need to compare your salary to a company's valuation rather than their income. That company worth hundreds of millions is probably actively losing tens of millions overall. It's only worth hundreds of millions because capital owners decided that this type of cash is worth burning. Without them, your $150k job simply wouldn't exist.