
Silicon Valley’s engineering salaries are finally getting fair. Thank Facebook - barredo
http://pandodaily.com/2012/02/04/silicon-valleys-engineering-salaries-are-finally-getting-fair-thank-facebook/
======
pg
This article is an embarrassment. He does not offer any evidence at all for
his claim that the no-poaching agreement drove down programmers' salaries. It
may have been anticompetitive enough for the participants to get sued, but how
much did it actually decrease salaries? 10%? 1%? 0%? If this guy knows the
answer, he doesn't tell us.

And I know for a fact that Facebook is not the only reason programmers'
salaries are rising. There are a huge number of new startups all competing for
the best people.

~~~
vladd
The agreement with its secrecy (the intent) and its effects are 2 different
things. Lack of the later doesn't make the former right.

Come to think of it, there was at least one effect: at least 1 person was
fired because he didn't respect the cartel rule.

~~~
pg
_(the intent) and its effects are 2 different things_

That is exactly my point.

~~~
keeptrying
If we take into account that on Wall Street, there are engineers making $330K
+ for program trading jobs, then why would that not have happened here in the
valley.

HEdge funds routinely pay $200+. With a fair market I think we should have
seen similar numbers here in the valley.

There are many times more engineers in New York than in SV.

~~~
ntkachov
The economics are different. I'm assuming you mean the guys writing the
programs that run trading platforms. Those guys are super specialists and for
their employers a small boost in performance means a huge boost in revenue for
the day. Also from some first hand account I've read from here and on Reddit
the job is very demanding. You can get called in at any time to write
something that needs to be done by the next morning. It comes with its perks
of pay but the trade off is freedom.

~~~
keeptrying
Umm I used to be one and I know many doing that now. There arent any super
specialists :) ...

Hedge funds regularly give $250K or more for an engineer with experience.

~~~
nnann
What types of engineering skills are needed for this type of work/this type of
pay?

~~~
keeptrying
C & C++ usually. Again any new york head hunter can answer all your questions.

------
markerdmann
This article tries hard to give coders a warm, fuzzy feeling about how
important they are.

As a coder working on a startup, I can tell you one thing I've learned: coding
(at least for me) is not the hard part. If your dream is to be an
entrepreneur, here's my advice: learn to code _and_ learn to sell, or find a
great cofounder who knows how to sell.

~~~
ootachi
Yeah, that rubbed me the wrong way too. Engineers are completely overrated;
your best bet is to hire no engineers and outsource to India or odesk, or if
you absolutely must hire engineers, hire them for rock-bottom prices and fire
them if they ask for more.

~~~
neurotech1
That is the dumbest piece of advice you could give a founder.

A start-up that outsources its core competency is doomed. If you have an idea,
and can't find a technical co-founder, learn to program yourself. PHP aint
that hard.

~~~
mgkimsal
Yeah, it must be a huge pile of valuable IP if someone without tech knowledge
can hack it together with self-taught PHP in a few weeks...

Aren't startup people supposed to be all focused on getting results? If it
takes paying someone else to hack up v1, rather than you spending time on it
when you should be out selling or interviewing potential customers, etc, do
that.

We never hear the stories from people who self-taught PHP or Rails for 6
months hacking on an idea only to then try to give it to users and have it
rejected for multiple reasons. But they happen. Probably more than anyone
realizes.

------
mwsherman
Gibberish article, I’m afraid. As one of said engineers I don’t see how my
employer is undercutting me by paying only twice the median, plus bennies.

The expense of Silicon Valley is largely down to growth policy, which is to
say, they can’t build housing concomitant with demand. Similarly here in NYC.

Making very good money in an very expensive place is not a struggle, it’s a
privilege of very few.

~~~
moultano
> _The expense of Silicon Valley is largely down to growth policy, which is to
> say, they can’t build housing concomitant with demand._

I can't tell you how much this infuriates me. I actually heard a Mountain View
city council member say, "Maybe we should tell Google that they can't hire any
more people." Meanwhile, the city is full of termite-ridden rotting apartment
buildings just waiting for the next earthquake to pulverize them.

Here's the zoning map for mountain view:
[http://www.mountainview.gov/civica/filebank/blobdload.asp?Bl...](http://www.mountainview.gov/civica/filebank/blobdload.asp?BlobID=2459)
There's only a single block of high density residential on the entire map.

~~~
brudgers
The R3 zoning district (all that orange on the map) allows fairly high density
- FAR 1.05 maximum and upto >40 DU's per acre. [Mountainview, Ca, Code of
Ordinances, Chapter 36 Article XII available at www.municode.com]

However, the primary land subdivision pattern of many small lots (and
consequently many owners) makes assembling parcels suitable for redevelopment
at higher densities not just expensive, but difficult.

Furthermore, existing high rents mean that the value of the land based on
existing cashflows may make redevelopment infeasible once the cost of new
construction and land acquisition is amortized and the higher returns
associated with the risk of development must be paid.

Obsolescent housing (and other structures) remain because they are profitable
and can be valued on an existing income basis and thus traded with known risk.

Higher density projects may be possible, but the market may not be able to
absorb the units if the rents are significantly higher - and of course, higher
rents are also likely to be untenable for voters as well.

~~~
moultano
I don't think that's the issue. Look through the R4 zones on the sunnyvale
zoning map.
[http://sunnyvale.ca.gov/Departments/CommunityDevelopment/Map...](http://sunnyvale.ca.gov/Departments/CommunityDevelopment/MapsandData.aspx)
Almost every one of those is a beautiful new (tall) building that efficiently
uses the space, and the plots aren't huge.

------
3pt14159
I keep thinking Dropbox is the next Facebook in terms of the next 100 billion
IPO. Does anybody know what their option pool looks like? I know they want to
be the hard drive of the internet, and will probably happen once their latency
gets better (I recently built an App where I really, really wanted to use them
but a minimum of 1.2 seconds latency just to _list_ the files in the directory
was way too much).

~~~
jrockway
Unfortunately for Dropbox, cloud storage doesn't really have the network
effect that social networking does. Anyone can clone Dropbox and if the price
is right, users can switch without suffering any hardship. This makes Dropbox
look like something that will be bought rather than made public. Amazon can
provide storage infrastructure for cheaper than Dropbox can, but they haven't
written good client-side software. Buying Dropbox would fix that.

~~~
frisco
> Anyone can clone Dropbox

Right. Okay. I think you don't quite understand why Dropbox is Dropbox.

~~~
jrockway
I understand why, the software works really well. But given the right amount
of engineering resources, anyone could duplicate it. Nothing is keeping you on
Dropbox other than the quality of the software, so if better quality software
comes along, you'll switch to that and Dropbox will be a distant memory of the
past.

Compare that to Facebook where you can't switch because your friends won't
switch, and you only use Facebook to interact with your friends. Even if there
is a better social networking site than Facebook, it won't matter because
nobody will use it.

~~~
frisco
These are two different kinds of moats. Yes, Facebook has very strong network
effects that create an advantage. However, it's a mistake to underestimate the
strength of Dropbox's engineering complexity and strong product design. It
wouldn't be simple for _anyone_ \- including Google or Microsoft - to just
clone what Dropbox has done. Apple, Google, or Microsoft would have to decide
that they were comfortable treating platforms other than their own as first-
class citizens, and be able to defend the incredible emphasis on simplicity
all the way through the product's lifecycle. Facebook would have to dedicate
themselves to QA and quality-rather-than-velocity in a way they've shown they
don't like doing. Anyone else, well, like I said: good luck.

~~~
spung
Dropbox has shown the huge need people have for their services. Why wouldn't
the big guys (Apple, Google, MS) be compelled to now get in the game and make
the investment in treating platforms other than their own as first-class
citizens?

~~~
jrockway
One possibility is the amount of money to be gained. According to
<http://www.quora.com/What-is-Dropboxs-revenue>, "revenue is on track to hit
$240 million in 2011". Google, on the other hand, made $37,905 million in
2011. Microsoft made $69,943. Apple requires too much effort for me to get the
numbers, but it's more money than either Microsoft or Google.

So my theory is, "why bother?" If one of those companies needed a few more
million, there are easier ways of making the money.

------
olalonde
My understanding of economics and game theory lead me to believe that the free
market will eventually take care of this "no-poach" cartel (looks like it's
already happening). If I recall correctly, this agreement can be reduced to a
"prisoner's dilemma" game: the rational decision for a given company is to
cheat the agreement or simply not take part in it.

~~~
Nutella2
Perhaps economics and game theory will in the long run but here and now the
Department of Justice and the class-action plaintiffs are doing a good job
taking down the cartel.

------
fleitz
90% of value is created post-IPO, 10,000 shares of MSFT stock in 1983 when
they IPO'd is now worth $100 million.

~~~
spitfire
Most of todays internet tech companies don't have the shelf life of Microsoft.
Many will be has-beens in 10 years time (or even 5!). So you want to take the
cash upfront.

~~~
_delirium
(Disclaimer: Not a real survey.) Doing a spot-check of big tech IPOs in 2004
(first post-crash year with a significant number), there do seem to be pretty
inconsistent outcomes.

Big IPOs that year: Google, DreamWorks Animation, InPhonic, Shopping.com,
SalesForce.com, Atheros, PortalPlayer, Shanda.

Of those, Google, DreamWorks Animation, SalesForce.com, and Shanda continue to
be successful. Shopping.com was acquired by eBay within a year at a modest
premium over the IPO price (15%), and Atheros was acquired by Qualcomm after 7
years, for about 3x the IPO price (also around 15% annual return).
PortalPlayer was acquired by Nvidia after 3 years for 20% below the IPO price
(and 45% below the first-day closing price). InPhonic went bankrupt after 3
years.

------
abalashov
Waaah, waaaah! Are these self-entitled vermin seriously trying to claim poor
house?

It's not anyone else's fault you choose to live amidst a hyperinflated housing
bubble, so quit bitching that it's so expensive. The rest of us don't whine
about not being able to afford Manhattan penthouses.

This type of sob story only reinforces the external prejudice that the Valley
is a phenomenally insular echo chamber, wholly disconnected from all semblance
of national or global reality.

(Yes, I'm a coder, not a business guy.)

------
CPlatypus
As Silicon Valley salaries rise, they will eventually reach the point where
more employers will decide to spend their personnel dollars elsewhere.
Engineers in Austin or Ann Arbor or Cambridge (either one) can work out of
local offices, or straight out of their homes, and produce more lines of
useful code per dollar than their peers in Palo Alto, Mountain View, or
Sunnyvale. Go ahead, call it "inshoring" and look down your nose at those
cheaper programmers if you like. They'll still be taking your jobs, and you'll
be left living in a very expensive place after the salary bubble collapses.

The only question is _when_. I think the process has already begun. Some might
predict another year or two. Nobody sane would expect the ride to last longer
than that before supply and demand reassert themselves over mere fashion.

