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You have suggested that Silicon Valley is successful, in part, because workers accept a notion of "long-term compensation" [1]. Long-term compensation, perhaps
by freyr 12y ago
You have suggested that Silicon Valley is successful, in part, because workers accept a notion of "long-term compensation" [1]. Long-term compensation, perhaps better called maybe-someday compensation, requires SV software engineers to work for relatively less (factoring in cost-of-living) than many other skilled professionals, with hopes that they'll be rewarded with a big windfall in the future.
With the rising cost of living in SF/SV, young engineers are expected to shoulder much the risk of startups while putting their long-term financial stability on the line. All in hopes of maybe-someday being compensated. And let's face it, the lion's share of these rewards will not be passed to these workers who put all their eggs in one basket, but to financially-secure VC's who have hedged their risk across many companies. If this is how SV works, do you truly believe this is a strong foundation for the industry? Obviously it's good for founders and VCs, but I'm considering the perspective of engineers.
We seem to be enjoying go-go years of investment and profits, everyone is starry eyed, and the system is working. What happens when the present-day strain on workers exceeds the allure of maybe-someday compensation? Also, why shouldn't talented workers move to an industry that provides guaranteed compensation for hard work in real time?
Of course, start-ups have a much different risk profile than banks, consulting agencies, large corporations, etc. And as a result, the long-term compensation model may be a necessity. But in the end, it sounds like SV works because there's a large supply of people willing to gamble on their future financial stability.
[1] http://blog.samaltman.com/why-silicon-valley-works http://blog.samaltman.com/why-silicon-valley-works
- sama 12y agoIt's a personal choice for workers. If you're an engineer and you want a guaranteed $250k per year, go work for a financial firm. Nothing wrong with that decision. Everyone gets to make his or her own. Engineers at startups make $100k+, sometimes much more. I don't think people are being asked to subject themselves to unreasonable financial strain. It is indeed "maybe-someday" competition. When you work at a startup, you're acting like an investor but investing your time instead of your money. If you choose well, the upside can be pretty crazy.
- latj 12y ago>Engineers at startups make $100k+, sometimes much more. I don't think people are being asked to subject themselves to unreasonable financial strain. Is $100k enough for a person to live without roommates within 20-30 minutes commute from said startup? Eat healthy food? Pay student loans? Have health insurance and build savings? I'm not from the Bay Area- this is a serious question.
- eachro 12y agoYou probably won't be able to afford living without roommates. But the rest, is certainly feasible on a 100k+ salary.
- deleted 12y ago[deleted]
- sama 12y agoYes, though not if you live the lifestyle many engineers at startups choose to :)
- suyash 12y agoPlease don't side track this thread with salary discussion in bay area. There are plenty of HN threads where this has been talked extensively.
- jpmcglone 12y agoHey, "AMA" does mean "Ask Me Anything"
- praneshp 12y agoEverything except the student loans, yes. If you have student loans you'd need to get a roommate (or two). Source: I live in the Bay area, and got a job at bigco but a salary similar to 100k. Almost no education loans (under 5k), but about 40k of loans for parents back home. I paid it back in a year and a little bit more.
- pbreit 12y agoYou're missing a key reason why annual salaries are modest at the beginning. A key attribute of a founding team is intense resourcefulness and have considerable powers of persuasion. Both of these attributes result in lower salaries initially.
- freyr 12y agoI guess my concern is how salaries grow with experience, in a place with cost of living comparable to or higher than Manhattan. A software engineer, a management consultant, a white shoe lawyer, and a banker may all start out at a "modest" $100k-$125k salary. Maybe a bit lower, maybe a bit higher. But in only one of those professions is there a fairly low ceiling for salary growth and a tacit belief that your value decreases with age and belief (or, at least, a tacit belief that younger workers can do "good enough" work with lower pay and longer hours). The consequences of this are why having engineers go all in on a startup with hopes of delayed compensation is a huge ask. Again, people are happy to do it, so it's not Sam's problem. It's certainly not my problem. But this system has grown dependent on a continuous stream high-profile IPOs making the gamblers rich, drawing in new and optimistic workers to take their place. If that stream dries up, I won't want to be anywhere near SF/SV during the fallout.