
The Programmer's Price: Want to hire a coding superstar? Call the agent - eroo
http://www.newyorker.com/magazine/2014/11/24/programmers-price
======
mallyvai
I'm the lead engineer and founder of
[http://OfferLetter.io](http://OfferLetter.io) \- We guide engineers (and
designers and PMs) by helping them navigate the "last-mile" \- that is, the
offer selection/negotiation process - in exchange for a fee from the
candidates. (We got brief shoutout in the article along with Dave and our
friends at HackMatch)

I want to specifically address 1) Sam Altman and 2) Chris Fry's respective
points about the problems with regards to models that align with the candidate
more directly (like ours):

1) Much respect for Sam, but he's dead wrong with respect to the 'negative
selection' problem - yes, good people have no problem finding work, but the
key problem is that the _opportunity cost_ remains phenomenally high for
suboptimal decision making. We have actually worked with outstanding engineers
who are _at YC portfolio companies_ , simply because they wouldn't have known
how to get what they're worth otherwise and push for more. And Sam is missing
the point entirely with regards to worth - people in the industry are not
getting paid based on their merit - not at all. The gender wage gap is perhaps
the most stark example of this, but we see it, starkly, along many other
demographic slices as well.

2) With respect to Chris Fry's comments - I was actually _in Twitter 's eng
org_ when Chris raised the internal engineering referral bonus from 2.5k to
10k because the company wasn't getting the volume of quality people it wanted.
Chris is a really great guy, but I find his point about "[at] Twitter, you get
the best résumés on your desk already [via recruiting department, referrals,
etc]" somewhat misleading - there's no way he would have raised the referral
bonus as sharply as he did if he really felt that. In fact, there wouldn't
have to be an referral bonus structure at all. Twitter is wonderful, and I
loved my time there, but even there we weren't getting all the high-quality
people we wanted.

[#plug: check out [http://OfferLetter.io](http://OfferLetter.io) \- we all
deserve to get what we're worth]

~~~
anonymous30x
I'm one of the developers Mr. Altman is talking about and have recently
rejected an offer from 10x. I have to agree with Mr. Altman's point of view:
I'm making 1.5 - 2.0 times the average developer's salary already. Speaking
with 10x, they told me that their average project was just 1 - 2 months long
and that I should treat their service as a supplement to my income rather than
relying on them to keep me booked.

The problem is they charge 15% of ALL of my income for that privilege and
don't make any guarantees. Why should I pay them over $2k a month for them to
_possibly_ make me new sales when I'm already capable of keeping myself booked
the majority of the time?

The whole thing reeked of predation to me. If they're really able to provide
more value than they take from me, then they should only be charging me a
commission on the sales they bring in.

~~~
tptacek
Wait, did you just say 10x wants a 15% slice of your gross revenue regardless
of whether they source it or you do?

~~~
anonymous30x
Precisely.

~~~
tptacek
What was the logic they gave for this (crazy-seeming) ask?

~~~
anonymous30x
Because that's how it's done in the entertainment industry, apparently.

~~~
waterlesscloud
It is how it's done in the entertainment industry (for 10%), but finding the
work is only part of what an entertainment agent does. They also negotiate the
deals, help resolve conflicts, help build the team for the project if
necessary, etc. Plus in many cases, the agent (or their agency) is better
known in the business than the client, and just mentioning the agency opens
doors even if they don't make the contact.

That all seems unlikely in the case of 10x.

~~~
notahacker
The other key difference from the entertainment industry is that in-demand
artists can potentially derive a large percentage of their income from
royalties and "image rights", so it's a good thing for them to retain an agent
who's incentivised to find that unpaid TV slot in New York that'll help them
"break America" but advise of the pitfalls of an apparently lucrative
advertising gig they've been offered. Agents for successful entertainers, in
other words, are supposed to boost a wide variety of income streams related to
entertainer's image, including pre-existing ones.

Contract programmers on the other hand, generally receive their compensation
for a project in cold, hard cash, without any lucrative sidelines in selling
T-shirts with pictures of their face to manage, or concerns over whether
taking on a project for Yahoo will dilute their brand equity or boost their
autobiography sales. It's difficult to see where 10X adds the value in cases
where they're not finding the work. Interview coaching and advice on upping
your rate is not hard to find; any recruiter that _does_ have a position will
offer it without wanting a piece of your existing income.

------
latch
Many companies claim that hiring is a top priority, but do little more than
put up a JD in a couple places. They then complain about shortages.

You need to actively recruit talent, which means understanding what you're
looking for. Building nginx modules? Go through github and see who's built an
nginx module before. Do a google search for "nginx module development" and see
where that leads. Then send out brief but targeted emails to people you
sincerely want to join your team.

There's a ton of developers who aren't actively looking, but _presented_ with
the opportunity, they'll jump. I don't know a single developer who isn't
flattered and intrigued by a sincere cold call for employment from an actual
company (they're pretty easy to filter from agencies)

Second, money and location are a big deal. "We can't find developers" really
means "We can't find developers who want to work for this salary and/or at
this location." I remember not too long ago, our startup had a budget for 10
new developers, which we just couldn't fill. Our CTO and CEO 100% refused to
get 5 developers and pay them 2x. So instead we stayed 10 people short, for
over a year, while "hiring remains a top priority."

TL;DR - If hiring is important, spend the necessary time on it, don't just pay
it lip service.

~~~
Animats
Google, in their growth days, had some interesting methods. One day I was
looking up a topic in proof of correctness with Google, and there was a Google
recruiting ad on it. I was once contacted by a Google recruiter because I'd
been posting on "comp.lang.c++".

~~~
latch
My point exactly. That behavior shouldn't be considered special or google-
esque. It should be business as usual.

~~~
justincormack
Yeah I remember seeing those. But now its just the Google recruiters, who
don't really have any idea what Google does, or what I do.

~~~
Animats
The two who've called me were at the telemarketer level of cluelessness. I
wondered if they really were paid by Google or just working on spec.

The other side of this is tying up America's top brainpower on banal stuff. As
Jeff Hammerbacher of Facebook said, "The best minds of my generation are
thinking about how to make people click ads. That sucks." It's either that or
quantitative finance to make big money. ("Apps" are a zillion people chasing a
market with about 20 big winners.) Two good robotics people I know went to
hedge funds.

------
danso
I've never been a freelance developer so I don't know what my rate would
be...but I would really like to get some insight on what $200+/hr web-
development is like. I mean, what are the expectations versus a $50-developer?

For example, I could probably build in 10 hours a customized, nice-looking
Twitter bootstrap Rails site with Stripe integration and deploy it onto EC2
and set up Capistrano to integrate with whatever existing Github flow they
have...but then when it comes to building the admin...um...developing the
admin from a technical standpoint is non-trivial, but developing it in such a
way that it is hassle free from the client...How exactly does the developer do
that, without extensive consultation time with the client? And what if their
in-house developer (let's pretend they have one who is competent) doesn't have
a workflow like I imagine a good workflow should be?

In other words, I'm having a hard time imagining what a rockstar developer
could singlehandedly create that would be spectacular and would be something
that that mortals can use and maintain on their own...but obviously that's why
I'm not a $200+/hr freelance developer.

~~~
aantix
It's not about the technology. It never has been.

You're number one mission whenever you get a contract is to understand the
business and figure out how you can get them making more money.

That's the secret; you should always be framing your services as an
investment. Demonstrate how you're going to raise their revenues (and do it!)
so that it when it comes time for contract renewal, your worth is easily
demonstrable (you paid X in exchange for Y millions).

~~~
Silhouette
_Demonstrate how you 're going to raise their revenues (and do it!) so that it
when it comes time for contract renewal, your worth is easily demonstrable
(you paid X in exchange for Y millions)._

This is a nice theory, much promoted on HN by a few high profile posters a
while back.

Unfortunately, it doesn't necessarily scale well beyond a team size of 1. This
may or may not be a problem, depending on the kind of work you want to do.

It's also worth noting that if you're going to play that game, you need to be
much more of an all-rounder than just someone with technical skills. This will
suit some people very well, but it's not for everyone.

In short, demonstrating a direct return on investment is a safe and reliable
way to convince clients of your worth if you have the option, but it isn't the
only way.

~~~
dreamfactory2
If your team doesn't add business value greater than the sum of its parts,
it's simply not effective as a team

~~~
Silhouette
There are many ways of adding value. Some are obvious and immediately
observable. Some are subtle and/or only observable over time.

There are also many ways that any organisation with more than one person
contributing could collectively achieve good results, while any given
individual personally made anything from a disproportionately positive to a
negative contribution.

As I said, demonstrating your personal worth through a direct measurement of
your contribution is not necessarily easy with team sizes greater than 1.

~~~
aantix
Many ways to add value, but no one ever argues with the bottom.

If we're discussing $200+/hr consultants, you're going to do yourself a
disservice if you don't find some way of objectively measuring your
contribution.

No one ever argues with increases to the bottom line, so start there.

~~~
Silhouette
Right, but to give one obvious example, you just ruled out a whole industry of
trainers who charge a high day rate for giving courses in specialised fields.
You only know what bringing those people in was worth after your newly trained
team gets better results.

Even then, unless the training is in some convenient sales/marketing field
where the resulting conversions are easy to quantify, you may not be able to
put a dollar amount on the long term value of the knowledge and insights your
people gained from the training for a long time.

As an extreme example, consider the possibility of a one-day training course
for software developers taught by a world class expert for $10K. Maybe one of
your developers learned a new defensive programming technique five hours into
that day, and that technique later prevented a bug that would have cost your
business $1M to rectify. Obviously that training had a very high return on
investment, but how is the trainer supposed to demonstrate that to his next
client?

~~~
dreamfactory2
Sales collateral of very highly-paid trainers should have evidence of value
and a great way to do that is exactly those kind of real examples, which a
highly experienced and effective trainer will have picked up over the years.
Reputation is secondary evidence of value of course, though considerably
weaker. Strong evidence of value is how people can be persuaded that it's a
sweet deal to pay huge amounts to consultants in any field where those
consultants come with a long list of similar organisations they helped.

For the rest of the training market it would come down to a client requirement
for the service, general qualification to do the job, and typical market price
- existing budgets and product pricing kicks in at this point rather than ROI
on specific individuals or teams. We see this in the dev contract market as
well and that's what the article is about - commodity resource vs stars.

tl;dr if you can't demonstrate exceptional value, you will trend towards
commodity.

------
forrestthewoods
Those rates really don't seem all that high. I mean 250 hour * 40 hours/week *
50 weeks year = $500,000. That's kind of a lot. Except then the article itself
mentions employees getting a few million a year in stock from Facebook or
Google.

I feel like there exists a market for getting start-ups launched on the right
foot. Twelve weeks (480 hours) for $1,000,000 with a bonafide rockstar to get
your concept not only up and running but well designed to be carried forward.
Do you guys think people would pay that? If no, how much do you think people
would spend?

If your idea is good and the work is good it would easily be worth it. Of
course proving that you can deliver ahead of time is more than a little
difficult.

~~~
crdb
It depends on your definition of "rockstar" but your pricing appears high.

To share an anecdote: I was having a chat with a HNWI who wanted to "get into
startups" about the cost of launching a product that he was thinking about
(something similar in complexity to OpenTable). He had very high estimates in
mind, something along the lines of what you're talking about and half a year.

I told him it was probably possible to do it much faster by employing
experienced developers at a high hourly rate but whose experience would
drastically cut both mistake time and planning time. He asked me to get him a
quote, so I contacted two guys I knew from the functional programming meetups,
both with PhDs and recently published papers, both with half a decade
experience in a big famous company based in Silicon Valley, both having worked
with each other on consulting projects for years, and they spent a week
drafting a rough, serious quote.

The estimate came to around 25-40x cheaper than what you're talking about, and
two months (part-time, on the side of their research work) to launch + USD
2k/month post launch to maintain it with no new features.

Of course, the HNWI changed his mind (in part due to a co-investor on another
project who objected to the "high" estimate and told him to use free or cheap
fresh grads instead... welcome to the world outside the US) and I profusely
apologised to my contacts for having wasted their time, but it did put an
order of magnitude on the "high quality contracting" idea.

~~~
forrestthewoods
I didn't understand consulting until a post on HN awhile back. It was a
friendly guy who liked to hangout and chat with fellow devs. While visiting a
city, Chicago I believe, he met up with coffee with a guy possibly also from
HN. They talked, went back to the office, and he talked with another employee
for awhile. The guy in question I believe had a background in SEO so he just
kinda shared what he knew for 2 or 3 hours. Then they shook hands and went
their separate ways.

A few weeks later he e-mailed back asking how much he would have paid if that
friendly chat with an official consulting job. The answer was around $10,000.
Yes it was only 2-3 hours of time, but built upon thousands of hours of
experience. And the changes they could immediately implement would generate
more than $10k in increased revenue so it would easily be worth it.

My point here is that it doesn't matter jack shit how many hours are spent on
a project or how cheaply it could be done. What's infinitely more important is
how much money can be made. If you can get more money out than you put in and
putting more money in means you get more out then you put as much in as you
can afford. Now for someone to plop down a million bucks on three months worth
of work means they'd have to be unusually confident in a project's chances of
success. So that number I gave is pretty high. However paying big money to a
seasoned vet to get the ball rolling makes an unbelievable amount of sense.

~~~
jcr
Your recollection of the story is a little off, but it's close. The story you
mentioned was from _5 years_ ago (2009). It was mentioned in a blog post in
20011 [1] and again in a podcast in 2012 [2]. It involved Patrick McKenzie
(a.k.a "patio11" [3]) and Thomas Ptacek (a.k.a "tptacek" [4]). They are two of
the most prolific contributors to HN [5].

Needless to say, times change. At present, Patrick's consulting rate is
somewhere north of $30K a week [6], and dare I say it, I'm sure he's worth
every penny of it for the right companies.

[1] [http://www.kalzumeus.com/2011/07/08/business-
psychology/](http://www.kalzumeus.com/2011/07/08/business-psychology/) [2]
[http://productpeople.tv/2012/12/26/patio11-part2/](http://productpeople.tv/2012/12/26/patio11-part2/)
[3]
[https://news.ycombinator.com/user?id=patio11](https://news.ycombinator.com/user?id=patio11)
[4]
[https://news.ycombinator.com/user?id=tptacek](https://news.ycombinator.com/user?id=tptacek)
[5]
[https://news.ycombinator.com/leaders](https://news.ycombinator.com/leaders)
[6]
[https://news.ycombinator.com/item?id=8574541](https://news.ycombinator.com/item?id=8574541)

~~~
forrestthewoods
I knew it was a prolific HN poster but alas I could not remember who. Given
that the blog post was from 2011 I think that's forgivable! Well, maybe.
Thanks for the links.

------
r0h1n
Playing the devil's advocate here, but why is the concept of free-agent
developers who (a) command huge premiums, and (b) prefer working on short,
intense sprints instead of with one employer, still not here yet?

I'm not saying 10X Management is an example, but why can't individual
programming be valued like, say, acting/singing etc.?

~~~
patio11
Many consultancies work on this model, particularly in specialities where it
is extraordinarily difficult to find anyone qualified or to retain them on W-2
payroll for a year at a time.

Hate to toot my own horn, particularly as I no longer do much consulting, but
if a hypothetical software company said "OK we have a product and it works but
we can't convince our Dev team to build marketing plumbing and they don't know
where to start even if we ask" one could hypothetically have called me up,
gotten advice like "You should probably do lifecycle email", and if you were
incapable of shipping that yourself in two weeks I could fix that for you for
$X0,000.

It works similarly if you need a crypto system validated, etc etc.

~~~
Locke1689
From what I gather (mostly through blog osmosis), you kind of fell into that
career through the experience you had marketing BCC. How would you suggest
someone do this intentionally, and in varying specialties?

That is, how do you decide to specialize in a marketable niche? Sure, if I
already knew the marketing business I could probably worm my way into doing
marketing contracting. Similarly, if I were an expert in cryptography I could
start fielding requests.

What if, however, I'm just a proficient developer qualified in relatively
mainstream technologies. By simple analysis of economic principles, I'm not
highly valued due to the availability of general talent, so I have to
subspecialize in some valuable niche. But how do I choose that specialty ahead
of time? I can always choose an arbitrary specialty, but it's possible the
demand isn't there.

My specialty, for example, may be in compilers, but I have an inkling feeling
that being able to untwist some truly horrific legacy Win32 COM garbage may be
the more lucrative endeavor. How do I test these theories without wasting a
huge amount of time and money?

~~~
patio11
_How do I test these theories without wasting a huge amount of time and
money?_

Take buyers and sellers of technology services out to coffee and ask what they
buy/sell and what they would buy/sell but for the impossibility of finding it
in the market.

For example, you could take me out to coffee. It's no secret what I would tell
you there, since it is practically in 50ft tall fire letters on my blog: When
I was consulting, I made systems which made software companies lots of money,
most typically by applying engineering tactics to marketing/sales ends for
them. The prototypical deliverable was "Your SaaS app now sends a lifecycle
email campaign." My sweet-spot client is a software company with $10 million
to $50 million a year in annual sales. (There exist hundreds of these, most of
whom will never even be mentioned on HN, in any context.) I am not
particularly a supergenius with copywriting -- I just apply a bit of formula,
horse sense, and personal experience with experimentation, and it works much
of the time. I picked it up with a bit of reading and a lot of doing. Do I
think that the average HNer could do this 6 weeks after having announced an
intention to seriously start doing this? Yes. Can my average consulting client
find someone to do this full-time for them? No, not for love or money. Do I
think this niche would support a consultancy full-time? Yes. This _tiny little
sliver of the global economy_ would support ten clones of my consultancy,
selling 30 weeks a year, without coming _close_ to satisfying market demand
for this service.

Price is a signal that the market generates to cue potential service providers
that there exists unsatisfied demand for a service. The fact that the market
does not clear in e.g. marketing technology or cryptosystem verification or
what have you, even at rates in the $20k+ a week region, should signal "Well,
that would be a lucrative practice to be in."

~~~
tom_b
It boggles my mind that you say the average HNer could do this in 6 weeks. Not
in a "I don't believe you sense" but rather in a "that's so outside of my
mindset that it doesn't compute."

And this is coming from someone who remembers reading stuff from you on Joel's
Business of Software forums, so it's not like I haven't seen the full path
from BCC to consulting to AppointmentReminder . . .

Personally, I fall into the trap of thinking, oh, I couldn't do that unless I
master <insert obscure tech at the Knuth level here>. Which is clearly just
not the differentiating skill here . . .

~~~
tptacek
Are you a younger adult? One thing that may surprise you with a decade or so
behind you is how much of the big stuff was only ever a few solid weeks of
pushing away.

Building and running a company worth lots of money when we sold it, yes, took
8 years. But getting the company into the right trajectory to do that --- fits
and starts, blind alleys aside --- was nothing like that much work.

Some things take "10,000 hours" to get good at, but a lot of really valuable
stuff takes more like 100.

~~~
tom_b
I'm actually older than most HN'ers. But a bit of a "late-bloomer" to being
paid as a hacker.

Just didn't ever know that entrepreneurship was an actual option for people.
Coming from a risk-averse and somewhat fatalistic family/peer group wrt
work/career control hasn't helped.

One of the best parts of HN is actually reading contributions from people like
you and Patrick that break down what are frankly self-limiting thought
patterns.

------
tptacek
_“Ballpark, for this role you’re talking a hundred and fifty to two hundred
and fifty dollars an hour.”_

So, standard market rate?

~~~
trose
Is this actually common? I'm just curious. I have three years experience out
of school and assumed that consulting rates were more like $50-$100/hr

~~~
tptacek
No, 50-100/hr describes unloaded headcount cost for _salaried_ senior
developers (and/or developers at extremely rich companies) in the bay area.

The rates those agents were talking about seem to me to be approximately what
every high-end iOS dev shop charges.

Another ballpark estimator: that bill rate wasn't even in the ballpark of my
(more specialized, of course) bill rate for the last two years I was
consulting. It's nuts out there right now.

------
ap22213
It's about time that high-end coders are getting the prices that they deserve.
Many skilled coders aren't skilled in the art of negotiation, and that ends up
bringing down the market price for everyone. I've seen far too many highly-
talented people getting roped into five-figure salaries, when they'd be more
appropriately priced in the six or even seven figures.

------
gregjor
10X client (freelancer) here. I'm the guy living in Thailand mentioned in the
article. Let me add to a few of the comments here. I am not writing on behalf
of 10X, these are my own opinions.

 _I would think that people hiring would like potential hires to be
unrepresented. An un-represented developer is going to be cheaper.
(chrisbennet)_

Price is just one factor. If I charge twice as much as someone else but I can
solve the customer's problem in one-fourth the time, the customer saves money.
Customers are usually focused on solving business problems within their budget
and schedule, not just on hourly rates.

 _It 's not about the technology. It never has been. You're number one mission
whenever you get a contract is to understand the business and figure out how
you can get them making more money. (aantix)_

Almost exactly right. It's not always about making more money, though; it may
just be to figure out how to make their software do what it is supposed to do.
Too many job postings and too many résumés list technologies without
addressing business needs or experience. For me, 10X has been good at getting
both sides to talk about and describe business requirements and setting clear
deliverables and goals.

 _Boy. As someone who actually runs a contracting + project agency, that looks
to be of an approximately similar size as 10x (at least before this was
published), this was lifting-cars-painful to read - not just because they have
PR and I don 't, but because they (Solomon and Blumberg) _are the
inefficiencies they are pretending to eliminate_. (scottru)_

The New Yorker article was not an exhaustive description of how 10X works or
who does what. Most of my interaction with 10X is with Michael Solomon, so to
say he isn't adding any value is just not understanding what he does. Everyone
at 10X is adding value for me, and the several 10X customers I work for or
have worked for have without exception said only good things about 10X
Management. In my experience most projects go wrong due to miscommunication
and conflicting expectations. 10X, and specifically Michael, are good at
heading those things off before they become problems, and working out
solutions that are acceptable to both sides.

Yes, 10X has had some great PR. No, they aren't the only good freelancer
agency or consulting firm. I've worked for quite a few placement/consulting
firms and with many recruiters in my career (35+ years) and for the work I do
now and the life I want to live 10X is a great fit. It may not be the right
fit for every client (freelancer) or customer, and it may not be the way to go
if you want to try to make millions at a startup.

A few years ago I decided to concentrate on stalled projects and broken code,
the almost-working or somewhat broken stuff left behind when developers fall
out with their customer and stop answering their emails. My customers are
mostly smaller businesses and non-profits, without the need or resources for
their own IT staff, and without the sex appeal of Facebook or Twitter. They
have real business problems to solve, they can't throw everything away and
start over, and they aren't qualified to recruit and hire technical staff. I
found plenty of this work on my own, but when I decided to travel and
freelance remotely I worried about finding customers and easing their fears
about hiring someone living overseas. 10X has been a good fit for me -- they
bring in plenty of customers, they have clients with every technical skill you
can think of when I need help, and they are a real US-based company that can
assure customers I will deliver no matter where I happen to be. They have also
negotiated better rates and more useful contracts that I was doing on my own.

~~~
300bps
The thing that shocked me from the article was when they said:

 _you’re talking a hundred and fifty to two hundred and fifty dollars an hour_

Do "rockstar programmers" really work so cheaply? Crappy attorneys make that
much and good attorneys generally start their billing around $350 per hour.

I don't have an agent and even though I work full time at an investment bank,
I find all the side programming work I want @ $150-$200 per hour. In the past
four years I've averaged 18 hours per week from side work.

Even I'm moving away from hourly pricing to value based pricing though. I
would think this is where an agent would provide the most value. Evaluate the
project, determine a the project's NPV and then base the pricing on a
percentage of the NPV.

Envisioning agents like outlined in the article - they seem little different
than high-end technology shops that provide bodies.

~~~
dasil003
> _Do "rockstar programmers" really work so cheaply?_

Absolutely. You can find amazing programmers even in San Francisco for <
$150/hr.

But the thing is that software development is a market for lemons in the worst
sense. In fact I can't think of a hiring market that is more opaque. You have
clients who are technologically illiterate, and then you have massive Dunning-
Kruger effect from the fact that knowing how to FTP a file to a Linux server
made everyone worship them as a computer "genius" from a young age. Then you
have the fact that the quality of the deliverable is inherently hard to
measure. If the expert software craftsman builds something that is rock solid
and scalable for 10 years, it might not be appreciated as much as the
spaghetti-code time bomb that a whiz kid drops on their plate in half the time
but ends up requiring a complete rewrite.

Heck, even after being a professional web developer for 15 years, all I can
say about myself is that I am better than average, but only because I've
worked with hundreds of developers and seen that the average is not great. I
have no idea really how much less valuable I am than the elites. I even
suspect that context plays a big role in the relative merits of different
developers.

It sounds like you're moving up the food chain in terms of being able to
deliver value. Expert programmers who also understand business are thin on the
ground and exponentially more valuable than either one of those skillsets in
isolation. However the thing to remember is that most businesses aren't
throwing the kind of cash that they can pay a programmer $250/hr. Lawyers can
make that much because of the nature of the work (ie. time-limited, risk
mitigation), but software people? Investment banking is one of the few places
where people won't balk at those rates. There are many other profitable
businesses that could _afford_ it, _if_ you can prove your ROI to them, but
those industries (manufacturing, etc) are much further behind on the curve
than ones where the competitive advantage of good software is already well
understood (finance, tech).

~~~
antjanus
I think the reason why rates fluctuate so much is that developers don't know
their worth (positively or negatively). It's nothing you can truly _measure_.
There are shoddy developers with $150 rate and great developers with a $70
rate. In all kinds of different cities and situations.

Sure, you can throw in a collection of achievements, but then you could just
as easily end up with that whiz kid and spaghetti code while your best
developer works under NDAs and has nothing to show for it.

So how do you even value yourself? You say that you're better than average but
how do you know that? Are you faster? Better at architecting apps? Is it the
business side or communications?

I honestly don't know about myself but balk at the idea of trying to find out
and push my rate at that range. Either I'd be positively surprised (and
subsequently depressed because high-paying full-time work is difficult to
find) or negatively surprised...which would just suck.

~~~
peteretep

        > I think the reason why rates fluctuate so much is that
        > developers don't know their worth (positively or
        > negatively). It's nothing you can truly measure. There
        > are shoddy developers with $150 rate and great
        > developers with a $70 rate. In all kinds of different
        > cities and situations.
    

Yep. Which is why only an insane person would allow open salary discussion in
a team they were managing, let alone open-salary policies some places have.

~~~
lmm
Huh? Conclusion does not follow from premises, at all.

------
fecak
This conversation about agents has come up here several times. The 'agent'
model referred to in this article is not so different from what run-of-the-
mill recruiters do for their clients. Client calls saying they need to hire
someone, and the recruiter provides a candidate (often an independent
consultant). If candidate is hired, recruiter marks up consultant's rate and
makes a margin. That margin is the agent/recruiter's take - so the consultant
is paying for the broker's service regardless of whether that broker calls
itself an agent or recruiter.

This isn't new, but using the term 'agent' makes it sound more appealing to
all sides. The consultant can say "I have an agent", and the hiring company
feels that the level of talent should be higher from an agency than from your
everyday recruiting firm. If the talent is vetted better, it could be.

Where the concept of agents gets much more interesting is when discussing
those in salaried/permanent hire situations. Consultants are generally willing
to cede 15% or so of rate in order to use a broker/agent/recruiter's services
to find gigs. But will someone seeking a salaried employment role (a 150K
software engineering job) pay an agent 5%/10%/15% of their salary in order to
find a permanent position?

Because most of the tech population works in salaried positions, this is the
real question. Independent consultants make up a relatively small portion of
the industry, yet this 'agent' conversation really only applies to them at
this point.

I like the agent concept as it aligns the incentives of the recruiter/agent
and candidate much more clearly, as opposed to the current recruiter model
where the recruiter is typically considered to be more aligned with the hiring
firm. (The real estate agent argument comes up here).

In this case, the 'agent' model is mostly just a rebranding of what we
currently have in place. If this ever hit the permanent/salaried job market,
that will be a bigger story.

~~~
michaelochurch
_The 'agent' model referred to in this article is not so different from what
run-of-the-mill recruiters do for their clients. Client calls saying they need
to hire someone, and the recruiter provides a candidate (often an independent
consultant). If candidate is hired, recruiter marks up consultant's rate and
makes a margin. That margin is the agent/recruiter's take - so the consultant
is paying for the broker's service regardless of whether that broker calls
itself an agent or recruiter._

That may be true of this case, but I think that the agent relationship, if
done properly, is long-term and involves a lot more trust than exists between
a job-searcher and a recruiter.

If you get fired (let's say it's not your fault but potentially embarrassing,
as most terminations are) and you have rock-solid trust in your agent, you can
tell him and he'll tell you what to do next, and he'll know which companies
you should be truthful with and which ones you should hide your past around.
With a recruiter? You're not going to tell him that you were fired, because
you know that he's paid by the employer's side. He might not even call you
back if you admit to it.

The difference between agents and recruiters is the amount of trust rendered
to each. If you have a good agent, you can share your weaknesses and
embarrassments and he'll know how to work around them. On the other hand,
you're not going to tell a third-party headhunter about such things, because
you want him to connect you with his best freight. Your agent can help you
with the reputation-management work, but a recruiter is generally going to
pipe everything you say back to his clients (i.e. prospective employers).

~~~
fecak
I think this is still a matter of terminology unless there are legal
agreements of exclusivity in place. The recruiter/job seeker relationship can
also be long-term (though I agree it usually isn't).

I've been in recruiting for over 15 years, and some people that I first
interacted with around 98-2001 didn't result in any placement ($) for me until
the past few years.

Part of the reason this type of experience is rare is because most recruiters
don't have much of a specialty, so if they get a position seeking a specific
skill set they may be unlikely to get that same mix again. Therefore, the
candidate becomes somewhat 'disposable' and can't be worked with for future
searches. If you have a specialty, which I've had for years, almost all
candidates may be a fit for a future position.

Your example about termination could be valid in some cases, but a recruiter
who treats candidates as an agent will get the same level of trust. An agent
isn't likely to expose that info - whether a recruiter exposes all potentially
negative information probably varies by individual.

I think the difference between recruiters and agents is non-existent when we
are referring to solid 3rd party recruiters (good clients, excellent
reputation, valuable relationships), except for in rare circumstances like you
mention (hiding information about your talent).

I would love to see more of an agent mentality for recruiters. But someone has
to pay for that, and the lion's share of work in tech is done by salaried
employees and not consultants. Consultants know and accept that their $200/hr
rate will get eaten into a bit if they use an agent.

Will someone making 200K a year pay a fee to an agent during a job search? How
much should that representation cost?

------
skrebbel
Sounds like 10x Management hired a PR firm.

~~~
msoad
Not only "a PR firm", in fact many PR firms:

[http://boss.blogs.nytimes.com/2014/09/08/representing-
progra...](http://boss.blogs.nytimes.com/2014/09/08/representing-programmers-
as-if-they-were-celebrities/)

[http://abc7news.com/archive/9075316/](http://abc7news.com/archive/9075316/)

And links to many more in their website:

[http://www.10xmanagement.com/](http://www.10xmanagement.com/)

~~~
x0xMaximus
As far as I know they haven't hired anyone, from personal experiences most of
these leads came from emails asking them what they we're up to... 10x
certainly doesn't employ a full time PR person.

M

~~~
altay
(Founder of 10x here.)

Max* is right... we have spent literally _zero_ dollars on PR. The New Yorker
approached us for this article. (As did Mashable for their piece last week
which interviewed a bunch of 10xers: [http://mashable.com/2014/11/09/digital-
nomads/](http://mashable.com/2014/11/09/digital-nomads/) .)

Frankly, it makes it even more exciting to me, because it means this is an
actual trend, rather than a manufactured one.

* Yes, the parent is Max Nanis from the article. The article failed to mention that he also currently has a sculpture in the Smithsonian. :)

~~~
skrebbel
I admit that that's pretty impressive indeed. Good for you, and thanks for
replying!

------
eroo
>>"Enter the agents. Solomon describes himself as an equalizer. In creative
industries, he told me, 'there’s always this pattern that the creatives start
out at the bottom of the food chain and are exploited.'"

Even recognizing that the current hiring model has major inefficiencies, it's
hard to not see this as awfully ironic.

>>"part of our goal is to de-risk freelancing and make it more viable. [...]
She also appreciated that they had been vetted for interpersonal skills. At
one point, they had to speak directly with the health-care company’s New York
offices. 'They were good,' she said. 'And it wasn’t embarrassing to let them
out of their cave.'"

The value proposition of the agent, pushing both technical and personal
professionalism of candidates, should be addressable through a reputational
system that doesn't take 15% and require ad hoc negotiations. It would,
however, have to be complex enough to address how well certain talent is at
addressing specific projects. How much of that is a lack of proper metrics and
how much is the hiring party's inability to frame their needs?

~~~
altay
I'm with you, it's certainly not the most elegant solution to the problem, but
we're basically Doing Things That Don't Scale.
([http://paulgraham.com/ds.html](http://paulgraham.com/ds.html))

As we grow, we identify bottlenecks, and we write software to automate those
processes; I imagine we're iterating towards something like what you're
envisioning. (At least internally, if not externally.)

But your last couple sentences got at an important point... as much as I'd
like to see this problem solved with software, there are still a lot of
unavoidable, messy, people-related issues that, currently, still require
manual finesse.

------
_pmf_
Introducing a clueless additional middleman rarely solves a problems.

------
hkarthik
I find this agency model for hiring to be troubling because it's turning
software into a hit-driven industry like Music, Movies, or Video Games.

Hire a few rockstars, belt out a hit with hockey stick growth, watch it flame
out or lose interest over time, and then watch the rockstars move onto their
next project.

What about the founders who put their heart and souls into building a real
sustainable business?

What about the customers who took the chance on an unknown solution and may
have become dependent on it?

What about the developers that might have worked with the rockstars, but are
less interested in moving on and more interested in continuing to build great
products?

I can see why a lot of talented folks got jaded by this industry in the last
bubble. And I think it's clearly happening again.

~~~
phamilton
For founders it's simple. Cash out a few million in the A or B round. Flame
out. Repeat. They are well taken care of in today's model.

~~~
joezydeco
And the developers get squat. So if they want their cash up front, more power
to them.

------
scottru
Boy. As someone who actually runs a contracting + project agency, that looks
to be of an approximately similar size as 10x (at least before this was
published), this was lifting-cars-painful to read - not just because they have
PR and I don't, but because they (Solomon and Blumberg) _are the
inefficiencies they are pretending to eliminate_.

Let's take a few parts of the article:

>>"The three partners have separate roles. Blumberg handles his and Solomon’s
eleven remaining music and entertainment clients, and takes care of back-
office matters: “Accounting, invoicing, collection, payouts. Everything that’s
the bane of most people’s existence.” Guvench vets new talent. Potential
clients have to fill out a questionnaire that one programmer compared to “the
most complicated dating Web site ever.” Then Guvench and Solomon conduct
interviews, to screen for communication skills. (I heard one potential client
say, during a meeting in Solomon’s office, “We don’t want people who just
write code and drool.”) Guvench also does code reviews—testing Web sites that
aspiring clients have built, and reviewing the programs they’ve written."

So... \--Blumberg isn't working on the business at all; \--Solomon's work
isn't even described (except "conducting interviews for communication
skills").

So there's one person, Guvench, an ex-engineer, who's actually doing the
technical vetting - i.e. 100% of the value so far is coming from one guy.

OK, then maybe the others are selling? Nope.

>>"10x technologists are working with a variety of customers: Live Nation, a
virtual-reality startup, and an N.B.A. player who has an idea for a social-
messaging app. Solomon admitted, however, that this list is somewhat random—it
consists mostly of people who found 10x through Google, or whom he or his
clients know personally. He has hired a salesman, to pitch 10x to companies."

OK, so you're closing PR-driven leads and your friends in the entertainment
business? That's your sales pipeline?

I know a number of agencies with two or three partners running the
organization. I don't know a single one of those where there isn't somebody
pounding the pavement, hustling, finding clients - and who know the difference
between a long-term partner and a sports star with an "idea for a social-
messaging app." (We _all_ hear about those.)

The other value they're talking about is in the negotiation process. Hey, I'm
totally willing to believe that a many-year entertainment agent is a better
negotiator than I am, at least in the first-principles department. But this is
not some magic skill in what is generally a well-defined and competitive
market, and of course you're better at it when you deeply understand the
technology and market, the BATNA for the client, etc. Those of us who actually
understand the very small markets that one job description might meet are, in
fact, pretty darned good at it too. For that matter, I've never told an
engineer that you should work with us because we can get you a better deal
than you can get for yourself, and if you're dealing with a client who
understands the market (which said NBA player may not), that's pure hokum.
(P.S. plenty of people on HN provide that coaching for free all day long.)

It's ok that the author doesn't really understand this market, and so the
competitors she mentions aren't really competitors at all - they're all
focused on full-time hiring. I guess it's also OK that the New Yorker's fact-
checking department didn't discover that there's no such programming language
as "THP" \- that should be "PHP." (Maybe it's just a typo.)

But to let the reader believe that this approach represents the best this
market has to offer - well, I guess that's just really, really great PR. Back
to work.

(Added later: I realized I commented on these folks 1.5 years ago at
[https://news.ycombinator.com/item?id=5527610](https://news.ycombinator.com/item?id=5527610).
I was feeling nicer then? Maybe? It looks like the participant in that HN
thread was the partner who's clearly adding value.)

~~~
morgante
> there's no such programming language as "THP" \- that should be "PHP."

I wondered what sort of esoteric programming language THP must be for me to
have never heard of it...

It does seem _very_ odd that they don't seem to have much of a sales focus. As
a developer who occasionally contracts, that's my #1 problem. I don't need
help negotiating or "invoicing" (software's great at that). I just need a
steady flow of high quality clients. I'd happily give up 15% of my earnings if
it meant I could stop playing extrovert by going to meetups and conferences.

Bottom line: find out who their PR firm is. They're worth every penny.

~~~
praptak
Wait, you never heard of THP?! It's virtually mandatory for pink box testing:
[http://neilbowers.wordpress.com/2008/08/11/pink-box-
testing/](http://neilbowers.wordpress.com/2008/08/11/pink-box-testing/)

------
mathattack
Can you really get rockstars like that for $150-$250/hour including the
agent's fee?

How are these agents any different than other contracting firms, other than
their supposed access to the best?

~~~
skrebbel
The difference is that these guys get feature in a Newyorker article.

~~~
x0xMaximus
Michael (& Altay) continues to do a lot of me to excel in my other life goals.
They provide advice, outlets and scheduling (via assistant) for me to take my
art and science career ahead just as much as my software. If they weren't
interested in my best interest of being happy on my own standards above all
else then I wouldn't be with them for ~2yrs now.

I want to also note here that I leverage 10x to do less recruitment for jobs
and more with purely figuring out which are the best opportunities to pursue
at that time. Personally speaking, I want to spend as little time on the
planning / business side of my tech career as possible so I can use that time
to focus on my other pursuits. I trust (& they've proven) to be able to make
the most advantageous choices for me professionally with long term goals in
mind.

M

------
3rd3
The rockstar metaphor always strikes me as unprofessional because it seems so
incompatible with team work. Why aren’t there any rockstars in other areas of
engineering?

~~~
zimpenfish
It's even sillier when you consider that the average rockstar turns up after
many hours of a large team of people setting up a precise controlled
environment, does maybe 2 hours of work, then buggers off in luxury whilst the
team dismantle, pack, and ship the environment.

A true rockstar developer would change one or two lines of code in a finished
project (created by a team) immediately before it was committed then move onto
the next project.

------
sireat
When you read the examples given of super programming prowess such as making a
function for repetitive tasks and bunching calls to db it gives the illusion
that that is all it takes.

Hey I do all these best practices, doesn't everybody else?

Then you return back to reality of being a lazy 0.1xer and realize that there
is a great deal unwritten and glossed over in these kind of general interest
pieces.

------
hackdays
We are embarking on a reverse negotiation model for startups as well. Feel
free to signup [http://250ksalary.com](http://250ksalary.com)

There are lots of areas in life where the cost of acquiring a quality
product/service is clearly communicated. Salaries haven't been one of them,
which might change.

Don't confuse upfront salary negotiations with lack of motivation etc. This
just brings more quality candidates to job markets, saves everyone a lot of
time and lets you focus on other important parts of hiring process.

------
prairiedogg
"Todd McKinnon, the C.E.O. of Okta, a cloud-computing company, told me that
top engineers are worth way more than what we’re paying them.'"

Relieved to hear that Todd!

------
ExpiredLink
The '10x' super star and other myths debunked:

[https://leanpub.com/leprechauns/read](https://leanpub.com/leprechauns/read)

~~~
ExpiredLink
> _Professional talent does vary, but there is not a shred of evidence that
> the best professional developers are an order of magnitude more productive
> than median developers at any timescale, much less on a meaningful timescale
> such as that of a product release cycle. There is abundant evidence that
> this is not the case_

[http://www.knowing.net/index.php/2011/12/09/forbes-is-
wrong-...](http://www.knowing.net/index.php/2011/12/09/forbes-is-wrong-about-
developernomics/)

> _The Myth of the Rockstar Programmer_

[http://www.hanselman.com/blog/TheMythOfTheRockstarProgrammer...](http://www.hanselman.com/blog/TheMythOfTheRockstarProgrammer.aspx)

~~~
spacecowboy_lon
Depends on the suitation when I worled for BT another devloper and I developed
in a month in a RAD/DSDM web project project what another part of the biz had
quoted 2 years to develop.

But we did have a depty CEO (Bruce Bond) as a sponsor so stuff got done
quickly.

I reccon in my entire period working at BT that month was most prodcutive -
and thats including the time I spent a coupel of days sorting out a BACS
trasfer that netted 3/4 mill.

------
dreamweapon
Hasn't the whole 10x myth been largely discredited, for some time now? How are
we to take a company draws its business plan from it seriously?

~~~
mynameishere
Well, since it's ultimately based on the fact that we evolved with 10 fingers
and 10 toes, it's not meant to be taken literally. In fact, some programmers
are effectively worth infinitely more than the average. The average programmer
isn't even a fraction of Ken Thompson, for instance.

------
stuaxo
In the US are most jobs offered directly ?

In the UK it's all pretty much through agencies ... agents vary immensly, at
the top end they can be good, more often they don't know about the technology
they are recruiting for, and about 1 in 5 times you will get a bad one that
will do things like lie about the rate.

~~~
talmand
It varies.

In the past I have worked with agencies and directly with the company for
different positions. Many companies will specifically state in their job
postings they don't want candidates from agencies. It's kind of a mixed bag
that I feel, in general, hurts everybody involved in some way.

------
einrealist
How is the rockstar being evaluated? I mean, if the rockstar sucked at two
clients before, is it still 250/hr for the next client, because he co-authored
X? Or is the 100% success rate guaranteed in the contract? It is like reading
about a homeopathy product.

~~~
altay
No, we're constantly evaluating people during and after each project.
Thankfully we've only had to drop someone in one situation, but we're not
afraid to do that if necessary to keep the quality high.

Also thankfully, the people we rep tend to bring their A-game to projects
because they understand that it's not just their reputation on the line...
they're also representing 10x and all of the other consultants that 10x
represents.

~~~
einrealist
Thanks. I am biased, because I work as a consultant. I always bring my A-game
to my clients, too. But if I ask for 250/hr, my client's procurement will just
laugh and close the door. Well, there were some exceptions, when clients were
really in need and I was the only person applicable to solve their situation.
But that's rarely the case in longer assignments. Usually, those high rates
are demanded by specialists, who are hired for 1-2 weeks of a critical product
integration phase.

In my experience, there is no guarantee that an A-grade technician will
perform well in any environment. There are so many (not to say endless)
factors, which makes it very difficult to value the performance objectively.
So unless you have a very good monitoring in place to monitor your client's
satisfaction and be very transparent about it to all clients, I tend to claim
that you profit from the "Chivas Regal Effect". And I doubt, that your track
record of successful time & material engagements really exceeds those of other
firms (e.g. Thoughtworks).

From another perspective, you do a great job. Because it is time for many
companies to value their staff differently. There are so many IT departments
which have not changed much since 20 years.

------
mgkimsal
I've been predicting this sort of approach would happen for a while now, and
glad to see it taking shape. I would like to see it more prevalent, but living
in a somewhat less business-focused area, this approach may not trickle down
here for several years.

------
yoshiokatsuneo
How about finding out from TopCoder, HackerRank, or any coding challengers ?

------
penprog
This is a parody right?

~~~
floody-berry
Going off the comments here, "pretentious, over-priced twat" is quite real and
worth being.

------
0800899g
great comment section i must say

------
michaelochurch
_Sam Altman, of Y Combinator, said that, in the small world of Silicon Valley,
the very idea of talent agents presents a “negative-selection problem”: “The
actual 10x engineers don’t need or want an agent; people quickly discover
they’re great, and they end up picking where (and especially with whom) they
want to work. In my limited experience, the engineers that get agents are
bad.”_

That may be true now, but programming has a _huge_ reputation management
component. Negotiation isn't hard to learn, but it's always better to have an
advocate than to negotiate for yourself (note: lawyers retain other lawyers)
and detecting trends in technologies and finding work that helps a
programmer's career is a full-time job in its own right.

 _By many measures, the star system didn’t work that well for Hollywood: it
made moviemaking more expensive, which made studios more risk-averse, which
led to inferior creative projects. And programmers are not movie stars—not
yet, anyway. “Movie stars have their own brands,” McKinnon, the Okta C.E.O.,
said. “People will go to see a movie just because it has Tom Cruise in it. But
programmers don’t really have that. No one’s going to pay for a product just
because James Gosling built it.” (Gosling is one of the inventors of Java.)
“Well, geeks like me will. But most people won’t. They pay for a service.”_

In Hollywood and software both, value delivered is multiplicative rather than
additive. A good actor in the lead role might add 10% to revenue. If it's
going to be a $5 million film, that's only $500,000. If it's going to be a
$250 million film, that's huge: now we're talking about $25 million. Of
course, many of these multiplicative variables are latent and unknown until
the thing's actually released.

Because of this, no one knows what "the base" is, or who contributed what, and
there's wide room for negotiation.

------
sort3d
Who would hire a firm called 10x (two timers?)

------
rajacombinator
That's some lolworthy PR right there. The "UX designer for Apple's iCloud"???
These headhunters must have no idea how stupid that sounds to anyone who is
actually in our industry.

~~~
briandear
I am not sure I understand. iCloud.com does have a UX, and a nice one at that.

