
Ask HN: Why is it difficult to achieve a FAANG-level salary while self-employed? - lokifancio
As a software engineer at a FAANG company, it is easy to earn $200k to $300k with just a few years of experience. At the same time, it is non-trivial to get to a similar level of salary while self-employed.<p>My assumption would be that a company always has to pay engineers less than the value they generate. How is it then that a FAANG-engineer would struggle to achieve a similar salary on his own?
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rogerkirkness
If you consider the work output of an engineer to be a proxy for value, then
working for a machine that has extensive and significant capability for
distributing value will result in more value creation (for you and them) than
working for yourself would. If what you are building impacts 1B people who are
paying in some way for what is being created, the value creation is way
higher. The same applies to anything, more distribution power means more
potential value creation and more value created. In a sense, you're more
useful to a FAANG than you are alone.

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buboard
Thats not all. FAANG companies also have higher revenue per user than
competitors. Network effects and all

[https://www.cnbc.com/2019/11/01/facebook-towers-over-
rivals-...](https://www.cnbc.com/2019/11/01/facebook-towers-over-rivals-in-
the-critical-metric-of-revenue-per-user.html)

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WheelsAtLarge
One reason is leverage. Large company engineers are able to focus more on the
work they do and let the rest of the company deal with the other stuff. Also,
bigger companies have lots more work to do so the engineers can focus on only
a few things.

Think about it in these terms; a custom car maker can only make a few cars but
a factory can make so many more at a lower cost and higher total profit simply
because of the number of cars they can make.

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byoung2
That's a great point...working on your own (e.g. as a freelance engineer) you
will spend a nontrivial amount of time on advertising, billing, etc., that
cuts into billable time.

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kohanz
> it is easy to earn $200k to $300k with just a few years of experience

I think this part shows that whether it's easier to make more as an employee
or self-employed is highly regional. In large, competitive tech centers, where
FAANG companies are, the demand and competition for talent is high and fierce,
driving salaries significantly higher than what you might normally expect. The
cost of living in such places also tends to be astronomical.

In other places, say medium-sized cities that are not known as tech centers,
that dynamic doesn't exist. In my experience, this means that the income you
can achieve as a self-employed (and often remote) software engineer far
exceeds the general salary "ceiling" of that local region (and I'm talking
about North America here, not far-off places). So you may not quite achieve
FAANG level compensation (although I'm sure some do), but relative to the
cost-of-living you're doing quite well if not better.

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throwawayy2018
I think your assumption is wrong.

Making $200-300k as a self-employed software engineer requires a completely
different skillset than getting and maintaining a job at a FAANG. The roles
have very little carry over.

I made ~$400k last year (in cash) as a self-employed engineer. I work maybe 20
hours a week. I would hardly say that getting here was non trivial, but I'd
hardly say it's trivial to get a job at a FAANG either.

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rafaelm
That's pretty impressive! Can you elaborate some more in what you do and how
you got there? I imagine you don't want to give too many specifics, but I'm
just curious.

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al2o3cr

        My assumption would be that a company always has to pay engineers
        less than the value they generate.
    

For FAANG companies, I'd guess that a nonzero amount of that value is "keep
this person from contributing at our competitors".

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jppope
Great points being made. There are other considerations though too.

One example, that there are only so many engineers at that skill level and
employee churn is high at FAANG companies - so paying a premium for talent
makes sense since money isn't an issue and the engineers leave to go elsewhere
after a brief stint getting FAANG on their resume. Higher salaries keep the
recruiting funnels full, and allow FAANG companies to keep a high level of
talent

Another important aspect is competition. Sometimes its not just important to
get talent, but also important that your competition doesn't get talent.

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kleer001
In addition to all the other good answers here.

Economies of scale:

[https://www.investopedia.com/terms/e/economiesofscale.asp](https://www.investopedia.com/terms/e/economiesofscale.asp)

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anigbrowl
Because alone you can't leverage a network effect. If you decided to start a
new venture and persuaded 9 colleagues to join you, you'd probably make more
than 10x the income.

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lokifancio
It is hard for me to imagine how ten engineers would easily get a new venture
to $3M yearly revenue within a short timespan.

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anigbrowl
That would be a very lucky outcome, I agree. But it's not so hard to imagine
that 10 engineers could produce something that looked impressive enough to
investors to throw $25 million at the idea and tell them to pay themselves $3m
a year and hire 20 more at a somewhat lesser sum, in the expectation that they
would be very profitable a few years later.

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ioierters
It’s not.

It just depends on who your clients are. Are your clients FAANG-level
companies or SMBs?

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buboard
Economies of scale due to monopolistic domination of markets.

The question is how to fix this

