
How a Tech Billionaire Created Two Fortunes and a Software Sweatshop - tomohawk
https://www.forbes.com/sites/nathanvardi/2018/11/19/how-a-mysterious-tech-billionaire-created-two-fortunesand-a-global-software-sweatshop/#4e6d77766cff
======
arbuge
"His workers must agree to install spyware on their computers so Crossover’s
productivity team can track the number of times they click their mouse or
stroke their keyboard. The tracking software takes screenshots every ten
minutes and, in some cases, snaps photos from PC webcams."

If they really believe they can measure programming ability by the number of
times their workers are clicking things, I'd give a wide berth to their
software products.

~~~
geofft
They're hiring the software equivalent of Subway sandwich artists, not chefs
at two-Michelin-star restaurants. Sure, both jobs involve placing cheese on
top of bread. But in one of them the goal is to do it repeatedly and reliably,
not creatively or innovatively.

~~~
neednewacct
As a former cook in one and two Michelin star restaurants, I can assure you I
move 10X faster than a Subway sandwich artist. I make 10X as many moves with
precision. A single mistake can make the whole flow go to crap. Moreover, I
can continuously track the temperature of upwards of 100 pieces of different
types of meat and fowl, 5 or 6 venison loins, 15 veal chops, 25 pieces of
filet, 25 pieces of rack of lamb, ect. I can do that with the optimal rest
period before the meat touches the plate. Another place I was leading the fish
station. We would plate 40 scallops dishes and 30 of the sea bass dishes at a
time with a team of 3. ([https://www.foodnut.com/i/Picasso-Las-Vegas/Picasso-
Las-Vega...](https://www.foodnut.com/i/Picasso-Las-Vegas/Picasso-Las-Vegas-
Sea-Bass.jpg)) The cook who did this didn't get the correct angles on the
cauliflower quenelles -- so far from perfection.

I write software now. I helped open that kitchen. The first couple months is
engineering, how to get organized to plate 90 quenelles in 4 or 5 minutes
under a heat lamp. Writing software is just like engineering that kitchen
everyday all day, month after month. It's not about creativity or innovation
with food. It's about creativity and innovation with solving engineering
problems.

~~~
akhilcacharya
I'm consistently amazed by the diversity of folks that post on HN. It's why I
keep coming back!

~~~
sibeliuss
same. Great response A+

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sologoub
“His father, Gregory, worked directly under legendary GE executive Jack Welch,
and the Liemandts vacationed with the Welches. After his father left GE to be
CEO of a mainframe software company in Dallas in 1983, Liemandt began
programming but also took a strong interest in entrepreneurship, frequently
reading the business plans his father brought home. As a Stanford economics
major, he was determined to create the kind of business that either Jack Welch
or his father would want to buy.

His obsession with sales efficiency spawned Trilogy, and in 1990, at age 21,
he defied his parents’ wishes and dropped out of Stanford to build his
software company.

Six years later his sales were some $120 million and he was on the cover of
Forbes.“

That’s a pretty remarkable insight that’s tough to illustrate without
including someone as venerable as Jack Welch. It’s the knowledge of what’s
possible and how things are already being done that lends an amazing edge to
talented/smart people born to the right circumstances. The cognitive leap that
you have to make without this knowledge frequently leads people to over-
estimate complexity and excellence you’d have to compete against. This first
hand knowledge of exactly how top business plan, value and view opportunities
is amazingly valuable.

The question is, how do you move this from being a family/birth advantage to
being part of education?

~~~
chubot
To its credit, YC is trying to do that:
[https://www.startupschool.org/](https://www.startupschool.org/)

I have no intention of starting a startup, but I watched some of the videos,
and they seem like valuable new information.

~~~
sologoub
More thinking in terms of kids/parents. In order to know that YC exists, the
kid needs to learn from somewhere.

It’s the initial discovery problem. I feel that currently we have all the
resources for those who want to start a company, but I don’t know if we are
good at showing new genetraion what’s possible across the board. Imagine the
innovation we could see if every capable kid got to hang out with Jack Welch
and absorb that excellence?

~~~
geodel
Parents can advice kids to marry up. I think this is practical and profound
advice. It would be applicable across different societies and it does not
involve white, first world or big city privilege etc.

Also the accounting shenanigans of GE which are finally getting much more
coverage lately and major role of Jack Welch in it. I'd think most of
innovation by hanging out with Welch will be in separating fools from their
money. Now a lot of companies would be like this but their CEOs do not get top
billing like him.

------
aerovistae
Read far enough in and you'll find out he's a patent troll. I closed the
article at that point. Not interested in articles idolizing patent trolls.
Mysterious tech billionaire indeed.

~~~
tomohawk
I didn't get the narrative that the article was idolizing the subject, but
rather talking about what he and his company are doing, which includes being a
patent troll among other things.

~~~
aerovistae
Writing up a lengthy article about a person's accomplishments in a prestigious
mainstream magazine, especially with a title calling them "mysterious," is
definitely in the vein of hoisting the person up onto a pedestal.

~~~
tomohawk
Or under a microscope.

With the term "sweatshop" in the title, it doesn't seem like the intent is to
idolize this guy. The guy's banked some serious bucks. Whether he's done that
in a savory or unsavory way is left up to the reader to decide.

~~~
ianai
I agree with GP, this articles more glory than spotlight. Hard pass.

------
redleggedfrog
From everything I know about software development, I can't imagine anything of
value being created under such circumstances. 50% of software development is
not coding. I suspect what is getting created is crap, but crap that can be
leveraged to make money and get that 3 billion to keep going up.

That's the sad part about the article to me - at one time the emphasis in
computing was, well computing. In our modern age, it's money.

Glad I was there for the good part.

~~~
ttul
Trilogy also created a great deal of crap. They came to my engineering school
in the late 1990s and handed our student society $500 just to give us a free
lunch.

Many of my friends went to work in Texas for them, only to escape a while
later after toiling away on projects for fortune 500 companies which were
massively overbilled. Their formula was: hire new grads, pay them well and
take them to parties, and soak big corps with dot com projects they neither
needed nor understood.

The article is correct in pointing out that many Trilogy grads went on to do
great things. But this was not Trilogy’s doing. It was because these people
are smart and would have succeeded anyhow.

As for the new strategy of paying $15/hr for sweatshop C++ coders... I can
only imagine the quality of that code. You get what you pay for.

~~~
m23khan
Just a note on wage:

$15/hr for C++ coders will get you a highly-talented coder from poor parts of
the World who may rival your above-average C++ coder in developed countries.

$15/hr is still a _very_ good wage in poor countries.

~~~
hermitdev
For $15/hr, you do not get top quality C++ developers from any corner of the
world. I know - I've worked for companies that have tried. You tend to end up
with a spaghetti code base utilizing crappy open source or shareware libraries
that a cousin produced. Then, you try and scale, and need to bring people that
actually know what they're doing.

2 years in at current job, where most of the work was done by offshore devs,
company now has a team of onshore developers to fix all of the performance and
stability problems.

~~~
fipple
There is a lot of variance in $15/hr offshore developers. For example, you can
buy a shirt for $10 in various places in the world, some of them will be total
crap and some of them will be exquisitely tailored. The selection becomes the
challenge and just because someone failed doesn’t mean someone else did.

------
otoburb
Wage arbitrage for software Continuing Engineering (i.e. maintenance) talent.
This article is eye-opening due to the scale and effectiveness, but
unfortunately not surprising.

~~~
jiveturkey
sorry, but what exactly is unfortunate about it?

------
akhilcacharya
> Liemandt and Trilogy’s other founders developed their software as
> undergraduates at Stanford. The young Liemandt seemed destined for business
> success. His father, Gregory, worked directly under legendary GE executive
> Jack Welch, and the Liemandts vacationed with the Welches. After his father
> left GE to be CEO of a mainframe software company in Dallas in 1983,
> Liemandt began programming but also took a strong interest in
> entrepreneurship, frequently reading the business plans his father brought
> home. As a Stanford economics major, he was determined to create the kind of
> business that either Jack Welch or his father would want to buy

Color me surprised.

------
tfolbrecht
Sure it's downward pressure on US wages without the benefits of having an
employer, but for third worlders, $15 USD must be mana from heaven.

Calling it a "Software Sweatshop" is a little hyperbolic.

~~~
baybal2
> but for third worlders, $15 USD must be mana from heaven.

This model is waning. Eastern Europeans now flock to East Asia in swathes, and
are way way more aware of global job market.

This also creates a factor of negative selection: talents leave right after
graduation, and remaining labour force is not suited to "evolve" and progress
without a guiding force.

~~~
tfolbrecht
How is any of that a bad thing?

If you can't utilize someone to their potential because of some political or
social barrier, that's an absolute shame.

~~~
baybal2
I never meant so, I state that things are turning progressively sour for
companies like Crossover.

------
howard941
Does the person screening the code for backdoors get paid more than $15/hr?

------
fallingfrog
The resemblance of this guy to the protagonist in “sorry to bother you” is
almost too on the nose.. get ready for life worry free!

------
chiph
> has no qualms about Crossover’s tactics, including its WorkSmart
> productivity tracking tool, which Tryba calls “a Fitbit for how you work.”

If I were FitBit, I'd send a C&D letter over this.

~~~
sulam
It definitely made this Fitbit employee annoyed!

~~~
chiph
An aside - I'm really liking the new Charge 3.

------
bsiemon
The pervasive monitoring reminds me of the villain in Snowcrash.

~~~
joejerryronnie
Sure but where’s the failed pizza delivering samurai or the mafia-backed punk
skateboarder ;-)

------
quotemstr
This article is as good an occasion as ever to talk about supply and demand.
As a matter of basic economic and mathematical reality, we can't graduate
increasing numbers of programmers from CS programs and vocational schools
_forever_ without eventually creating a glut. Nobody wants to hear that, but
it's true. Yes, so far, the amount of work has been keeping pace with the
labor force, but this trend can't continue forever. You can't build an entire
economy out of software production: nature abhors a self-licking ice cream
cone.

There's a lesson we can learn from the legal profession. Quite a few people
got expensive law degrees thinking that they would quickly earn back the
investment, but it turned out that 1) law has surprisingly shallow demand for
low- and mid-tier legal skills, 2) law is able to automate much of the low-
and mid-tier work, and 3) legal practitioner skill is real, obvious, and
exists on a very broad continuum, 4) professional demand is not uniform across
the skill continuum.

Sounds a lot like software, doesn't it?

The legal profession bifurcated [1] into completely separate low-paid and
high-paid worlds. This "FAANG" thing people talk --- about how there's some
qualitative (and quantitative) difference in employment experience between the
"good" tech companies and the rest of the industry --- is this same
bifurcation pattern ramping up in software.

It's especially unfortunate that in a "bubble" industry like software is (and
like law was), it's the marginal participants who are the worst hit by the
inevitable crash. Demand for software talent is strong (for the moment), so
wages are high and rising. But the people who clump together at the high-end
compensation mode --- the ones who are exceptionally good at writing software
and who really enjoy the field --- are _already_ in the industry.

A $1 increase in industry-wide average compensation won't, generally speaking,
convince a star programmer to join. The person who joins due to that $1
increase is someone on the margin, someone who would really rather be doing
something else with his or her life, but who's just _barely_ convinced, by
that $1 increase, to try programming. Is this the kind of person who's going
to land in the high-compensation bucket? Occasionally, yes, but generally no.

So far, software demand has generally kept pace with available labor, but this
situation can't persist indefinitely. What happens when it stops? There's
going to be some moment at which the industry recognizes that salaries are too
high. There might be some precipitating event --- e.g., the coming inevitable
business cycle trough --- or the progress of automation might greatly increase
productivity for low- and mid-tier tasks --- or the industry as a whole just
might slowly start to ask itself, "what exactly am I paying for?"

In any case, when that event comes, expect more companies to turn into the
kind of software shop you see in the likes of Trilogy, or some contract body
shop, or Electronic Arts. When the developer bubble finally bursts, the whole
industry will look like these places --- except at the very high end of the
skill distribution, because the supply curve for high-skill programmers is
much shallower than the supply curve for low- and mid-skill ones.

At a certain point --- maybe not today, but probably some day soon --- it'll
be irresponsible to tell people at the margins of software skill or enthusiasm
to enter the field, because such a person will be able to expect only low-paid
work in bad conditions, forever, just like a marginal lawyer today. But timing
the market doesn't work, so who knows when that day will be? It could be
tomorrow.

[1] [https://abovethelaw.com/2018/06/the-most-important-chart-
in-...](https://abovethelaw.com/2018/06/the-most-important-chart-in-the-legal-
industry-and-it-has-nothing-to-do-with-the-law/)

------
mooreds
Does this story remind anyone else of L. Bob Rife from Snow Crash?

------
cyborgx7
When open this website, I get a pop-up to agree to data collection. My only
other option is "more information". If I click on that, I get the option to
reduce the data collection to "necessary cookies". Once I set my preferences,
it presents me with an obviously fake "processing request" screen, with a
percentage number slowly going up. I can, of course, cancel at any time. At
the end it tells me that I changed my preferences but some "partners" could
not recieve those changes because I'm using https.

I really hope the EU actually intends to prosecute those not in compliance
with the GDPR.

~~~
csdreamer7
They will if EU citizens report them.

~~~
rosege
Does it matter if the website doesn't have any physical presence in the EU?

~~~
Tade0
As long as it serves content on EU territory, GDPR applies.

~~~
protomyth
What is the sanction if you have no physical presence in Europe?

~~~
shittyadmin
Absolutely nothing. They're not about to block some of the biggest sites
around for failing to comply with GDPR. Can you imagine the backlash? No one
wants a Great Firewall of the EU.

Anyone who thinks GDPR applies to companies operating entirely outside the EU
is deluded at best.

------
rezd
This smacks of fake news

------
gaius
Should be required reading for anyone pushing the “teach kids to kode” mantra
in Western schools. Or the myth of the tech talent shortage.

~~~
yborg
My father was a machinist, and I saw in high school that there was no future
in that in the US and went into software, which at the time was a hot field.
But it was clear to me once the Internet made outsourcing these kinds of tasks
trivial that coding would become commoditized. (I actually also thought that
basic software construction would be largely automated by now lol.) It
occurred to me a while ago that "programming" in the traditional sense is more
or less the "blue-collar job" of the 21st century. And these jobs will follow
the route of the blue-collar jobs of the 20th century in the US.

~~~
maxxxxx
It seems the only survivors will be MBAs and lawyers...

~~~
EForEndeavour
Nah, just speed through a few YouTube video series, pirate a couple of
machine-learning textbooks, clone into the Deep Learning with Python repo, and
market yourself as a data scientist.

