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Can you make “big money” as an employee in software?
- 3327 12y agostartup case: the short answer is no. Why ? Statistics. 1-2% doesn't get you anywhere, after dilution, vc's getting, stake and if an eventual takeover happens. A 50mn takeover will leave a founder with about 6mn is an O.K aprox. Granted he had 50% of the company to start with, where does that leave you? established company case: As an employee you can hit the 1mn mark over a few years depending on the company. But that depends on what you mean by "big money" Assumptions: big money > 5mn
- dangravell 12y agoI guess we all have our different requirements but I think that's quite a high bar for "big money".
- dataker 12y agoAs a co-founder, how much does 10-15% leave you with?
- philbarr 12y agoAt least I can make database connections as an employee in software.
- seansmith1020 12y agoLolzzz
- Bachelor 12y agoOr at least keep them in tact...
- deleted 12y ago[deleted]
- kelukelugames 12y agoWas the article worth reading? It had a very clickbait title.
- gedrap 12y agoA summary of big tech companies (Apple, Google, etc) salaries in the USA according to GlassDoor. You haven't missed anything :)
- ForHackernews 12y agoMaybe they should have thought faster.
- cubano 12y agoYes, but will they lead to Big Money?
- nakovet 12y agoIn between GlassDoor data he talks about founders being the Lords of the Startup Feudalism and I kinda agree, companies used to pay 25-40k to an employee, a programmer/engineer can take several jobs from the industry henceforth the salary is 3x the regular salary. However the successful founder become rich and invest in other companies small, medium, big and help raise the inequality.
- ChuckMcM 12y agoThat is the broken narrative. An employee can get stock in 5 different companies in 5 years, a founder is, at best, able to get one company off the ground in 5 years. An employee can move change jobs (and often get a pay raise) when the unexpected hits a company puts it on the skid. A founder will never be invested in again if they jump ship on the company when it hits a big problem. An employee can work for a cash salary every year, a founder often will spend one maybe two years without salary. Founders file for personal bankruptcy, employees generally don't. And the interesting thing is that any technical "employee" can work for 5 years in the Bay Area and get up enough cash to be a "founder" for their first startup. (I went 12 years before going into a startup but the earliest I've seen it be successful is 5, you have to know enough about running a company to make it work). The reason the narrative is so skewed though is because you here stories about the successful founders but few about the marginal ones. You rarely hear about the person whose personal bankruptcy has made every part of their life that involves running a credit check harder. For every successful billionaire founder there are THOUSANDS of millionaire employees. The problem here is the notion "big money" and perceived inequity of distribution. But if you actually put everyone who identifies as a "Founder" in a group, and everyone who identifies as an "Employee" in a group, it is much more likely the people in the latter category will have retired early.
- mooreds 12y agoRight. If you view your labor as an investment (and you should), employees are diversified and founders definitely are not. An interesting book on the subject is "Are you a Stock or a Bond" [0]. It really makes you think about how your time/labor has a risk profile in the same way that financial instruments in your 401k do. [0] http://www.barnesandnoble.com/w/are-you-a-stock-or-a-bond-moshe-a-milevsky/1111895174?ean=9780137127375
- api 12y agoYes, in a few ways I am familiar with: (1) Finance. They make so much "free" money that they can afford to just pay massive salaries and not blink. You just have to be okay with doing things that basically add no value to anything. (2) As a very early employee in a hugely successful startup. But this is roulette, since most startups fail and some only succeed after so much dilution that your share ends up tiny. (3) Working your way up to a CXO level (or near) role in a very large established company. This is hard and takes years of both work and corporate politics. (4) There are some niches, like doing IT for oil and gas operations in remote areas, that I've heard pay very well... but these are almost like joining the army. I'd say #1 and #4 are probably the most straightforward. If you want to pursue #2, you should approach employment with a super-early startup by thinking about it as if you are an investor. Would you take a small chunk in a seed round with this company? If not, pass, cause if you are taking a lower salary + equity you are making a seed investment.
- rch 12y agoIsn't (1) roughly equivalent to working for a monstrous telco monopoly, or stodgy office equipment manufacturer?
- api 12y agoYeah. Any boring money printing machine has to offer fatter salaries to attract talent because there is no other intrinsic appeal. Finance is just a particularly big one. I might also add government, though you want to avoid lower-level contractor positions there and go for higher-end stuff or becoming a direct Federal employee. Also avoid sexy areas like space if your goal is to get rich, since these will have intense competition. This is part of why science pays so badly -- people want to do it.
- rch 12y ago> telco monopoly https://en.wikipedia.org/wiki/Bell_Labs https://en.wikipedia.org/wiki/Bell_Labs > office equipment manufacturer https://en.wikipedia.org/wiki/PARC_(company) https://en.wikipedia.org/wiki/PARC_(company)
- Aqueous 12y ago"Error establishing a database connection." I see what you did there.
- pg_is_a_butt 12y agoi really love when shitty developers complaining about compensation while completely demonstrating their inaptitude. unable to establish database connection? well, i'm unable to give a fuck about your whining. fuck off.
- gue5t 12y agoFuck money. Hacking is about the novel manipulations of technological systems, and you're supposed to be poor while you do it.
- beat 12y agoI have a term I call "win at money". You've won at money when you have enough capital to live comfortably for the rest of your life just on the interest from low-risk investment. Can you win at money in software? Yes, but pretty much only by founding your own company or being among the first handful of employees at a startup that gets huge. On the other hand, you can make a comfortable middle-class living at software very easily.
- zrail 12y agoYour "win at money" is similar to the philosophy on Mr. Money Mustache[1]. He advocates shifting your lifestyle down a few notches in places where it doesn't affect you much, reducing your cashflow needs and making it easier to "win", or in his parlance be financially independent and retire early. [1]: http://mrmoneymustache.com http://mrmoneymustache.com
- kkamperschroer 12y agoThat is essentially the definition of financial independence, and it's certainly possibly with a job in software. It just involves saving as much as you can afford to and taking advantage of compound interest early on.
- deleted 12y ago[deleted]
- jeffreyrogers 12y agoI think this is a good point. It's also worth noting that there are pretty much no careers where you can just get a normal job and end up "winning at money". Finance is a possible exception, but it comes with its own tradeoffs and the biggest players generally leave their finance jobs to start their own funds.
- beat 12y agoRight. The system is designed so you'll finally save enough to "win at money" about the time you're too old to work effectively anymore. What kills me is seeing friends whose jobs involve hard physical labor. They can't save enough to win at money before their bodies start giving out from the abuse. In better economies with unions and cultural support, they just sort of loaf away their less productive, later years. In America, they get laid off and can't work anymore.
- signa11 12y agowas it peter-thiel's talk that mentioned that you are not a lottery ticket ?
- mathattack 12y agoThe link was dead. But to answer the question - I've known several engineers who have done very well. It's not $100+ million money, but in the 5-10 million range. The key was both being visibly talented (the kind of people universally recognizable as being capable of solving the hardest problems) and joining companies that grow like a rocket (Apple, Google, etc).
- beachstartup 12y agosite is down. after starting my own company and seeing modest success, i wouldn't want to get rich any other way. i feel much more in control this way, and even if it is an illusion, it's a useful one.
- JanneVee 12y agoFound an archived link of it if you get the database connection error. https://archive.today/WyTCF https://archive.today/WyTCF
- arbitrage314 12y agoIf you want to make "big money," you should pretty much avoid WORKING at startups at all costs. Instead, get a high-paying job at an established company, and invest the difference in the startup's equity. I've considered lots of startup jobs because I believed strongly in the companies. Every single time, however, I was able to get a larger chunk of the company by keeping my current job and simply investing. To give an example, my current job pays about $250k, and one year, I invested $100k of that into a startup, leaving me with ~$150k of salary. This $150k + startup equity was a better deal than the startup was offering in both salary and equity. Plus, equity bought as an investor is much less tax toxic than equity options received as an employee of a startup. On the other hand, most people who work at startups aren't interested in money. If that's you, that's totally cool, and I respect that!
- burger_moon 12y agoThis may be a really stupid question, but how do you cash out your investments in these startups? Do you have to wait for them to get bought out or can you sell your stake in the company to other investors?
- arbitrage314 12y agoHi burger_moon! There are a couple of options: 1. Attempt to sell back to the company 2. Sell your shares to an independent buyer that you've found (the company typically has right of first refusal, which just means they're allowed to outbid the independent buyer) 3. Wait until the IPO, and sell them on the open market. 4. Sell your shares on EquityZen, SharesPost, or something similar.
- burger_moon 12y agoThanks for the reply. Have you sold any of your investments so far? What process did you go through if you did?
- arbitrage314 12y ago
- deleted 12y ago[deleted]
- svimma23 12y agoBlog is back up now
- jrockway 12y ago> Because California income taxes are 10%, salaries in San Jose lose an immediate 10% when compared to those in say, Seattle. But I get to deduct state taxes from my federal taxes, so it's not exactly 10% different.
- mdorazio 12y agoIt's still a lot, though. Let's say you make 100k a year. State tax is 10k. If you weren't getting hit with the state tax, you would be paying $21,175 or 21.18% in federal tax (filing single). If you deduct the 10k from state tax to reduce your taxable federal income to 90k, you're still paying $18,375 in federal tax. So let's compare total taxes: $28,375 with state tax vs. $21,175 without. So you're paying an extra $7,200, or 7.2% of total income. That's on top of the sky-high cost of living in CA compared to other locations.
- deleted 12y ago[deleted]
- tracker1 12y agoNOTE: In many locations without a degree you can't call yourself an "Engineer".
- deleted 12y ago[deleted]
- bdcravens 12y agoKey word: "employee". Where someone else tells you what to do and controls your destiny. You can wrap it up in whatever words are prettiest, but employees serve the founders' visions for the product, financial rewards, etc. (which is of course perfectly fine, given the risk founders take) That doesn't mean the only choice is to become a founder, not everyone is there yet. Looking at the article though, you see the bias that defines so much of the literature: despite the fact that we're creating software that reaches the world, the only place to get a job is the west coast of the US, right? Wrong. There are tons of places doing 7 and 8 figures in industries driven by software. Small businesses. Be prepared to rethink how your career works. If you want to just hack and live in your little hacking world with your fellow hackers drinking hacker beer and listening to hacker music, then you're just an employee. If you're willing to stretch, and embrace what makes business happen, and apply your technical skills to those problems, and tie your success to the success of the business, there are some tremendous opportunities to be had. There are plenty of non-VC'ed businesses owned by people making real money who are more than happy to reward those who help them make more.
- giuscri 12y ago> Small businesses. Be prepared to rethink how your career works. could you explain better?
- HeyLaughingBoy 12y agoHe means start a business doing something profitable.
- army 12y agoGreat, another person who doesn't understand marginal tax rates.
- ultrasaurus 12y agoAs the informal statistics police, I'm uncomfortable with directly comparing jobs such as lawyer or doctor that require specific (and in the doctor's case limited) degrees to ones that anyone can claim to be (there are no 15 year old part time doctors). Also, while maybe not relevant to a discussion of $200k+ jobs, averages among employed people may not be the average relevant to you -- it's much easier to find work as a junior marginal software developer than a junior marginal lawyer.
- hacknat 12y agoI know an Engineer at Microsoft who makes in the $500k+ range. Trust me, none of you would envy him (okay, some of you might). The way he does it is he's the guy who solves tough (not necessarily interesting) technical problems in the shortest time possible for x important feature. When .NET 4.5 was shipped you couldn't use the `await` keyword in a try-catch statement, because there was some issue with the debugger. He created a proof-of-concept in one month, but he threw an ungodly amount of hours at it. He's divorced and he lives at work. He's gets huge stock bonuses every time he does something like this, but, IMO, it's cost him a lot to get that money.