
What US Software Companies Should Understand About the Rest of the World - JackPoach
https://medium.com/@did_78238/what-us-software-companies-should-understand-about-the-rest-of-the-world-783e8dbca758#.b2b3slmak
======
sbov
This reads like some slightly useful, but obvious, advice mixed with attempts
to "stick it" to companies based in the US.

I think it's telling in your example that the friend laughs because their
grandma did it, not that the friend themselves did it. Beyond that, by your
own admission all the money in tech makes bootstrapping harder, not easier,
because it drives up costs. So your example makes even less sense, unless you
intend to point out the ignorance of laughing at someone bragging about it.

You're also not the first to recognize that labor is more expensive in the US.
Many companies acted on this information in the early 2000's, and it did not
exactly result in a complete exodus of software development jobs. Culture,
language, and even timezone differences can be a problem. Paying someone in
Eastern Europe 30k/year instead of a US developer 100k/year to develop a
product does not necessarily result in 70k/year worth of savings.

Interestingly I feel like some of what you say here goes against your
recommendations in your internationalization article: the implication is that
we should all hire Eastern European developers, but your internationalization
article talks about the perils of thinking that all you need to do is slap a
new language on your product and think that it's OK for another country.

If you're developing a product to be sold in a given country, and you hire
developers from that country, you can empower your developers to act with more
discretion.

~~~
LouisSayers
I think you're missing the point here. He's coming at it from a sales
perspective. I.e. if you're trying to sell into Romania then there's no point
bragging about being bootstrapped because that is a normal way of life for
them. You also should recognise that they can produce the same products at a
fraction of the cost, and so you may just be too expensive.

On the R&D thing, of course there are issues with going international with
development, but if you find the right people, you'll find that many are
extremely competent and easy to communicate with.

~~~
nostrebored
Articles like this completely ignore brain drain. "Extremely competent"
becomes more of a rarity when high-quality developers in Eastern Europe move
to Germany or the US.

The reality is that nearly all of the time it's not "the same product." When
it is, it's great for whoever made it, but when it's not, you're making the
very serious decision to release a worse product to cut your costs. Sometimes
it's worth it, sometimes it's not.

~~~
LouisSayers
This is true - I've been told that Twitter has actively recruited university
students in Romania. However, some people would simply prefer not to move to
the US because of personal reasons.

The cheaper clones may also be a lot worse in practice, but hey, it seems to
be working for China ...

~~~
vonmoltke
> This is true - I've been told that Twitter has actively recruited university
> students in Romania.

This may be because Romanians seem to have a disproportionate interest in
natural language processing.

------
ChrisDutrow
> A good developer in Eastern Europe now costs $1000-$1500 a month

I haven't found this to be true, at least when trying to build an
international "work from home team".

I've found most estimates for the cost of skilled labor in other countries to
be low. Example: For software developers in South America, a good rule of
thumb is you need to pay at least half of what you would pay in the US.

I have some people who do marketing for me in the Philippines. They need to be
getting about a third of what a US person would be getting.

In both scenarios, you will be able to find people for a lot less, but you
will have issues with quality and reliability. This is because even though the
job market might suck in their country. You are still dealing with people who
are trying to live a comfortable life. In order to get first world
productivity, there is a base level of first world comfort that the employer
needs to provide (food, air conditioning, health insurance, internet, computer
equipment, car, social status, etc...)

Another factor to consider is that as you approach the upper echelons of play,
pay rates start to converge at an international level - regardless of where
the person actually lives (not a full convergence).

~~~
IndianAstronaut
>I've found most estimates for the cost of skilled labor in other countries to
be low

One thing people forget is that major goods cost the same all over the world.
Cars in India cost almost as much as cars in the US, decent models cost more.
Electronics in Brazil cost more than what they do in the US. So you just can't
pay people such low wages.

~~~
ChrisDutrow
We recently had to equip someone in Argentina with a Macbook Pro. It cost
literally double what it would cost here and it didn't matter if he bought it
there or we bought it here and shipped it to him. (we opted for the latter and
they hit us with import fees)

------
ubernostrum
_3\. You are paying your developers how much?_

Ironically this was how I felt sometimes talking to various EU-based companies
I was considering working with last year. Especially given the popularity of
the "you're a contractor your first year, then maybe you become an employee"
model.

I was looking at a situation where:

1\. The base pay was already less than my prior salary had been, and

2\. Because of the "start as contractor" model I'd get to pay at least an
additional 15% in tax for the privilege of working for them, and

3\. Because contractors are responsible for their own insurance, I'd get to
pay for that out of my own pocket too, and

4\. Since even the base pre-tax, pre-overhead rate was about 20% less than my
prior salary, it'd kill me when time came to negotiate for my next job -- it'd
be the same as being set back multiple years' worth of seniority/experience,
since salary negotiation always starts with what you made at your last job.

I ran the math on one offer and it came out close to an effective 40% cut plus
a likely significant reduction in whatever I'd make at future jobs. And that's
just flat-out unacceptable.

~~~
endymi0n
See, and no tripled salary at 20% tax rate would ever pull me to a country
where I pay 3000$ per month for a toilet with bed, every toddler has the right
to bear arms, clowns like Trump are even seriously considered for presidency,
and my kids don't get free health insurance, daycare and later on great
education until college level.

And nope, I don't feel unfairly treated by leaving 50% of my paycheck on the
desk in exchange for a society with an overall super low crime rate because
everyone here has a minimum amount of money here and the same right to the
same chances of starting out in life.

Guess it's simply a different lifestyle. :)

~~~
ocb
I understand and agree with the egalitarian spirit of your post, but...

1) Housing in the vast majority of the US is inexpensive. Paying $3000 for a
tiny room is something that pretty much only happens in SF proper and
Manhattan.

2) Crime, quality of public schools, etc. are all completely dependent on
where you live. As economically unfair as it is, software developer salaries
in most of the country are high enough to place you firmly into the
middle/upper-middle class, which means that you can afford to live where it's
safe and schools are good.

It's morally questionable but American software developers are paid enough
that they can for the most part ignore the systemic economic issues that
plague the US.

~~~
justinlardinois
> American software developers are paid enough that they can for the most part
> ignore the systemic economic issues that plague the US.

We could use a heaping reminder of this every time an argument about social
issues comes up on HN.

------
tlogan
Here is what my fellow Eastern Europeans do not know (and I'm from there so
I'm qualified):

> A good developer in Eastern Europe now costs $1000-$1500

> a month. I kid you not.

In Eastern Europe definition of a good developer is "hamburger flipper which
knows a little of HTML". I kid you not. Also work ethics are horrendous.

In short it ends up much cheaper to hire somebody in mid-west than from
Eastern Europe (even though I tried very very hard).

The really good developer in Eastern Europe is $6000/month - less than US mid-
west but you have to adjust for time change, logistic, trust, etc. So you end
up at same.

~~~
danieltillett
Developers are pretty mobile so you should expect that wages will converge on
a global basis.

The UK (outside of London) seems to be quite cheap.

~~~
tlogan
Exactly - wages for software developers are pretty much the same all over the
world. Of course, Bay Area is kinda crazy these days but that is just a
temporary flux (I hope).

~~~
danieltillett
Bay area salaries are just disappearing into housing and transport costs. I
don’t see salaries coming down, but a continued fleeing of development out of
the area.

------
matt_wulfeck
> It really helps to have R&D office in Europe, India or Philippines, you
> definitely should consider this if you want to keep your dev costs down.

I'm sorry but my anecdotal experience totally disagrees with this.

The problem really isn't developer quality -- which I believe is quite high in
a lot of places, _my problem is that it 's so hard to work across time zones
and countries_. Your costs are cheaper but your productivity sucks.

~~~
gohrt
Move the whole team to Romania, no need work across timezones.

~~~
guelo
Well, how come the teams that are already fully in Romania not out-competing
Silicon Valley?

~~~
dave2000
Same answer as for India and all the other cheaper locations; it's easy to get
simple development done thanks to all the (chiefly American!) tools for drag
and drop development, testing etc available nowadays, but having a team of
people with the vision to come up with something new (and therefore difficult;
you're not just doing a cheap shitty version of something which somebody else
already invented), functional (bug free - yes, the code compiles and passes
the tests you knocked together but does it actually work in the real world),
scalable and competitive with the systems it attempts to disrupt isn't quite
the same thing, is it.

On the positive side, I do get a lot of phone calls from Microsoft in India
offering to fix my computer problems if only I'd let them use remote desktop
to connect to it.

~~~
matt_wulfeck
That's true. Also the good engineers make it to the US where they make 10x
what they would at home. Isn't that what anyone would do??

------
hackuser
> You are paying your developers how much?

How come nobody asks how much you are paying your executives? Can't we find
cheaper executives in other countries?

~~~
iris-digital
Yeah, I cringed when I read that. Just what we need another excuse to keep
from sharing profits with the builders of your product.

------
jondubois
The argument about ad spending and dumb money makes sense and I can relate to
it. SV startups have the freedom to build products which are inherently
unprofitable (unprofitable by design).

There are many incestuous networks of companies and investors within which
startups dogfeed on each other's products in an attempt to generate profit for
themselves.

Unfortunately, money can't keep moving in a closed loop. Just like the economy
of a country; if money exits the network faster than new money enters it, the
network's finances will dry and shrivel up.

The incestuous pattern of dogfeeding which is common in tech centers like SV
tends to rely on a few 'alpha dogs' to actually extract money from outside the
network. These alpha dogs are the tech giants; Google, Microsoft, Oracle, IBM,
Facebook... - To avoid a bubble, these tech giants have to be able to make
enough OUTSIDE profit to feed not only themselves but all startups and
investors which indirectly depend on them for profit.

With this dynamic, you would hope that the alpha dogs of the industry are
highly profitable; but it's simply not the case. It's very rare to find a
large tech company with a Stock Price/Earnings ratio below 30 - It seems that
even the alpha dogs are struggling to feed themselves so it's hard to imagine
that they would leave behind enough scraps for the others who depend on them.

Interestingly enough, the giants like Google and Facebook tend to rely heavily
on customers from INSIDE their network for profit (I believe a decent share of
their revenue would come from advertising other tech companies) - Which means
that even the alpha dogs are dogfeeding.

------
atemerev
"it will function in all Russia, including Crimea,"

Sorry Dmitry, Crimea is not Russia, no matter what this crazy president of
ours thinks of it.

~~~
yoo1I
You realize of course that the Russian naval base in Sevastopol is older than
than the United States, right ?

Not to pass judgement on the current Russian claim to Crimea, but it's a very
short-sighted view to pretend that Crimea won't ever be Russian.

~~~
gohrt
The Russia that exists today is not the same Russia that existed when the
naval base was built. It's a different country with the same name.

~~~
AnimalMuppet
Well, it's a different _government_. I'm not sure it's a different _country_.

------
studentik
Many thanks, Dmitry, for brilliant and acute article. Same problems apply for
me: Russian developer doing logistics software in Finland.

Here is my simple theory. There are two types of deals: friendly and
unfriendly. Friendly deals happen between friends - people help each other,
they have trust and comfort in negotiations, they enjoy making a deal and
respect mutual interests. Unfriendly deals normally do not happen. They only
happen when there are no friendly alternatives around. During unfriendly
negotiations, seller is squeezed for all possible discounts, all terms are
treated sceptically, fear and negativity are in the air, and with first chance
deal will be off. Product has to be inevitably necessary for deal to happen in
unfriendly environment.

It is natural that foreign companies and persons are treated friendly less
often than local alternatives. But when product is good, and seller is right,
then deals happen anyway. And deals help to make friends, and vice versa =)

~~~
leeoniya
> During unfriendly negotiations, seller is squeezed for all possible
> discounts, all terms are treated sceptically, fear and negativity are in the
> air, and with first chance deal will be off.

This reminds me of the adage, "A fair deal is when both parties are equally
displeased with the outcome."

~~~
Blackthorn
A great deal is when both parties feel like they've ripped the other off.

~~~
avmich
That often means that at least one side greatly underestimated the real value
of the deal.

~~~
noobiemcfoob
Not necessarily. It only implies that the two sides have largely different
values. What is worth but perception, yada yada

------
sickbeard
I think OP is living in a bubble. Sure we aren't #1 in Japan, but what is the
size of business in Japan compared to the US? And Putin doesn't want to buy
our software.. and you call our society fucked? seriously you're run by a
dictator. I could go on and on but I think OP is too invested in his own
little world and wants the rest of us to know he exists.

~~~
tetromino_
> Putin doesn't want to buy our software.. and you call our society fucked?

You completely misunderstood OP's argument, IMHO.

A dispute between Obama and Putin over a peninsula where your company has
maybe 1.5 users suddenly results in you being locked out of a market with
millions of potential users. And the conclusion is that when selling abroad,
you need to be aware that vagaries of international politics can drastically
affect your business, and that an American software company will be seen - by
policymakers in _both_ countries - as a tool of American foreign policy.

~~~
doktrin
> A dispute between Obama and Putin over a peninsula where your company has
> maybe 1.5 users suddenly results in you being locked out of a market with
> millions of potential users.

Doesn't this cut both ways? If US based companies are locked out of the
Russian market, don't Russian based companies run the risk of being locked out
of the larger and more influential US market? If forced to choose, I know
which of the two I'd pick.

~~~
tetromino_
> don't Russian based companies run the risk of being locked out of the larger
> and more influential US market?

Of course, and in fact it has happened a few times, e.g. see [1]. But Russian
based companies tend to be aware of the possibility and plan accordingly. OP's
audience is Silicon Valley startups trying to enter foreign markets for the
first time, and for them the idea might be rather unfamiliar.

[1] [http://insidehpc.com/2014/01/us-lifts-trade-ban-russian-
supe...](http://insidehpc.com/2014/01/us-lifts-trade-ban-russian-
supercomputer-vendor-t-platforms/)

~~~
doktrin
> OP's audience is Silicon Valley startups trying to enter foreign markets for
> the first time, and for them the idea might be rather unfamiliar.

Why do you assume that to be the case? Just because US companies don't need to
rely on foreign markets doesn't mean they're somehow unaware of basic
geopolitics.

------
tonglil
"Heck, even Canada now has a law that makes using Dropbox illegal if you are
working with personal data (at least until Dropbox starts storing that data in
Canada, or that’s what I was told). It’s called PEPIDA."

It's actually called PIPEDA, not PEPIDA.

Also, where is the source? I have done a good share of readings in this topic
as part of my research in a Canadian university (< 4 months ago) and could not
find the "illegal"-ness of such actions.

Currently, the act essentially outlines consent and putting the knowledge and
power to update/remove private information with the users, and does not
outline what services or actions are illegal.

It is important for people care about privacy, but it is not cool to post un-
sourced opinions as facts, as people often mis-cite them as fact and propagate
false info.

Here is the act, and a summary of responsibilities:
[https://www.priv.gc.ca/resource/fs-
fi/02_05_d_16_e.asp](https://www.priv.gc.ca/resource/fs-fi/02_05_d_16_e.asp)

------
josephagoss
I am not a fan of this trend where other lowly paid software developers want
to bring down the salaries of highly paid software developers.

To be honest, I can't imagine highly skilled software developers on the wages
that the OP considers in his article.

Why are some people obsessed with highly skilled people making a lowly income?

------
VOYD
"only better and free" \- lol. Good luck with that. Amateurish at best.

------
emodendroket
I guess these might be surprising insights to someone but I'm not sure whom.

~~~
Zikes
And hot on the heels of an earlier post decrying Medium authors as largely
self-serving knowitalls that are eager to tell you how everything you know is
wrong. [1]

[1]
[https://news.ycombinator.com/item?id=11478159](https://news.ycombinator.com/item?id=11478159)

~~~
emodendroket
Too bad it's been deleted; that sounds like it would have been more
interesting to read than a guy asking me to be shocked that people make less
money in Eastern Europe than in the United States.

~~~
J_Darnley
Thank god for archives: [https://archive.is/5WGiY](https://archive.is/5WGiY)

