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An experienced engineer might be worth $x to one company, but $x*2 to another. A lot of companies that are used as a reference for market rates (Google, Faceboo

An experienced engineer might be worth $x to one company, but $x*2 to another. A lot of companies that are used as a reference for market rates (Google, Facebook, etc.) have incredible leverage in the sense that their per-employee revenue and/or profit is very high. This isn't just a result of the talent of their people. It's a result of their business models, competitive moats, infrastructure and tooling, etc. In SF/SV it is entirely possible for an employee to state "I'm not being paid what I'm worth" when, to their current employer, they are actually being paid more than what they're worth. The fact that their value varies from employer to employer is something that I think a lot of employees miss. Employees who want the biggest bucks should go out and get them, but the idea that companies are undervaluing/underpaying their employees just because they're not paying what Company X, Y and Z pay is one of the worst delusions in SF/SV right now.

candybar 13y ago
If a company is losing money from employing an engineer at a below-market rate, that means the company likely has a bad business model, not that the engineer is paid more than they're worth. One's worth, at least in this context, is determined by the market, not a a particular company's inability to make use of a valuable resource. And I'm not sure what this has to do with anything - within reason and all else equal, employees should go work in environments that maximize their value.
- jbredizzle 13y ago
  "If a company is losing money from employing an engineer at a below-market rate, that means the company likely has a bad business model, not that the engineer is paid more than they're worth." I need to call BS. Just because your business model can't justify paying engineers two years out of college a $120,000/year salary doesn't mean that you don't have a profitable business. It's okay if your business model isn't as profitable as Google's. Heck, a lot of the companies that are paying market salaries have no meaningful revenue o even a business model. They're investor-subsidized. "employees should go work in environments that maximize their value." A lot of people work in "environments that maximize their value" and they're miserable. I have friends who make half of what they could make in SF/SV. You would say that their current employers aren't maximizing their value, but most of them own their own homes, live very comfortably and are home by 5-5:30. I don't know many $120,000/year+ engineers in SF/SV who can say that. A lot of the high-paying jobs in SF/SV that are compensating employees at their highest theoretical value aren't as glamorous as the people who have caught the grass-is-greener-bug would like to believe they are. A lot of the people in these jobs trade whining about salary to whining about the hours, the lack of interesting work, their crazy/incompetent boss, the fear of funding running out, etc. etc. etc. Pick your poison wisely.
  - roel_v 13y ago
    "I need to call BS. Just because your business model can't justify paying engineers two years out of college a $120,000/year salary doesn't mean that you don't have a profitable business." Uhm, by definition, no. If your business model requires a resource for which the market rate is higher than what your business will sustain, you do not have a profitable business. I could have a very profitable gold selling business if only I could buy gold at 50$ per ounce. Which I can't, hence it's not a profitable business.
    - throwaway022014 13y ago
      "Market rate" is a meaningless phrase. I run a dev shop in San Jose. I hear all the time that the "market rate" is a good 40-50% higher than what I pay my engineers but I have all the engineers I need. Are they the best engineers in the world? If we're talking about pure talent no, but we're not doing anything exotic. We build modestly complex web applications for enterprise clients. Have I lost engineers? Yes. In the past 3 years I lost 2 of my favorite employees. I was disappointed but it wasn't a surprise and I supported their decisions. They were superb engineers and I knew that they would one day go on to do great things. It wasn't just an issue of not being able to match the salary of a publicly traded tech company. These engineers were destined to work on the type of things we just don't do here. So why would I want to hold them back? On the flip side I have one engineer right now who I know is looking to leave. He told one of our other employees that he's unhappy with the pay and thinks he can get a better job at a big tech company. Guess what? I heard about this 8 months ago and he's still here. I know he has interviewed elsewhere but you see, for every engineer who can get a $$$$ job at a tech giant or rocketship startup there are 50 engineers who THINK they can. And then they find out they can't. There is no shortage of engineers. The big names often get 100s of applicants for every open position. But you need to be really, really good, not just at your job, but at the interview process. The interview process at some of these companies is so difficult that a lot of very good people get filtered out. So I have no problem finding engineers at "below market" and still manage to deliver good work product to our customers at good margin. Apparently I'm doing the impossible!
      - 13y ago
mathattack 13y ago
I see your point. I've had to deal with this a lot. "Hedge fund X is paying someone 2x what I'm getting today for a technology job." ok... You may be worth more to them. You may also be working 50% more hours, and you may also be getting paid daily, and not getting benefits, social security contributions, and the like. IT's very frustrating. Ultimately I try to screen for "Money is the most important thing in my life" during interviews, and then if I have folks like this working for me, I encourage them to chase the better dollar. You can't stay in business chasing the best offer away for each and every employee.
- throwaway022014 13y ago
  Your last sentence is the best advice to give to any company in this market. My dev shop is doing just fine and I'm not paying anywhere near what I'm constantly told the "market" is. I wish I could but then I wouldn't have a business. When my best engineers want to move on to bigger and better things I support them. It would be nice to keep them of course but I'm honest enough with myself to know that I don't need the type of engineers that can get a job at Google. My retention rate with my "adequate" engineers is very high. Most of the ones that I know have complained about money find out that it's one thing to see jobs that pay $$$$ and another thing to actually get those jobs.

candybar 13y ago

If a company is losing money from employing an engineer at a below-market rate, that means the company likely has a bad business model, not that the engineer is paid more than they're worth. One's worth, at least in this context, is determined by the market, not a a particular company's inability to make use of a valuable resource. And I'm not sure what this has to do with anything - within reason and all else equal, employees should go work in environments that maximize their value.

jbredizzle 13y ago
"If a company is losing money from employing an engineer at a below-market rate, that means the company likely has a bad business model, not that the engineer is paid more than they're worth." I need to call BS. Just because your business model can't justify paying engineers two years out of college a $120,000/year salary doesn't mean that you don't have a profitable business. It's okay if your business model isn't as profitable as Google's. Heck, a lot of the companies that are paying market salaries have no meaningful revenue o even a business model. They're investor-subsidized. "employees should go work in environments that maximize their value." A lot of people work in "environments that maximize their value" and they're miserable. I have friends who make half of what they could make in SF/SV. You would say that their current employers aren't maximizing their value, but most of them own their own homes, live very comfortably and are home by 5-5:30. I don't know many $120,000/year+ engineers in SF/SV who can say that. A lot of the high-paying jobs in SF/SV that are compensating employees at their highest theoretical value aren't as glamorous as the people who have caught the grass-is-greener-bug would like to believe they are. A lot of the people in these jobs trade whining about salary to whining about the hours, the lack of interesting work, their crazy/incompetent boss, the fear of funding running out, etc. etc. etc. Pick your poison wisely.
- roel_v 13y ago
  "I need to call BS. Just because your business model can't justify paying engineers two years out of college a $120,000/year salary doesn't mean that you don't have a profitable business." Uhm, by definition, no. If your business model requires a resource for which the market rate is higher than what your business will sustain, you do not have a profitable business. I could have a very profitable gold selling business if only I could buy gold at 50$ per ounce. Which I can't, hence it's not a profitable business.
  - throwaway022014 13y ago
    "Market rate" is a meaningless phrase. I run a dev shop in San Jose. I hear all the time that the "market rate" is a good 40-50% higher than what I pay my engineers but I have all the engineers I need. Are they the best engineers in the world? If we're talking about pure talent no, but we're not doing anything exotic. We build modestly complex web applications for enterprise clients. Have I lost engineers? Yes. In the past 3 years I lost 2 of my favorite employees. I was disappointed but it wasn't a surprise and I supported their decisions. They were superb engineers and I knew that they would one day go on to do great things. It wasn't just an issue of not being able to match the salary of a publicly traded tech company. These engineers were destined to work on the type of things we just don't do here. So why would I want to hold them back? On the flip side I have one engineer right now who I know is looking to leave. He told one of our other employees that he's unhappy with the pay and thinks he can get a better job at a big tech company. Guess what? I heard about this 8 months ago and he's still here. I know he has interviewed elsewhere but you see, for every engineer who can get a $$$$ job at a tech giant or rocketship startup there are 50 engineers who THINK they can. And then they find out they can't. There is no shortage of engineers. The big names often get 100s of applicants for every open position. But you need to be really, really good, not just at your job, but at the interview process. The interview process at some of these companies is so difficult that a lot of very good people get filtered out. So I have no problem finding engineers at "below market" and still manage to deliver good work product to our customers at good margin. Apparently I'm doing the impossible!
    - 13y ago

mathattack 13y ago

I see your point. I've had to deal with this a lot. "Hedge fund X is paying someone 2x what I'm getting today for a technology job." ok... You may be worth more to them. You may also be working 50% more hours, and you may also be getting paid daily, and not getting benefits, social security contributions, and the like. IT's very frustrating. Ultimately I try to screen for "Money is the most important thing in my life" during interviews, and then if I have folks like this working for me, I encourage them to chase the better dollar. You can't stay in business chasing the best offer away for each and every employee.

throwaway022014 13y ago
Your last sentence is the best advice to give to any company in this market. My dev shop is doing just fine and I'm not paying anywhere near what I'm constantly told the "market" is. I wish I could but then I wouldn't have a business. When my best engineers want to move on to bigger and better things I support them. It would be nice to keep them of course but I'm honest enough with myself to know that I don't need the type of engineers that can get a job at Google. My retention rate with my "adequate" engineers is very high. Most of the ones that I know have complained about money find out that it's one thing to see jobs that pay $$$$ and another thing to actually get those jobs.