Comment by austenallred
6 years ago
Google and FB were paying less when they were founded than most startups I see today, adjusted for inflation.
The difference is that now Google and FB pay way more. More than startups could ever dream of competing with. Everyone I know at FB or Google is making $225k+, with the average/median being around $300k/yr. Absolutely no way new startups can play ball with those salaries, and FB/GOOG certainly weren’t paying that as they got off the ground.
> The difference is that now Google and FB pay way more. More than startups could ever dream of competing with.
Logically speaking, the only way that a company can pay more and still be profitable is if they produce value more efficiently. On a general, macro level.
So, if startup founders cannot even dream of providing either cash or equity (adjusted to risk) comparable to the big-techs, does this mean that startups are no longer the best way for society to become more productive?
I only see if two ways (again at the macro level)
a) Startups are better than BigTech for society economically: so make sure you hire the best-of-the-best, and give them high equity, and later compensation when you have more cash.
b) BigTech is better than startups for society economically: here, the proof is in the pudding, better hires leads to more profits, so hire the best of the best, and just give them mountains of cash.
I feel like we're seeing b) for the last 5 - 6 years.
I don’t think it’s crazy to say that a line of code written at Google will, risk adjusted and averaged across all lines of code written at Google, create more value for society than the risk adjusted and averaged line of code at a random startup.
But in startups averages don’t matter as much - it has power-law style returns, so if you happen to work at an insanely valuable startup those lines of code might be 1,000x as valuable as the average line of code written at Google.
Ergo, if you can/want to play the odds with those kind of risks you go to a startup, even knowing the risk adjusted value is lower (loving your work also matters, and some prefer startups - myself included). If you want a sure thing you go to Google.
Could it be because BigTech, collectively, have created an oligopoly? Perhaps making it easier for startups to compete is another reason for antitrust.
BigTech is insanely big right now. Basically advertising and cloud are humongous cash cows. It’s a good time to work for BigTech and build some safety net.
But then again it’s only Google and FB that pay above the line. Microsoft and Amazon salaries, last I checked were pretty subpar.
5 replies →
Or alternatively (and in my mind, more likely), the massive gains coming directly from computer technology has reached its peak. There will never be another new purely "technology" (i.e. where the business is primarily built-on computer software, internet, and/or hardware) company that's as profitable and powerful as Google or FaceBook
There will always be scope for solid good new businesses with big and small margins, but maybe the next FB / Google will be in some other field? Maybe biology or nutrition, maybe quantum physics, who knows. I wish I had some ideas though.
> Logically speaking, the only way that a company can pay more and still be profitable is if they produce value more efficiently. On a general, macro level.
sed 's/produce more value/extract more wealth from dominant positions and regulation then control/'
C) The largest tech companies are receiving windfall profits after a decade of successfully engaging in predatory anti-competitive behavior and regulatory capture.
>> Google and FB were paying less when they were founded than most startups I see today, adjusted for inflation.
You'd have to adjust quite a bit for inflation. The average rent has skyrocketed 300% since the time Google was a pre-IPO company. I would not mind a "low" Google 2004 salary if I could somehow also lock down a Mountain View 2004 mortgage. Also, tuition and student loans have risen. So while im at it, i'd love to lock down a 2004 student loan burden.
> average rent has skyrocketed 300%
The world is bigger than SF. Seattle enjoys the same payscale with half the housing costs.
Pretty sure house prices in Mountain View would've been way higher in 2004 if everyone knew where they'd be in 15 years.
> Absolutely no way new startups can play ball with those salaries
Are their ideas just not that promising, or are they just not raising enough money, or what?
Google has an ATM printing money in the basement. Startups do not.
> Google has an ATM printing money in the basement. Startups do not.
Venture capital is supposed to be (and certainly was a few years ago, though it may have gotten more conservative) the transfer pipeline between the money printing enterprises and the high-risk, high-reward startups that provides the unlimited cash the latter don't otherwise have while unlocking the return potential the former lack.
1 reply →
They may have been paying less, but they were granting actual meaningful equity, and it paid out. Startup equity offers are absolute jokes now, and on top of that you run the risk of a recap zeroing out everything you've worked for.
Most startups can't match G/FB on cash, but they can do much better than they are on equity amounts, equity terms, work-life balance, etc.
For example, what is the option exercise window if you leave Lambda?
They can do better on equity, but they absolutely no longer do. My last startup was acquired for $1.1B. The founder walked away with $400M, and the average engineer (there were 60 of us) received less than $100k each for 4 year grants.
> startup can do much better on work-life balance?
really? i never heard anyone said that