
Big Tech Company Salaries Are Hurting Startups - alain94040
http://thestartupconference.com/2017/03/25/the-350k-google-salary-is-hurting-startups/
======
krschultz
If you are a startup and are trying to compete head to head with Google / FB /
Amazon / Apple / Microsoft for the same people, you are going to have a really
hard time recruiting.

But there are plenty of great engineers that don't want to work at those
companies for various reasons. There are plenty of great engineers that want
to work remotely and don't have that option at the large companies. There are
also plenty of inexperienced engineers with high potential that can't yet get
hired at those companies and can be great additions to your startup. Do what
you can to find and recruit those people.

~~~
znq
Very true. For both of our companies [1][2] we pay a fair salary plus a
quarterly bonus on top of that based on what we can give (based on the
company's quarterly profit results). We also offer remote retreats (so far
Cape Town, Thailand, Martinique, Spain and Skiing in the Alps) and the biggest
contributor to everyone's satisfaction is that we let everyone work from where
ever they want and as much as they want as long as it is planned properly.

The result: we've had a couple of employees who received job offers from
companies like Apple, Google and Facebook. But after going to the interview
process and talking to other employees there they've all (with the exception
of one) decided to stay with us, with a significantly lower salary, but a lot
more freedom and work-life balance.

Not saying that we've a better offer than Google & co, but saying that our
offer is different than theirs and there are enough people out there who care
more about other things than just money.

[1] [https://mobilejazz.com](https://mobilejazz.com)

[2] [https://bugfender.com](https://bugfender.com)

EDIT: formatting

~~~
RamshackleJ
I'm always curious about companies who talk about "caring about things other
than just money". Maybe I'm missing somethings but if you are a for-profit
company by definition you care about money, any claims other wise feel like
marketing.

~~~
michaelbuckbee
To me the big non monetary currency is time.

Average US commute time is about half an hour [1], add to that another 15
minutes on each side for context switching and "settling in" and it's an easy
10 hours a week at least you're saving.

Remote work isn't for every job or person, but the financial difference would
need to be significant to drag me back into an office.

1 -
[https://www.washingtonpost.com/news/wonk/wp/2016/02/25/how-m...](https://www.washingtonpost.com/news/wonk/wp/2016/02/25/how-
much-of-your-life-youre-wasting-on-your-commute/)

~~~
antisthenes
Jesus...That certainly puts things into perspective.

10 hours a week is an extra book you can read or 5 movies to watch or
just...10 hours to relax and work on your side projects.

520 hours per year.

------
jasode
The way the article frames the $350k competitive salary as a "problem" for
startups is backwards.

If you're a businessman, you build a business that works with the prevailing
pricing that's out there. That includes prices for _everything_ such as raw
materials, office rent, AWS/GCP cloud costs, government taxes & fees, and yes,
high programmer salaries.

Complaining that your startup is "hurt" because AWS egress transfer fees are
too high, or office sq footage $ is too high, or programmers cost $350k is
counterproductive.

To think like a businessman, one has to turn that around: how do I build a
_more valuable_ business that _can pay_ the high costs of the San Fran office
and the $350k salary?

E.g., Jeff Bezos in 1994 isn't going to handicap himself because Microsoft was
paying $100k salaries. Google in 1998 can't blame the difficult recruiting on
Cisco and Sun Microsystems paying $100k salaries.

Either build up value in the business and/or include the high programmer
salaries in the numbers when you ask VCs for money.

The other option, as other sibling comments noted, is to attract programmers
who will work at a discount. Brian Acton & Jan Koum applied to Facebook and
were rejected.[1] They are obviously not the worst programmers in the world
and many of their caliber won't get $350k from Facebook/Google. See if you can
hire overlooked programmers like them. Some will also work for a discount
because they value the startup's equity or other intangibles. A startup
entrepreneur has to hustle and make compelling propositions to these
programmers.

[1]
[https://en.wikipedia.org/wiki/WhatsApp#2009.E2.80.932014](https://en.wikipedia.org/wiki/WhatsApp#2009.E2.80.932014)

~~~
wpietri
That's a reasonable tactical perspective. For the individual entrepreneur,
it's valid.

That doesn't mean that this article isn't a valid complaint from other
perspectives. E.g., It's totally reasonable that CEOs and investors will
grumble about this. I'm sure Bezos, Page, and Brin were grumbling at the costs
back in the day.

But I think the interesting perspective here is at the ecosystem level. If
startups have to spend a lot more, it changes what's possible. We'll have
fewer startups. We'll have less interesting startups. The incentive to pretend
to be a zillion dollar winner is higher. As is the incentive to pursue
artificially amazing growth rates. And to lie, cheat, and steal your way to
making good on your sky-high valuations.

Personally, I think the startup world was way more interesting 10-20 years
ago. The pressure to be the next unicorn is so intense that I think we've lost
a lot. There are a lot of factors here, but I strongly believe that much
higher living and operating costs is one of them.

~~~
fpgaminer
This is why I'm kinda getting on board Courtland Allen's belief in indie
startups. They're a counter reaction to that unicorn obsession of the current
startup world. And the developer and entrepreneurial ecosystem is now such
that launching and running small, competent businesses with useful
products/services is easier than ever.

In other words, yes, the ecosystem is starving out traditional startups. But
it seems like it's making a breeding ground for indie startups. They don't
suffer the cost of a $350k/yr salary, which gives them a nice advantage.

~~~
wpietri
Definitely. A friend is bootstrapping a company that she just loves. It will
never be a unicorn, but it doesn't have to be. They already have a bunch of
wildly satisfied customers, good press, and excellent prospects for
sustainable growth. This is probably the last year she'll have to consult on
the side to pay the bills. And she's so happy with it.

------
bla2
Sounds like the market is telling startups that early engineers are worth more
than 0.1% of stock options.

~~~
thedevil
I had more of a financial background before becoming a software engineer. I
was shocked when I found out "equity" given to early engineers is so puny.

Why would someone work long hours for low pay with higher risk for 0.1% of
high-risk small business?

~~~
emcq
From my own experience, it was naivety and manipulation.

I trusted the founder when he would make big promises for the future. He
didn't bring up equity until the last moment once we already were ready to
quit and join. In hindsight these are clearly common business tactics (get the
person to accept before going into details), but as a young engineer I had
more trust in older more experienced folks like the founder. Even when there
were huge alarm bells ringing in my head, I said yes. It's hard to describe
how a good salesman can have you saying yes to things you aren't comfortable
with.

In the end the company crashed and burned after losing all it's founding team
who all work at top companies now.

~~~
thedevil
> It's hard to describe how a good salesman can have you saying yes to things
> you aren't comfortable with.

I recommend a book that describes some of these tricks pretty well. It helps
protect me from such manipulation (some of the time):

[https://www.amazon.com/Influence-Psychology-Persuasion-
Rober...](https://www.amazon.com/Influence-Psychology-Persuasion-Robert-
Cialdini/dp/006124189X)

------
throwaway2016a
I work at a startup that isn't profitable yet so our salaries are very low...

\- Our typical junior makes $50 - 60k

\- A typical mid makes $65 - 75k

\- Seniors (including CTO) make $90 - 110k

In greater Boston.

It is VERY difficult to hire at those rates. We had someone come in
interviewing for a senior that I would place as a mid (generously...) and he
accepted another offer for $150k. At our scale he would be making $75k at
MOST.

It takes us 6 months to find a single hire.

But I'm not bitter at Google. I think the market is valuing the workforce
fairly. Which means...

\- We are probably priced out of the market

\- We should / do offer higher percentages equity

\- We need to hire the people who the Googles of the world won't hire and
train and mentor them __

__That last one works really well. We hired a few people that couldn 't get
jobs elsewhere that after two years with us left for a job that pays over
twice more but they wouldn't have been able to land without our training and
mentorship. We actually congratulate and celebrate those people even though we
are VERY sad to see them go.

~~~
jasim
You'll get programmers from developing countries with a good 10 years on them
for $70k if you can build a company around a completely async remote culture.
And I'm not talking about fad-following framework-crazed devs, but rugged pros
who'll cost a premium if they were in a developed country.

~~~
spapas82
Hello,

this is not only true for developing countries but even for developed
countries. I'll speak about my country, Greece. The average wage for a junior
developer is a little less than 20 000 euros per month (around 1000
years/month x 14 months + 4000 for insurance etc) while for a senior may be a
little more (but probably less than 30 000, depends on years and kind of
work). Wages of more than 35 000 euros are seldom found for developers and are
mainly reserved for management positions. The wages are more or less the same
on most Southern Europe countries (Italy, Spain etc) and are definitely much
less in less developed European Countries (Bulgaria, Hungary etc).

So, if you focus on developers from similar countries you can get top talent
(and I mean that, there are many great developers here, most of these people
are _better_ than the ones in Silicon Valley since they are working in _their
own_ country which the jobs are not much instead of migrating to a different
place to find a job) for less than 40 000 euros / year.

The only drawback would be that they'd want to work remotely (or else they'd
have already migrated). So the best course of action is to create your
company's culture to not only allow but to embrace remote work (i.e by trying
to only hire remote people -- this'll also save you money). Also, another idea
is that migrate the start up offices _instead_ of trying to convince
developers to migrate!

Greece is a beautiful country after all :)

~~~
pedrosorio
"most of these people are better than the ones in Silicon Valley since they
are working in their own country which the jobs are not much instead of
migrating to a different place to find a job"

These people are better than the ones in Silicon Valley because they refuse to
emigrate? I don't follow your logic.

~~~
spapas82
Sorry, I probably didn't make myself clear (english is not my main language):

Here in Greece there are not too many jobs on local (Greek) companies because
of the economical crisis and repression. Definitely there are more candidates
than jobs. So most of these jobs would probably be given to the better / more
experienced developers while, other, not so good developers will try to
emigrate to other countries to find jobs.

Notice that there was no culture of emigrating here in Greece before the
crisis, people seldom emigrated because the family ties are strong here and
people are raised with a culture of loving their country and not wanting to
leave it (and as I said in a previous comment Greece _is_ beautiful - you only
want to leave it if you actually starve). This has changed due to crisis of
course but I think that a good developer will definitely be able to find a job
here in a local company and not need to emigrate.

~~~
pedrosorio
I see. What you mean is that the average employed developer in Greece is
better than the average Greek developer due to competition for jobs and
culture of attachment to the homeland.

This may be true, but it has little relation to quality of the average
developer in Silicon Valley.

------
jmcdiesel
Flip the argument the other way.

Startups want to underpay for talent. Google isn't overpaying... the big
companies aren't overpaying, the startups are under paying.

Being a startup isn't an excuse, and you're asking people to take less pay to
work at a place that has a decent chance (compared to established places) of
going under. You're asking engineers to take on more risk for less pay.

If you aren't funded enough to pay your engineers what they deserve, you
aren't funded enough to hire more... end of story.

------
boulos
(Disclosure: I work at Google)

I describe the ability to hire as being a U-shaped curve: new grads (whether
undergrad or grad school) or people that don't actually need to work anymore.
Google's high pay actually means that for senior folks, they're getting closer
to the right end of the curve! (But also, that they'd most likely be a founder
unless they believe so strongly in your idea that they must see it happen).

As bla2 says below: the reality is that .1% is a pretty low equity offer, and
while engineers aren't naturally greedy we can do math. A person just out of
school might not care, but you shouldn't begrudge folks that say "Umm, the
expected value of this offer is pretty bad compared to my current situation".
You can offer them something else (work that matters!), but I feel like
everyone knows that employee equity is still too skewed towards founders and
investors.

------
watertom
The biggest thing hurting startups is the fact that big companies provide
health care. Having Businesses provide health care, IMHO, is the biggest
issues facing job growth in the U.S.

Having been on the ground floor of 3 startups, the biggest issues wasn't
salary it was health care, the only people that you can recruit are those
young enough not to care, either because they are single or they don't have
children. If you want to hire experienced employees the roadblock will be
health care. I've lost more people than I can count due to health care issues.

Big businesses actually like to provide health care, they bitch and moan, but
if they didn't want to provide it they would drop it. Big business controls
the job market by providing health care, it limits employee's freedom to
change jobs and start companies. Business provided health care also makes our
products and services more expensive decreasing our ability to compete
globally.

~~~
ghaff
Which is part of a reasonable benefits package. So you're arguing that, in
addition to underpaying base comp, they also want to bypass a competitive
benefits package--but that may not be obvious to young people who don't think
they need insurance.

~~~
emcq
I think the parent is trying to make the case that startups by nature can't
provide competitive healthcare, which hurts the economy when small business
can't attract top people.

It's much different than a 401k, free meals, foosball table, vacation policy,
etc, in that once you experience a major health problem you are compromising
your health or face prohibitive costs if you are on a mediocre healthcare
plan.

~~~
ghaff
They're trying to make that case. Healthcare plans (for the time being) are
available outside of employers but are not inexpensive. If the company can't
either provide a plan or pay employees enough to buy a plan on their own,
they're simply providing inadequate compensation.

I've worked for smaller companies in the IT industry and salaries haven't been
Google level but I've always had a decent benefits package, including
healthcare.

------
hashkb
I don't think the average engineer with 5 years of experience makes 250k; not
even in the top 10%. And startups DO pay that much, it's just reserved for
powerful exec hires.

Just pay more if you want the best engineers. Asking for a world where top
talent works for less money is stupid.

~~~
likpok
The average engineer at google with 5 years of experience makes at least 250K.
To put it bluntly: I'm pretty sure the average _cash compensation_ (that is,
disregarding RSUs entirely, which is likely at least another 100k/yr) is going
to push 200K. The same is substantially true of the main competitors to Google
(Amazon, Facebook, Microsoft).

~~~
jbergens
Since the interviews at Google/Amazon/MS is famously hard they don't have the
average developers (or shouldn't, then they have done a bad job with the
recruitment). THEIR average is not the same as the average in the industry. I
do think they are a bit closer to the average than they think but not very
close to it.

~~~
plandis
I'd consider myself average at best and got job offers to two of those
companies. I still work at one of them and have been promoted (so I can't be
that terribly bad).

Honestly, reading cracking the coding interview and the algorithm design
manual go a long way to summarizing relevant information you learn in college.
Knowing how to write Python coupled with working through those books is
probably enough to get hired like maybe 7/10 times. (I say 7 because a bad
interviewer can sink your interview and there is nothing you can do about
that).

My point being, is that the people that work at those companies are not dumb
but that they are for normal people too. I wouldn't not apply just because you
think everyone is somehow really smart.

------
awalton
The "Google compensation package" (not Salary) is making it a realistic option
for Google employees to buy homes in the Bay Area after a few years of work.
(Unfortunately thereafter, the RSU pyramid makes it really hard to _leave_
Google, since you'd be giving up a virtual fortune, shimmering off in the
distance like a mirage...)

Your startups... aren't doing any of that. Most of them pay shit-all for
equity and salary, even for early engineers, even for senior-level employees.
On top of that, most of them fail, leaving engineers with worthless stock and
a hole in their bank account balances.

I'm sorry, this is a simple game of economics - if you want those engineers,
you need to give them more in their package. Deal with it.

~~~
tonfa
> Unfortunately thereafter, the RSU pyramid makes it really hard to leave
> Google, since you'd be giving up a virtual fortune, shimmering off in the
> distance like a mirage...

Never understood that argument, how is it different from your base salary,
isn't it a similar mirage? Per year you get XX USD in RSUs vesting, you don't
have to consider granted RSUs as being "yours".

~~~
awalton
> Never understood that argument, how is it different from your base salary,
> isn't it a similar mirage? Per year you get XX USD in RSUs vesting, you
> don't have to consider granted RSUs as being "yours".

If you can/do get an offer that replaces your outstanding RSUs and you're
willing to move on, then none of this really matters - you are going to move
on and the whole conversation is moot.

However, RSUs are typically based on looking back at previous work, not
forward like a salary. If you did a ton of work at the beginning of your
career and earned a huge stack of RSUs, you've sunk a cost... but one that is
easily recoverable simply by waiting. Even if your output drops.

The biggest problem is that people are very often more productive and
energetic in this field at the beginning of their careers, so much so that big
companies don't even want to _touch_ older people - built-in Silicon Valley
ageism. And that's its own whole can of worms...

So after a few years when their productivity begins to slide and their life
priorities change, they get married and have kids and buy cars and homes and
pay for private schools... and getting a new job becomes more difficult by
virtue of ageism and the sheer volume of outstanding RSUs a company would have
to offer you making you a very unattractive candidate, people find they
literally cannot tolerate the risk of moving on.

I've heard stories of people willing to accept fates such as being "roofed"
(see Hooli on Silicon Valley) for months at a time looking for a new position
internally while learning to be a world class barista in the employee lounge,
simply because by sitting on their ass and doing nothing, they can afford to
buy a house next year, but they can't find a new job because nobody is willing
to give them the half a million they feel is owned to them as what is
essentially back pay. It becomes a working pension, albeit one where the end
goal isn't funding retirement, it's the freedom to move on. This is so common
a phenomenon it has a name: Golden Handcuffs.

So yeah, some percentage sunk cost, some percentage risk tolerance, some
percentage boredom tolerance.

------
ozi
This article is basically arguing that farm teams should be able to afford pro
athletes... Having engineers who "perform in the top 10%" is a nice-to-have,
not a requirement for startup success.

~~~
snarf21
I agree but the problem is also the money. A lot of the VCs want to talk about
how many ex GOOG and FB engineers who graduated from MIT that they have
building their next unicorn. They don't have the same story talking about
three state school graduates from Kansas who may be just as talented and have
a better product. They also never want to fly to Kansas, like ever.

I've lived through this working at a startup in central PA. We were in
discussions to be acquired by several of the top 10 west coast tech companies
and having to have an office in PA and come here killed all but one deal. Some
Director of X doesn't want to fly to Philly and take an hour train to visit
the team. This is despite the fact that costs here are like 30% and there is
plenty of reasonable talent.

~~~
jessaustin
Very few people fly to Kansas. There isn't really a major airport in the
state.

~~~
tutufan
Technically true, though everyone on this board thinks Kansas City is in
Kansas...

~~~
jessaustin
Yeah they named the whole state after some other state's second-best city.

------
monkmartinez
I am naive... however, some opinions...

If the startup is truly revolutionary|innovative, shouldn't we see VC's
pounding down the doors to give them money? If they have money, shouldn't they
spend that on their personnel (assuming they are not manufacturing robots or
something) if we are talking software?

Seems to me that startups want to have their cake and eat it too. If you have
money to pay, then pay competitive wages. If you don't, offer equity. If you
have something worth a shit, people will want to work for your startup.

The next facebook, unless it is the next facebook, isn't going to sell a lot
of people. I look at the YC list of startups and shake my head... most of them
don't make much sense. They might be winners, but I would ask for a large
paycheck instead of equity for most of them.

~~~
heurist
No, VCs are fallible and don't always recognize opportunity. They may not
trust that it can be delivered. They might be hedging their bets for whatever
reason. Having a good product is no guarantee of significant funding.

Most startups, even potential game-changers, only have a limited amount of
cash on hand and need to make it stretch as far as possible. You're thinking
about the unicorn case which is so rare as to be a joke.

~~~
st3v3r
I also have a limited amount of cash, and thus I need to work where I can
maximize my compensation.

------
chomp
Then hire remote? Don't found in SV? This article makes it seem like startups
want something valuable for a cheap price, which is unlikely.

------
faitswulff
Well, Hacker News seems to be hurting this website, so here's Google's cached
version:
[https://webcache.googleusercontent.com/search?q=cache:RD5ZRW...](https://webcache.googleusercontent.com/search?q=cache:RD5ZRWKCqcAJ:thestartupconference.com/2017/03/25/the-350k-google-
salary-is-hurting-startups/+&cd=1&hl=en&ct=clnk&gl=us)

~~~
HenryBemis
The definition if Irony!!! Google is hurting us, so use a system by Google to
read how Google is bad for (some) business(-es) which you could not read if
Google didn't exist, while at the same time this article wouldn't exist if
Google didn't exist!

(and right about now I'm watching myself looking at me seeing me)

~~~
samkellett
that isnt ironic

~~~
jessaustin
There are lots of Alanis Morissette fans on HN.

------
jboggan
I'm leaving Google this week to start my own company again. The prospect of
eventually sitting on the other side of the table and competing with these big
companies used to bother me but I've realized that the personalities I'm
looking for don't flourish at Google, and vice versa.

Google engineers (those that stay past the first vesting event) tend to be
very risk averse, even for engineers. I'm not talking about technical risk and
skill but I mean career and life risk. There are relatively few motorcyclists
and skydivers. On our last team Vegas trip I kept track of how much everyone
was gambling as a proxy for their risk appetite and decided that Googlers like
a sure thing, not a risky payout down the road.

My point is, you may want Google's talent bar (who doesn't?) but you aren't
truly competing for the same people. Give me some smart pirates and a fast
ship.

~~~
madamelic
>On our last team Vegas trip I kept track of how much everyone was gambling as
a proxy for their risk appetite

Yikes. Gambling is just a dumb idea in general (it is literally designed to
make you lose money)... unless you are gambling with other's money. ;)

There is a diff between "With enough work, this risky thing could work out"
and "With enough luck, this risky thing could work out if I stop while I am
ahead"

~~~
727374
> Yikes. Gambling is just a dumb idea in general

Or, a thrilling and potentially expensive form of entertainment. I don't feel
it's dumb when I lose $200 at the blackjack table when I'm in Vegas for a
bachelor party.

------
canistr
The other problem is that with so many startups nowadays, none of them offer a
compelling enough vision or mission that would entice someone _away_ from the
Google/Facebook/Microsoft's of the world. A lot of them are either still
working on their product-market fit in a niche field or they are hire front-
end devs for some CRUD analytics tools.

I'd much rather go work at a non-profit, NGO, or government-based organization
where there's a better mission statement or something you're doing for moral
reasons.

If you're a startup who can't hire but you're still doing whiteboarding
problems to screen candidates, you're doing the equivalent of using vanity
metrics.

~~~
umeshunni
> none of them offer a compelling enough vision

Bingo! You could get 0.1% equity and low pay to work on yet another food
delivery or social photo chat app or you could work at M/G/F/A/A for
$200k+RSUs and at least know you have competent co-workers and management.

------
inputcoffee
Here are some options, but notice how controversial they are:

1\. Employ younger, inexperienced people and train them

2\. Import immigrant developers

3\. Hire people in different geographies

As an alternative, why not:

1\. Hire older workers

2\. Hire the unemployed American workers

3\. Hire in America?

Well, because it costs more? Does it?

I don't know, I am just trying to open up the conversation here.

Edit: made language more neutral

~~~
throwaway2016a
We have had high success with #1.

~~~
alexc05
now are you referring to #1 (younger + training) or #1 (older)?

~~~
throwaway2016a
Younger + training.

We've tried the latter too but have not been even remotely as successful. The
job requires some mental elasticity and they older developers we tried it with
were a bit too set in their ways. It didn't make sense given the market since
at least here older developers are pretty well employed so the salary is still
high.

But I am more than willing to try it again.

------
root_axis
In my view, this complaint is just one step above an acquaintance who claims
to have an _amazing_ idea, and all you have to do as an engineer is make it
into a reality and then we'll be super rich

Oh... but you can't really pay me that much (or at all), but once this idea
comes to fruition, I'll be so glad I invested all my time and energy.

This is what I hear when a startup can't pay a competitive salary. If you
can't offer to pay a competitive wage, you shouldn't be in the business (or
you really _do_ have an amazing idea, and the engineers are willing to take
that bet based on merit or based on trust the founder has previously
established)

~~~
mikestew
_In my view, this complaint is just one step above an acquaintance who claims
to have an amazing idea, and all you have to do as an engineer is make it into
a reality and then we 'll be super rich_

No, this view is _exactly_ the same as the folks that crawl out of the
woodwork back in 2010 when they find out you write iOS apps: you build my
idea, and we can split the profits. The fact that a startup throws some token
amount of money at you doesn't change the formula.

Can't afford a million dollar CNC milling machine? Then you don't get to make
widgets. Can't afford the going rate for a software developer? Then you don't
get to make shitty throwaway apps for profit. The difference is that the
milling machine vendors will tell you to pound sound when you whine that you
can't afford it, whereas there's always a doey-eyed college grad ready to
believe they're going to get rich writing the front-end for "Uber, only for
cats".

------
JDiculous
Solutions

1\. Hire candidates that these big companies overlook, or that aren't
interested in experience-blind trivia style data structures & algorithms
interviews

2\. Hire in locations where the cost of living is low

3\. Allow your engineers the freedom and flexibility to work remotely. A side
effect of this is that it opens up your candidate pool outside of your
geographic confines and allows you to accomplish #2

4\. Shorten your work week, or even remove the mandated work week altogether.
To most this probably sounds blasphemous, but engineering is the type of work
that doesn't have to be confined to a M-F 9-5 schedule.

5\. Increase equity (0.1% is an absolute joke for most startups)

Hiring remotely is the easiest way to compete with fat corporate compensation
packages. I would gladly take a pay cut if it meant being able to forgo my
$2k/month rent in NYC and digital nomad around Europe and Southeast Asia.

------
crdb
Alternative hypothesis: these salaries are _helping_ startups.

It is fantastic that someone not born into wealth and connections can pay off
their debt in record time, then save enough to cover financial security and
take a few risks, such as quitting the well paying job to bootstrap a company
before your twenties are over. And if the venture goes pear shaped, there are
plenty of high paying jobs to catch up with the rat race.

I've heard of $170k starting salaries in the Valley last year, admittedly for
the best students from MIT or Stanford. But on that money, or even half of it,
you do not need to hot bunk to put a serious amount away, and give yourself
the time to develop the product or convince a decent technical person to join
you. And you won't be (as much) at the mercy of investors or clients.

------
dbg31415
Man, every startup at SXSW was bitching about this.

I think it's an easy fix...

1) Startups need to pay more than they want to. If you want a talented
engineer, they aren't free. I see a lot of startups offering WAY low salaries
and then getting frustrated they can't find devs... it's basic supply and
demand. Budget accordingly and stop making business plans that involve finding
devs for lower-than-market-rates.

2) Hire more junior people, build a process to mentor them. Recognize that
they will leave after a year or two...

3) Hire freelancers to augment where needed.

4) Hire remote workers who live in cheaper locations -- realistically these
days the only hard part about managing a distributed team is when they are in
dramatically different time zones.

5) Work smart... a stitch in time saves nine, measure twice cut once... hire
good product managers, UX designers, and QA people to help keep your project
momentum going. Devs building prototypes that you just want to changeup as
soon as it's launched... those are the most expensive wireframes you'll ever
build... you're not only saddled with the dev cost, but tech debt to make
changes. Prototype to keep costs down.

6) Cut other costs... Get rid of your office, for starters.

~~~
humanrebar
> ...realistically these days the only hard part about managing a distributed
> team is when they are in dramatically different time zones

Well, there are cultural issues. You _need_ to write things down more to work
remotely effectively and lots of people don't like to read or write.

~~~
dbg31415
Think about every issue in your current backlog. What's the real reason it's
in there, and not in the done pile? I'd willing to bet the root issue is lack
of documented scope leading to a lack of ability to estimate which leads to a
lack of ability to prioritize... Writing and reading are important; I wouldn't
let people get away with half-baking requirements even if I worked right
alongside them... always be kind to your future self and document.

------
johngalt
First off don't bother trying to outbid google/facebook/amazon. Instead look
to the good engineers that they can't hire. Large companies can afford to put
a large list of requirements down and throw out anyone who doesn't check all
the boxes. Zero in on a frivolous requirement that the bigco's commonly use to
reject good candidates and target those engineers.

Secondly the real elephant in the room is equity. The path between early
employee in successful startup and payday is narrower than ever and filled
gotchas. There is a reason we tell startup employees to treat equity as
worthless.

Bluntly it's a 'tragedy of the commons' type problem. Individually each
startup will have large incentives to keep all the dollars at the top while
constantly delaying any possible payday for early employees. Collectively
trust in equity grants has collapsed to zero. It doesn't matter if _you_
individually are a good startup, because an engineer isn't going to gamble
away a 300k salary on the off chance that this time it is different.

You also can't simply solve this problem by saying: "engineers should have
known X about Equity". No thanks, instead I'll take the cushy big-co job with
benefits, reasonable schedule, and _cash on the barrel today_. Sounds easier
than trusting that I've found all the ways I could get screwed by professional
business people who do this every day.

------
anonymoose111
One of the reasons Google and other top companies pay so many engineers high
salaries is to prevent said engineers working on startups. Other comments
mention that PhDs are doing trivial and insignificant work at Google -- why?
Because Google doesn't want them working on new startups.

------
creaghpatr
I'm old enough to remember when the big 5 colluded to keep salaries low...

~~~
matt_wulfeck
Which is funny, because reading the comments seems to be suggesting they're
colluding to keep salaries high in order to squash startups!

------
korzun
I hate posts of this nature. There are no hard facts; it's a collection of
thoughts communicated as 'facts' via a blog post.

Plenty of Google engineers become start-up co/founders. If you are good at
what you do, the start-ups will magically find money for you.

If the a start-up is an equity-heavy sweatshop. You don't have to make $200K
to know who is taking advantage of you.

------
douche
Maybe starting a company in an area consumed by rampant cost-of-living and
salary inflation isn't the smartest idea.

Besides, your Uber for Cats startup probably doesn't need
GoogSoftppleBookazon-grade engineers to slam together a mobile app and some
CRUD services.

------
RomanPushkin
One of my friends was rejected while interviewing for some SV startups. But
was not rejected by Google. Now he works in Google. Startups should re-think
how they're interviewing people. Seems like they suffer more from broken
interview process, not Google salaries.

~~~
tdumitrescu
But when everyone on HN is constantly complaining about how the Google
interview is ridiculous and shouldn't be emulated by startups, this sounds
like a perfectly acceptable outcome. Skills needed for successful startup
engineering vs Google engineering are not the same.

------
lloydde
Why doesn't the article explore starting up in different geographies?

Also, the most interesting questions are:

* How much of the pool are employed by those companies?

* How does the largest segment of employers pay? What percentage of top talent do they employee.

I'd bet there is a larger percentage of top talent at top talent at other
companies. Many, many people don't want to work at mega companies. Also, many,
many people, particularly the best, are motivated, like startups, by challenge
themselves, working on something important to them using tools they enjoy,
people they enjoy working with and most importantly external factors and how
work relates to their own life.

~~~
st3v3r
"Why doesn't the article explore starting up in different geographies?"

Honestly, because most VCs are insanely lazy, and have no interest in
traveling anywhere outside the Bay Area to do stuff.

------
madamelic
Optimizing for compensation is a silly idea at an engineer's salary.

I am a whole lot happier in a small company that pays me a reasonable salary
and is fun than a huge company where I have to play politics and jump through
hoops on command.

EDIT: Plus I get a lot more responsibility and exposure to everything involved
so that I am better equipped to strike out on my own.

~~~
seattle_spring
It's not silly for everyone. You can retire _way_ quicker on $300-400k than
you can with $120-160k. Not everyone wants to work an extra 10-30 years.

~~~
jdbernard
Especially when a lot of people worry about being employable as an older
developer. Makes sense to make enough money to be independent earlier.

------
Animats
Startups should be paying _more_ than established companies. The odds of
success are low, the hours are worse, the benefits are worse, and the odds
that the job will disappear within two or three years are high. Seldom is the
equity worth much unless you're in the first few employees.

------
allenleein
It’s actually like the golden age of Wall Street. The companies here are
collecting the smartest people in the world to improve their Ad click rate and
camera filter.

The talent also believe they are making the world better place but the truth
is just few people care about the REAL problem in the REAL wold.

------
mdani
The article assumes that most of the engineers at that experience level are
hired by Gooogle/Facebook etc, but it is simply not the case. The acceptance
rates are quite low and there are plenty of 5-10 year experienced engineers
who would be willing to work for startups at $130k.

------
mixmastamyk
As long as startups refuse to hire unless they find a young white/asian guy
who's good on the spot/whiteboard with trivia questions you'll have a hard
time hiring---google or not.

I've twenty years experience and couldn't get hired last year, so gave up and
joined a freelancer site. Getting lots of work now, no questions asked, and
guess what? Five star reviews, and work from home. I'm not interested in games
and prefer to get work done.

~~~
asah
nice!!!

------
deedubaya
Every founding team wants the _best_ engineers to build their CRUD app.

Maybe top talent is a requirement for some startups, but most won't make it or
break because they've got the very best engineers. Or even the next tier down.
Or even one tier below.

The vast majority of startups need a few engineers (usually only one) who have
been around the block and know what pitfalls to avoid. The bulk of the team
should be mid or junior level to do the grunt work.

------
eknight15
It's about location. Google salaries in Boulder, CO are not that high.

~~~
soreasan
What are Google salaries in Colorado like?

~~~
joshuamorton
Lower than in Bay/NYC, but still good, partially offset by the lower state tax
rate, and (signing) RSUs aren't any lower than in the Bay, which means that
take home pay for someone in Colorado after rent can be higher.

------
notliketherest
Absolutely 100% spot on. We don't even interview Googlers anymore for this
very reason. They literally think a "pay cut" means 300k+.

~~~
upquark
Is this slave mentality or what?

If I make 350k+, and a startup is telling me I should take their 150k base +
worthless options deal, or else I've "pigeonholed myself in the current role"
(actual quote), I think they're just being stupid and unrealistic.

~~~
uberwach
Are these the same bullshitters that one finds in the "recruiter" population?

"Slave mentality" is a term I often use as well.

------
alistproducer2
Don't start companies in places where the prevailing rates are in the 6
figures unless you have the cash to afford it.

The idea that software engineering is a "talent" strikes me as wrong.
Knowledge of algorithms and data structure is attainable by anyone willing to
put in the time to read a book. Hire people, incentivise them to learn what's
important to the success of your company. Pay them to practice their new
skills. Being congenitally "smart" is not the only path to being useful and
innovative in a company. Being curious, willing to learn, and having a company
that knows how to steer its workforce is.

~~~
thraway2016
> Knowledge of algorithms and data structure is attainable by anyone willing
> to put in the time to read a book

Cognitive limits _do_ exist. Hardwired g-factor correlates like working memory
will ultimately limit any one individual's capacity for understanding the
above.

I do agree with your larger point, though. SF/NYC/Boston are not the only
places one can find high-IQ individuals motivated to learn and build things.

~~~
alistproducer2
I'm not so sure one needs to be high-IQ to be proficient. Outside of pure CS
research, there's nothing in practical software engineering that requires much
more than average to slightly above average intelligence to comprehend. the
main thing you need is a person that is genuinely curious.

------
aphextron
There are a million different factors where startups are at a disadvantage to
big tech companies. That's the whole point of a startup. Of course you can't
compete on salaries. But if you're smart you'll find that startups have many
advantages in recruiting that the big companies don't. Namely self
determination and recognition - the two most coveted workplace qualities of
any good hacker.

------
TeeWEE
Wow we are really getting underpaid here in Europe (Amsterdam). Max salaries
for Seniors is really around 70k per year. Without an extra bonus.

~~~
uberwach
Same here in Berlin, I got an offer with 75k p.a. as Sr. DS.

I mean one could cite the living costs, but then one also has to compare the
different taxation / social welfare models. $350k+/year sounds huge, I would
actually switch to Google for that amount (ofc. knowing what a senior/lead
role encompasses).

------
vojant
I ma co-founder of London based startup and salary was one of the reasons I
decided to build dev team in Poland. East Europe is great resource for smart
software engineers asking for 50% of what we would have to pay in London (and
London is still 50% behind SF). I am surprised why so little startups are
looking for remote employees.

------
tootall
Speaking of big tech company salaries, here's a very fresh data point:
[https://news.ycombinator.com/item?id=13985376](https://news.ycombinator.com/item?id=13985376)

Sorry for the shameless plug, feel free to downvote if not appropriate!

------
mathattack
The idea that VC-funded startups should pay the same cash salaries as big
companies is a sign of hot markets. It happened in 1999 as well. In reality,
startups should pay less because they give equity, allow more freedom and
creation, and have less stupid corporate rules. It's not for everyone, but
that's the tradeoff.

Generally when you're borrowing from VCs who expect a 30-50% return on their
equity, it's a bad idea to pay too much cash. (It's like paying salaries on a
credit card - the lender may be willing, but they still want to get paid back)
When it does become equal, it's a sign of froth. To get the benefits of a
startup without any downside runs up against, "There's no such thing as a free
lunch."

~~~
st3v3r
Why should VCs get a 30-50% return on what they put in, but engineers don't
get a 30-50% return on the salary they sacrificed to actually do the damn work
of the startup?

~~~
smallgovt
Because we live in a capitalistic society where supply/demand ultimately
controls price, not what's fair.

I.e. On average, engineers get paid what they do because if they demand any
more, another peer of equal caliber, on average, will take their job. VC's get
paid, on average, what they do because no other VC will do it for less.

~~~
st3v3r
So basically a bunch of classist bullshit.

~~~
smallgovt
Whether or not that's true, you have little to no power to change it.

Unless you have some genuine superhuman value for justice , you'll be better
off spending your energy learning how to work within the system versus being
angry/complaining about it.

------
tylerfoster
Isn't that kind of the goal?

They get the talent that could build great companies on their own, and if that
talent is interested in the same areas they are, they lower the risk that
talent will end up building successfully competition.

If the markets are worth winning, the difference of a $50K * team size doesn't
really matter in the big picture.

At the same time, by driving up the ante, if an area they're not paying
attention to does get traction, to get to a successful exit there's a higher
likelihood that the startups will need VC capital only the likes of Google
Ventures and similar corporate venturing funds can provide.

Seems like a solid strategy to me.

------
georgeecollins
I see a problem where companies are looking for the magic wand of the "hero
engineer". For example, a manager at a small company asks me if I can refer
someone with the following qualifications: excellent technical proficiency in
many areas, front end and back end, great communicator, great leader, has a
design vision, experienced in obscure areas.. etc.

Come on! Even the people I know who meet these qualifications are often not
all they are cracked up to be. What happened to training people? What happened
to looking for role players. In my career I have seen good teams accomplish
great things with no geniuses.

------
kozikow
My solution: business and executives in Bay Area, engineering in Poland.

Syncing: I have to wake very early every day, but it's a small sacrifice in
the grand scheme of things. "Remote, office not required" book have a case
study of 37signals with two founders in Europe in USA. European moves his day
forward, USA wakes up very early, at least 4 hours of overlap a day is enough.

Relocation: If you open European subsidiary, you can long term relocate people
to USA on L1 if necessary.

How to find good people: It helped that I studied in Warsaw before relocating
to Bay Area and I know some good people who stayed in Poland due to personal
reasons.

------
krystiangw
Seems that startups are paying above average if you check some stats:

[https://jobsquery.it/stats/data.projectIndustry/startup](https://jobsquery.it/stats/data.projectIndustry/startup)

------
TeeWEE
What is the net income over a 150k salary in San Fransisco?

~~~
owyn
In California/SF the net take-home is about 8k/month on that salary. Average 1
bedroom rent is about $3000. Knock down another ~1000 per month for average
things like a car, parking, phone, internet etc and your spendable take home
is about half the actual paycheck.

Congrats, you're really making $50k a year!

~~~
dllthomas
You mean, you're _saving_ $50k/year, minus what you spend on fun. And yeah,
congrats! That's quite a bit better than most people.

------
iblaine
I like the to see startups be pressured into offering higher compensation.
Startups take advantage of engineers by over promising and under delivering.

------
gtrubetskoy
Traditionally, startups had the advantage of compensating with equity/options
that in time would be worth a lot of money. But ever since the laws passed
after the dot-com bust equity is mostly worthless unless you're one of the
founders or investors. That IMHO is the real problem here, not the big company
salaries.

------
calcsam
If startups want to compete effectively for talent with big companies, they
need to communicate more effectively about the value of their equity (and in
many cases, give more).

I built a site that helps startups do this:
[http://www.optionvalue.io/](http://www.optionvalue.io/)

------
yesimahuman
These moments feel like validation for sticking to our guns and not relocating
to the valley. From what I hear from our coastal investors, hiring engineers
is a major major problem in their portfolio and it's only getting worse.
Frankly, we don't struggle to hire engineers.

------
borplk
Are we supposed to cry for the capitalists now?

That's your free market. Enjoy the ride.

~~~
oceanghost
Haven't you heard? There's a shortage of STEM workers.

------
surfmike
Another problem is the cost of housing. Even if you want to join a startup in
the Bay Area, it's hard enough to pay the rent/mortgage on a big tech salary,
let alone a startup salary.

------
wdr1
So Startups need to pay more? Either in cash or equity?

I don't see the problem.

------
emodendroket
Oh boo hoo. Companies pay these kind of salaries because they can extract
significantly more value from the work than what they are paying.

------
brilliantcode
There's no way six digit salaries are going to be sustainable in the near
future. This kind of money is possible because of low interest capital going
around but when the rates inevitably rise and capital dries up, it's going to
be hard for companies to pay someone $350,000 USD /year doing the work someone
in Vancouver, BC can do for $100,000 CAD /year.

I recall during the dot com bubble people justified a six digit figure for
knowing HTML.

------
ctocoder
Give employees more ownership faster of the company. A billion dollars is a
lot and enough to spread around

------
logicallee
On the other hand it means that anyone with that salary can easily (no
sacrifices of any kind) take a salary of $0 for two years, for equity alone,
if the right idea and team comes along.

So here's a question: does that happen?

For a hint as to the answer, consider the existence of the word xoogler.

~~~
humanrebar
That's called being a partner, right?

~~~
logicallee
Yes, cofounder. (That is exactly what my comment was about - sorry I wasn't
clearer.)

------
st3v3r
Maybe startups, instead of going for the lavish offices, should put more of
that VC money into salaries and health benefits. Or try to offer a better
work/life balance. This entitled idea that startup founders have that they can
pay shit wages and work people to death needs to go.

