First off, while I appreciate your attempt at criticising the type of apps we build for clients who collectively generate billions of dollars in revenue per year I must point out that most web apps could be called pedestrian. Go through a list of the latest batch of YCombinator startups and I think you'd have a hard time finding many whose apps couldn't be called pedestrian too. An app doesn't have to be complex to be incredibly useful and/or profitable and by the way a lot of the work done at companies like Google and Facebook is pretty pedestrian too. So what's your point?
As for paying my employees less than I should, that's quite a statement given that you don't know how much I pay them. All of my engineers make $65-95k a year. At the lowest end is a recent community college grad who is really talented but didn't have the grades or money to go to a 4 year school because he was taking care of his sick father. I was literally the only company he applied to that gave him the time of day.
I constantly hear (from people like you) that my wages are too low and that I'm going to find it hard to hire good engineers but I have yet to experience this. I can't pay $110k to a new college grad or $140k to an engineer with 3 years of experience but from what I see the number of those jobs is far lower than the number of engineers in SV. Should the engineers who aren't going to even get an interview at Google remain unemployed?
I mentioned on another thread that I have one employee who I know is unhappy with his salary. He has about 4 years of experience and makes close to $90k a year but apparently he got it in his mind that the streets of Mountain View are lined with 6 figure jobs. He's a decent engineer who writes adequate code but he's not the type of guy who is going to pass a white board algorithm test. I know he has been looking and interviewing for the past 8 months and he's still here. If I'm taking advantage of him please explain why apparently no other company has offered him the 6 figure salary he (and you!) thinks engineers are entitled to.
By the way when I started in this industry in the 90s my salary as a programmer was the equivalent of about $38k today. I didn't feel taken advantage of or desperate then and thankfully to this day never got a big enough head to feel entitled to a significant income just because I can write some code.
My point wasn't that you won't be able to hire developers adequate to the tasks you require. It was that your target labor pool doesn't intersect with the labor pool target of companies building "database engines" or scaling up to "billions" of users, and so to compare your compensation packages to companies who are looking for engineers capable of building those things is a bit daft.
By the way I know plenty of people at startups who tell me they can't find decent engineers when they're offering 30-50% more in salary than I do. And 99% of these startups are NOT building database engines or running massive social networks. Most of them actually have web apps that are on par with the web apps we build for our clients if they are even that sophisticated.
The problem as I see it is that a lot of the management at these startups are deluded about the skill set they need and they lack the intellectual honesty to admit that their startup is not Google (yet). They can't find candidates because they are so in love with the idea of talent, too picky and don't want to invest in employee development. I mean it's not the end of the world if a candidate doesn't have experience with Git or unit testing. This stuff isn't that hard to learn and if your employees have nothing to learn from you they will probably be bored very quickly.
On the flip side all these ads for 6 figure positions and talk about salaries and talent shortages has given a lot of below average, average and good but not great engineers (which make up 99% of the labor pool by the way) the mistaken impression that anybody with a few years experience who can build a crud rails app can make a couple of phone calls and land in a 120k a year job. It's nothing but a mirage. For every 1 engineer who can get one of the $$$ jobs there are 50 who could do a dozen interviews and get no offers.
Those startups should be hiring your developers at the rates they offer, and you should be paying those rates. But because the startups you mention think they need the CS equivalent of Einstein and Feynman to run their CRUD stack, your developers are ones they pass on (and then whine about a talent shortage), and allow you to pay the below-market rates you get away with, because in your segment of the market there is, apparently, an excess of labor available. Your description, in other words, isn't a counter to my point.
The bay area is expensive but I am proud that I can provide salaries substantially above the median household income in the US with decent benefits. How many people do you provide $65-95k a year jobs to? When was the last time you hired people who had been rejected by every other company they applied to because nobody was willing to look at their potential and take a chance? What percentage of community college graduates do you think make $65k a year to start? Heck what percentage of 21 year olds you even think make $50k a year? It's easy to criticize me and tell people who don't have 6 figure jobs that they're selling themselves short but hey talk is real cheap.
By the way a ton of the startups offering those 6 figure salaries don't earn enough profit to pay those salaries. Their investors are paying those salaries. What do you think is going to happen when the money runs out and there are no more sinking ships to jump to? Will you suggest that the unemployed engineers cling to their tulips?