[HN Gopher] The tech sector teardown is more catharsis than crisis
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The tech sector teardown is more catharsis than crisis
Author : pseudolus
Score : 126 points
Date : 2022-05-15 11:52 UTC (3 days ago)
(HTM) web link (www.ft.com)
(TXT) w3m dump (www.ft.com)
| plaidfuji wrote:
| My biggest question behind all of this is how interconnected is
| the tech bubble, and how self-perpetuating will a downturn be?
|
| The venture-backed startups that I've worked at have themselves
| utilized tools built by other venture-backed startups. It seems
| like there's an entire cottage industry of SaaS tools designed to
| make it easier to scale up small companies. What will the effect
| of a startup downturn be on companies like Carta (high revenue
| but no profit from what I could find, and whose revenue likely
| comes from other companies with no profit...) How many Cartas are
| out there, whose customers are primarily unprofitable startups?
| leroman wrote:
| I've learned that B2B SaaS are actually a way to scale your
| company, there aren't enough really good people to go around,
| so think of it as outsourcing good skills
| kbos87 wrote:
| The idea that there's money to be made not in industry X, but
| supporting industry X has been taken to the extreme in spaces
| like crypto where that's pretty much all the space consists of.
|
| I can't think of more than a few examples of successful,
| scaling companies that are actually using blockchain as a means
| to an end that doesn't come back to "building the
| infrastructure for the use of blockchain" in some way.
| Apocryphon wrote:
| We're experiencing a glut of shovels.
| munificent wrote:
| It's like selling shovels to miners who are mining iron
| that is only used for manufacturing more shovels.
| LewisVerstappen wrote:
| Yeah, the same applies doubly-so for crypto markets (the other
| area where VCs have been going crazy). A drop in the price of
| BTC and ETH has massive ripples in the rest of the crypto
| ecosystem.
| Nextgrid wrote:
| I definitely think there's an advertising bubble and it's
| popping.
|
| Lots of startups' "business model" is "growth and engagement" -
| pump up user and "engagement" numbers and VCs will throw money
| at you, and maybe you even get a bigger sucker that outright
| buys you out. Spend all that money on advertising & marketing
| to keep these "engagement" numbers going up, all while having
| no actual product users pay for.
|
| This in turn means there are other startups that specialize in
| providing advertising/marketing services. For example, there
| are dozens of startups out there who try to reinvent _push
| notifications_ , even though in practice they make a lot of
| tasks harder in exchange of features most probably will never
| need. Those are overvalued and are only propped up by the
| aforementioned companies' VC money being spent on them to keep
| the "engagement" coming. Same with analytics which are used by
| these companies to measure (with dubious degrees of accuracy)
| the "engagement", which become less necessary if you have a
| profitable product and the main analytic becomes "how much $$$
| has landed in my bank account today?".
|
| Once the music stops, all of that crap will come crashing down.
| EricE wrote:
| "I definitely think there's an advertising bubble and it's
| popping."
|
| And Twitter is the tip of the pin popping that bubble. Going
| to be fun seeing Facebook and Google in particular get reset
| too. I've long considered online advertising to be barely
| above modern day snake oil.
| riku_iki wrote:
| > Lots of startups' "business model"
|
| and what is the share of startups in Ad tech comparing to
| behemoths like Walmart etc?
| overgrownzygote wrote:
| > I definitely think there's an advertising bubble and it's
| popping.
|
| This is something I've been thinking about a decent amount
| over the past few years. Advertising is the cash cow that
| underpins a good chunk of tech firms' value. But the purpose
| of advertising, ultimately, is to drive sales of real goods
| and services.
|
| Are those tech firms really driving actual consumption to a
| degree that justifies their value? I suppose it's possible,
| but the massive growth in tech firm valuation doesn't seem to
| be paralleled by massive growth in the "real" economy.
| lumost wrote:
| There are many B2B SaaS which have been negative gross on the
| theory that they are LTV positive.
|
| If their customers start cutting expenses, we may see the LTV
| theory break.
| [deleted]
| gadders wrote:
| Someone needs to dig out the VC letters from 2007-8 and just
| change the date and re-publish them.
| SemanticStrengh wrote:
| The only reason there is a recession is because people believe
| there is a recession
| athrowaway3z wrote:
| I'm not sure how you can belief this terrible cliche to be
| true.
|
| Without even bringing up money or inflation:
|
| Oil and other products are in much higher demand compared to
| the supply than the current system can handle right this
| moment. You can get less of what you used to get and its
| obvious for everyone.
|
| This has immediate consequences, but also compounding when
| slower/lower trade directly effects the ability for people to
| earn enough to stimulate more trade.
|
| The immediate stuff would cause a recession in itself. Period.
| Nothing about economic beliefs. ( except if you include a
| desire to nationalize certain parts of the economy ). The
| compounding stuff can be mitigated in many ways. Personally I
| don't think its prudent to mitigate it with consumer debt. i.e.
| the only way I'm able to interpret your suggestion to not
| belief in a recession.
| EricE wrote:
| "Oil and other products are in much higher demand compared to
| the supply" You mean when you arbitrarily cut off supply to
| satisfy a fringe element it has repercussions? Who knew?!?
| immigrantheart wrote:
| I wish I can create money for myself from my belief.
| SemanticStrengh wrote:
| you can certainly destroy money by stopping consumming as a
| group, which will make enterprises downscale or even go
| bankrupt, resulting in net losses and autoamplifying effects.
| Why do I even have to explain that..
| immigrantheart wrote:
| I want to consume but I don't have enough money in my bank
| account.
| SemanticStrengh wrote:
| That is a ~good thing, inflation is when there is too
| much money.
| kqr wrote:
| This goes for any social construct, and is just about
| meaningless to say.
|
| The only reason you have a family is because you believe you
| have a family.
|
| The only reason you have a manager is because you believe you
| have a manager.
|
| The only reason you're in a soccer team is because you believe
| you're in a soccer team.
|
| The only reason you have a grocery store is because you believe
| you have a grocery store.
|
| And so on.
| SemanticStrengh wrote:
| wtf you are totally 100% missing my point, the current
| recession is a self-fulfilling prophety that is auto-
| amplified in mediatic echo chambers and by sell feedback
| mechanism on stock values.
| dageshi wrote:
| What goes up must come down (at least a little bit).
|
| Stocks ran up A LOT during covid, it couldn't continue
| forever and it didn't.
|
| People who felt rich because they made a ton of paper
| profits on the stock market now feel poorer because they
| have paper losses in the stock market.
|
| That and inflation of course is really taking money out of
| peoples pockets.
|
| Real world things that effect the way people act have
| occurred.
| mathgladiator wrote:
| Yep, I feel it. I was about to impulse buy a deck, and
| then after looking at the market decided not to. I'm not
| alone in tightening spend.
| idealmedtech wrote:
| I think it's clear from the pandemic that stock values do
| not correlate with the economy.
| vkou wrote:
| They do correlate with the economy, they just don't
| correlate _solely_ with the economy.
| SemanticStrengh wrote:
| off-topic: Since you made idealmedtech, you should be
| interested in publicising the effect of ALCAR on
| glycemia/insulin. Since it nudge the mitochondria to
| increase the ratio of lipids/fatty acid consumption and
| reduce the consumption of glucose, it is very positive
| for the protection of both kinds of diabetes, in a side
| effect free manner. The number of lives/quality of life
| that could be saved if this information was more
| widespread is astonishing, especially since your website
| help to measure the impact.
| idealmedtech wrote:
| We're not really in the business of drugs/supplements, so
| unfortunately I can't comment on the efficacy of ALCAR
| and other drugs on the treatment of diabetes. If you have
| any papers on the topic, feel free to email me (linked on
| my profile) and I would be happy to discuss when there's
| time!
|
| Also, as much as I wish we had any sort of platform
| through idealmedtech.com, our traffic is quite low,
| mostly from investors and people pitching SaaS products
| kqr wrote:
| It might be the case that I just haven't communicated my
| point clearly enough. To a surprising extent, "self-
| fulfilling prophety that is auto-amplified in mediatic echo
| chambers and by feedback mechanism on X, Y and Z" describes
| a large portion of the human social condition.
| mancerayder wrote:
| While stated like fact, you're espousing a relatively radical
| philosophical perspective about reality. It might drive
| radical social change (or desire to), but most people don't
| think like this.
| kqr wrote:
| I fail to see how it's anything other than a logical
| consequence -- much less radical.
|
| I know from first-hand experience that if a team don't
| believe they have a particular person as their manager,
| that person is, in fact, not their manager. It's impossible
| for that person to be their manager.
|
| I also know from first-hand experience that once a group of
| people no longer believe themselves to be a soccer team,
| they stop being a soccer team. (Well, actually, this is not
| about a soccer team but the real example is too fresh and
| personal to be detailed about so let's pretend it's about a
| soccer team.)
|
| Similarly, I know from second hand experience that once
| people don't believe a person is part of a family, that
| person is, in effect, not part of that family anymore.
|
| I have third hand experience of people not believing a
| grocery store to be such, and indeed it ceased to be such
| very quickly and tragically to its former owner.
|
| And so on. I can't think of _any_ social construct that
| does not require buy-in from the affected parties.
| quesera wrote:
| This is essentially nonsensical though. You can
| internally reject social consensus or even objective
| measurement, but you cannot choose the frame in which you
| are evaluated by others.
|
| > I can't think of any social construct that does not
| require buy-in from the affected parties.
|
| "Prisoner", "slave", and "taxpayer" spring to mind (but I
| repeat myself). These are artifacts of social consensus,
| enforced by people with stronger-than-usual opinions
| about the correctness of their evaluations.
|
| Viktor Frankl, Nat Turner, and Warren Buffett, as
| exceptions, do not disprove the larger point.
| kqr wrote:
| I think I see where the misunderstanding comes from!
|
| I did not mean to say that you, as an individual, can
| disappear the grocery store by ceasing to believe in it,
| any less than you can wish away a recession by choosing
| not to believe in it.
|
| These social constructions (recession, manager, grocery
| store) are the product of the belief of a majority of the
| relevant people. One person believing this way or that
| way changes nothing. Only when most people stop believing
| do we see change.
|
| Slavery is a great example of a type of social
| relationship that ends when people stop believing in it.
|
| This goes for the recession just as well as the other
| examples I gave.
| WinstonSmith84 wrote:
| Yes, we were told there was not going to be any consequence of
| shutting down the entire economy followed by massive QE
| artificially bringing markets to ATH. And now we are in a QT
| environment with a few rate hike scheduled, while awaiting a
| demand crush ... all is fine, there shall not be any recession
| :-)
|
| Fact is, these last few years have been entirely emotionally
| and panic driven by old people caring mostly about themselves
| chillingeffect wrote:
| Ppl believe there is a recession bc of specific macroeconomic
| conditions. Iirc you specifically described them a few days
| ago!
| SemanticStrengh wrote:
| the base reasons do not matter much, the effect we will
| observe is order of magnitudes higher than the original
| reasons, because of the self fulfilling prophethy of
| autoreinforcing feedback and mediatic echo chambers. Every
| media that amplify the fear is responsible for an amount of
| suffering on earth. The 2008 crisis was mostly an absurdity
| that hurts the brain in retrospect. Thankfully I will make
| some money by buying now, afterall under those circumstances,
| economy is an intelligence market.
| Enginerrrd wrote:
| >the base reasons do not matter much, the effect we will
| observe is order of magnitudes higher than the original
| reasons, because of the self fulfilling prophethy of
| autoreinforcing feedback and mediatic echo chambers
|
| Ah... but this goes both ways. That's why we're in a bubble
| to begin with. Those same base reasons didn't matter as
| much because prices were way higher than you could really
| justify without those feedback loops on the positive side.
| gmm1990 wrote:
| The base reasons matter a lot. Inflation could mean the
| government won't be able to provide more liquidity in a
| downturn so the downturn will be more severe. Vs 2008 where
| at least the cause of the recession didn't preclude the
| govt from providing liquidity.
| boringg wrote:
| The Fed is hitting the breaks on demand in order to slow down
| inflation. If they slow the demand side too fast then we enter
| a recession, if they manage to do a soft landing the pull back
| demand enough that supply can catch up bringing inflation back
| down to a 2% range with many a small downturn or short
| recession.
|
| The goal is too slow down the aggregate demand in the market -
| whether or not we believe that it is a recession is irrelevant.
| Money will get more expensive, companies will be more shrewd on
| their spend & hiring. Whether the economy contracts and enters
| a technical recession - doesn't really matter - there are
| actual physical realities to the world and we can't just will
| our way into a bull or out of a bear market as nice as that
| sounds.
| SemanticStrengh wrote:
| > The Fed is hitting the breaks on demand in order to slow
| down inflation.
|
| Are we watching the same news? The measure to slow down
| demand is to increase the VAT
| https://en.wikipedia.org/wiki/Value-added_tax I don't
| remember what the Fed/SEC did the last months but it was a
| measure that had for effect to reduce investment in stocks
| (would appreciate if you could point out the name of the tax
| fee) Deincentivizing/diminishing investment in companies
| result in what? In a reduction not of demand but of
| production.. Enterprises will downscale their productions and
| are subject to auto amplifying panic hysteria. The panic
| sentiment do reduce demand from people (non linearly).
|
| The gap between demand and production, which is an absurd
| inertia that should have been anticipated during covid, is
| mild and most importantly is reducing quickly as time passe,
| unless of course media hysteria induce panic buys.
|
| most importantly, the salient absurdity of the thing is the
| non-locality of the discourse and of the measures. Only a
| limited set of companies have a deficient offer/demand ratio,
| e.g. a company can distribute 1 billion software copies just
| fine. However the panic mediatic fear of market subinvestment
| affect even the enterprises that have no issues matching
| demand, which are in fact the majorities of companies
| (although yes some key fundamental companies might be
| limited), moreover the FED/SEC measures affect them equally,
| and therefore the VAT measure I propose to reduce demand (
| which seems incredibly more logical) should be applied
| locally and proportionately to how much a specific company
| demand/offer ratio is affected.
|
| either I'm wrong either the system is just doing absurd
| suboptimalities and I'm betting more on the latter than the
| former but please share your thoughts.
| boringg wrote:
| FED / SEC are completely different entities with completely
| different roles and market functions. It's like apples and
| oranges. And has nothing to do with a VAT tax.
|
| I am sorry, but your comment is almost incoherent - so my
| response is more of a broad general definition of what the
| Federal Reserve is doing to help you understand the macro
| context a bit more. As the Fed actions are intentionally
| moving the markets / economy at this point.
|
| Short form - the Federal Reserve increasing the cost of
| money slows down demand in the entire economy as a function
| of the cost of money goes up. I am not talking only hard
| goods - we are talking services, investments etc. They want
| to slow down the demand side of the economy by increasing
| the cost of money. It's a blunt tool but it works - if it
| works to well we enter into a recession which is why they
| are in the hot seat right now. Very challenging as they
| have a simple lever where there is a considerable amount of
| factors (geopolitics, other countries central banks etc).
|
| Hope that helps.
| SemanticStrengh wrote:
| You are not addressing the fact that their lever
| deincentivize investment and therefore production, an
| argument worsening inflation and you are not addressing
| my point saying that VAT is obviously a direct measure to
| reduce demand, without impacting investment as directly,
| finally my VAT locality on the most critically
| underproducing sector yet non affecting the unaffected
| companies that produce just fine, is a third argument.
| This is pretty basic. The answer is more likely to be
| that the U.S never had a VAT and creating one has tragic
| political inertia and hence the FED use the wrong tool
| but the one it dispose.
| peyton wrote:
| We have that. They're called automatic stabilizers. There
| are a ton of them. For example, when people make more
| money, they pay a higher tax rate.
| Apocryphon wrote:
| Is this the sort of analysis that led to the invention of
| social credit by C.H. Douglas?
| [deleted]
| boringg wrote:
| I didn't respond to you argument because it was
| incoherent and unrelated:
|
| Why are you even discussing VATs? Politically infeasible
| and not a tool at the disposal of the Fed - its at the
| disposal of the legislature. Also it doesn't solve the
| problem that the Fed has - which is reducing money supply
| / offloading its balance sheet and reducing inflation
| without tanking the labor market.
| Jensson wrote:
| No, recessions happens when the economy is out of balance and
| corrects. Look at this graph for example, there was a huge
| correction happening in 2008. Currently the graph is much more
| out of line than it was in 2008, so it would make sense that we
| would need another recession to turn it back again.
|
| https://tradingeconomics.com/united-states/balance-of-trade
| forgotmypw17 wrote:
| https://archive.ph/TeJGf
| htormey wrote:
| The macro economic setup doesn't look good for small tech or
| growth stocks in general. Big tech I'm less worried about.
|
| We have central banks rising interest rates to fight inflation,
| caused by wars and massive monetary and fiscal stimulus to fight
| Covid. these hikes impact valuation multiples used to value tech
| and unprofitable startups.
|
| We have a supply chain shock caused by war in the Ukraine, the
| aftermath of Covid and Chinas second lock down which could lead
| to stagflation.
|
| The only silver lining I see is that big tech prints money, is in
| many areas essential for cost reduction and has excellent balance
| sheets.
|
| In summary Im more worried about the general economy tear down
| than the tech tear down, especially in the later half of this
| year and 2023.
| crate_barre wrote:
| Someone needs to explain to me why our tech companies are so tied
| to interest rates. Are VCs borrowing with home mortgage equity??
| tschellenbach wrote:
| DCF
| slavoingilizov wrote:
| The whole economy is intertwined. This is a very simplistic way
| of looking at it, but if you can park risk-free capital
| somewhere which generates high interest, the opportunity costs
| of investing in tech become higher, so VCs stop investing. Also
| - you're committing money in a business with a higher risk of
| not returning them given the economic outlook of their
| customers and revenue. Tech isn't isolated from the world.
| throw8383833jj wrote:
| in addition to the article mentioned by the replier, also, keep
| in mind that the way that equity markets work: it's all about
| the ratio of buying to selling. if there's even a small skew in
| buyers to sellers it can send prices up or down by quite a bit.
| IE: a 10 Billion$ fund, doesn't need to see 2B sold in order to
| go down 20%, a much smaller amount sold can affect the price
| quite dramatically, depending on the ratio. So, if a few buyers
| turn into sellers, it can cause quite the correction.
|
| also, keep in mind that markets are forward looking to about 6
| months. right now they're starting to price in a mild
| recession.
| crate_barre wrote:
| gsibble wrote:
| A lot of this is because VCs are in bed with the media,
| especially tech news sites. They've been publicly and loudly
| unhappy with the prices of rounds for several years now. They
| raised an enormous amount of capital over the last few years
| that they are expected to deploy as soon as possible. This is
| all coordinated with a drop in public markets and, yes,
| somewhat of a tech bubble, to force valuations down and make
| them more palatable for VCs.
|
| Source: Former SV startup CEO currently helping with a raise at
| an AI company. We aren't getting pushback on anything except
| our valuation which they constantly use the news of the day to
| try to lower.
|
| It's not like VCs don't have capital on hand and it's not like
| they will all have big paydays if they don't invest it. They
| just want better returns and have for a while.
| kooshball wrote:
| here are the basics
|
| https://www.investopedia.com/investing/how-interest-rates-af...
|
| I think the dynamic for private (VC) money and public markets
| are different
|
| VC money will dry up as endowments look to shift more money
| into safer asset class when interest rate is high
|
| public markets company valuation models change with interest
| rates changing. when rate is close to 0 investors are willing
| to buy asset with a very long term view for expected future
| profit (say 10 years). when rates go up that time frame
| shortens since opportunity cost of buying that stock today is
| now much higher.
| tyrfing wrote:
| Most of these tech companies build business models around
| giving away money, with a plan of _eventually_ making a profit.
| They are affected by interest rates because the higher interest
| rates you have today, the more attractive it is to have money
| today instead of tomorrow. Interest rates available today are
| the _discount rate_ for those future cash flows (profit).
| gsibble wrote:
| This. Historically, a company is fundamentally valued by the
| discounted rate of its free cash flows into the future. The
| discount rate is decided by several factors including the
| risk free rate.....which is frequently tied to interest
| rates. So interest rates go up, the risk free rate goes up,
| cash flows become worth less, and corporate valuations go
| down.
| worik wrote:
| Discounting is a fool's game, IMO.
|
| We only have data for the present and the past. Prediction
| is hard, especially for the future.
|
| I prefer using nominal quantities, known values, and ignore
| people's predictions. Not that they are always wrong, or
| never right. But because I like to make decisions based on
| facts.
| wutbrodo wrote:
| When interest rates are low, there's a lot more money sloshing
| around in search of better return, instead of just comfortably
| getting a high, low-risk return. When more money sloshes
| around, higher-risk investments like VCs get more money.
| carride wrote:
| Here is the republish without the paywall
| https://arstechnica.com/information-technology/2022/05/the-t...
| austinicholas wrote:
| Thanks!
| tjpnz wrote:
| There's been a lot of posturing here over the years about how
| <insert famous tech company> doesn't do layoffs, but we're
| starting to see that not even they are immune anymore. I hope
| everyone has some savings put aside if things really do turn to
| shit.
| chrisseaton wrote:
| A hiring freeze isn't pausing to stand still - as people
| continue to leave normally. So Meta's 'hiring pause' is really
| shrinking the company rapidly.
| tjpnz wrote:
| Wasn't singling out Meta specifically, but based on how
| relentless they had been with their recruiter spam there must
| be a lot of disappointed folk out there.
| kasey_junk wrote:
| Hiring pause/freeze are not strictly defined terms. Some
| firms mean true freezes with no further hiring, others allow
| back fill for any position and still others allow backfill
| for nominated positions.
|
| I don't know what Metas rules are but generally speaking
| strict hiring freezes are the rarest form.
| chrisseaton wrote:
| Meta's is so hard they're revoking promised offers I'm
| hearing.
| dado3212 wrote:
| I don't think that's true, that's based on one LinkedIn
| post that had some extenuating visa issues. Also hiring
| is still open for E5+ ML and E6+ generally.
| notacoward wrote:
| I predict that some of these companies will try to avoid the
| taint of layoffs by doing them in sneaky ways. One classic
| method is using "performance" reviews to reduce/deny bonuses
| and equity awards, or in some cases simply terminate people
| whose _objective_ performance is fine. Another is to cancel
| projects or reorganize, offering the "opportunity" for an
| internal transfer except that many will be surprisingly unable
| to find a "fit" before time runs out. Zealous (but selective)
| enforcement of previously ignored policies is a third. If you
| currently have a "handshake deal" for a 10-on/4-off schedule,
| or "business" travel that's really about getting to see your
| girlfriend more often, or an exemption to some IT policy, watch
| out.
|
| Driving "natural" attrition isn't hard, as companies like IBM
| and DEC realized long ago. Anyone working at a FAANG or similar
| company should get used to watching their steps very carefully,
| and consciously aligning with the "in" crowd even more than was
| already the case.
| bombcar wrote:
| Given the rapidity which people move around at FAANGs just
| slowing down hiring can be enough to be an effective
| reduction in force.
|
| The problem with people leaving voluntarily is that they're
| often your best performers (and so have the best outside
| prospects) whereas the people who "have it good" are less
| likely to rock the boat.
| greenglass wrote:
| Animats wrote:
| _" Following a series of "super clarifying" meetings with
| shareholders, Uber's chief executive Dara Khosrowshahi
| emailed(opens a new window) employees on Sunday night with an
| arresting message: "we need to show them the money"."_
|
| So the stockholders finally got fed up with Uber's "lose money on
| every ride and make it up on volume" approach. No surprise.
| Uber's stock is at an all-time low since the public offering.
|
| This isn't really about the "tech sector", though. It's about
| Uber. Uber is an over-funded cab company. It's not a tech
| company. It's a labor-intensive service company with a huge
| number of low-skill workers.
| EricE wrote:
| Uber is the epitome of modern day sharecropping - shift all the
| risk and expense - many of which are hidden because they are
| long term or rolling expenses (insurance, maintenance/car
| replacement/physical security, etc) - to drivers. Waive the
| allure of immediate cash at people and damn the longer term
| consequences.
| _tom_ wrote:
| If they get the self driving cars working, they become a tech
| company.
|
| Of course, then they won't be able to shift expenses to
| drivers.
| Animats wrote:
| _If they get the self driving cars working, they become a
| tech company._
|
| Uber sold off their self-driving operation years ago.[1] They
| still issue press releases once in a while, and do some stuff
| with self-driving startups, but it's not serious.
|
| [1] https://www.cnn.com/2020/12/07/cars/uber-sells-self-
| driving/...
| qiskit wrote:
| What teardown? Why do newspapers all parrot each other and spout
| the same fearmongering nonsense? Stock corrections happen. Life
| will go on.
| kriro wrote:
| I think the market is just normalizing. The overall climate was
| pretty insane. Free money (interest rates), stimulus money etc. I
| found it pretty fascinating that during a time that was pretty
| tough overall (global pandemic + supply chain issues) the stock
| market was basically saying we are in a golden age. That felt
| "wrong" to me but if I had acted on it, I'd be broke now because
| the market certainly outperformed my wildest expectations.
|
| As a value investor at heart, I still cannot rationally fathom
| some valuations (Tesla >100 PE). However, most tech companies
| seem pretty solid fundamentally and not close to .com bubble
| times. I cannot speak for crypto since I live in a bubble were I
| ignore it completely.
| nemo44x wrote:
| It's really about interest rates. The idea was that there's no
| way the Fed will be raising rates anytime soon so everything
| went on sale. Yes, an over extension is a lot of things is
| probably fair. Snowflake is not a 100B company today, for
| example.
| twirlock wrote:
| JCM9 wrote:
| There's a whole generation of tech employees that have never seen
| a down market. All indications are that these folks are woefully
| unaware of what's on the horizon now.
|
| It's going to be all about cash flow. If you're burning cash and
| not making much of it from operations then it's going to be a
| bumpy road ahead. Buckle up.
| version_five wrote:
| In the dotcom boom in Canada there was a sub-boom in fiber
| optics and related stuff in the Ottawa area. Nortel et al were
| hiring and paying big salaries right out of school, and people
| got used to it and thought that was how much money they could
| earn.
|
| For years afterward there were people who had mentally anchored
| themselves at a certain salary bracket that couldn't find
| anything (especially in Ottawa) that paid anywhere close.
|
| I always assumed this will happen any time with machine
| learning, I don't think it will be as bad for software overall
| though.
| chrisseaton wrote:
| > and thought that was how much money they could earn
|
| But they were right.
| mdoms wrote:
| They sure were! No need to read the rest of the comment!
| kgwgk wrote:
| Until they were wrong. There is an implicit "forever" - or
| "they would always be able to earn" - in the statement you
| reply to.
| stackbutterflow wrote:
| I've heard the argument that the dotcom crash was so
| catastrophic because the Internet as a market wasn't proven at
| that point. That'd mean a dotcom like crisis is the lowest
| point this industry can reach. Which in some way is reassuring.
| RandomLensman wrote:
| Not sure that follows. If (big "if") interest rates go up a
| lot, then a lot of investors might not reach for VC or PE to
| enhance their returns at even close to current allocation
| (and growth would be heavily discounted).
|
| Look at how the telecoms industry looks now compared to the
| heights of 2003 or so.
| DebtDeflation wrote:
| >If (big "if") interest rates go up a lot
|
| It's not a "big if" at all. Zero nominal rates and negative
| real rates are an anomaly in economic history over the last
| few centuries. Rates are headed higher, much higher. The
| Fed has been holding off in the hope that inflation would
| be "transitory" but it's now been a year and a half of >7%
| CPI increases with no sign of abating.
| RandomLensman wrote:
| Agreed on the long history.
|
| I'd still argue there is sizable "if" as one way to
| reduce government debt would be to use inflation (just
| like in the 1950s). So while rates will go up, the
| question is how much they will go up and if the level
| they reach will be high enough to cause substantial
| portfolio reallocations.
| refurb wrote:
| If interest rates go up and inflation stays high then _real
| returns_ stay low.
|
| I don't see VC/PE investment dropping as a percent of
| investments since it's a unique high risk/high return
| investment than 5% bonds can't match.
| RandomLensman wrote:
| Quite a few large institutional investors have
| surprisingly low nominal target returns, so 4-5% can be
| enough (in mainland Europe, for example)
| marcosdumay wrote:
| This.
|
| What happened in 2000 was that interest rates got up and
| money became scarcer, so there was nobody willing to put
| any money into more risky investments like VCs.
|
| Today we are in a completely different realm of money
| availability, but it is becoming scarcer again.
| JCM9 wrote:
| That was a factor, but more fundamentally it was companies
| with wild valuations and no realistic prospects of becoming a
| profitable and self-sustaining business. There is some of
| that out there right now. Market corrections exist in part to
| flush those companies out of the system.
| tluyben2 wrote:
| Some of that? There are a lot of companies that raised 20m+
| without any hope of _ever_ paying that back and actually
| heavily depending on new rounds of funding to survive at
| all. This was all wrapped up as 'pump everything in growth'
| which works as long as it works and that was no different
| in 1999 when companies were also just buying users (one of
| my clients at the time gave away free groceries the first
| month of your membership; guess what the retention was
| after that month) with investor money. When that dried up,
| all users left in a a few months and the companies were
| gone. This will happen again. Everyone I know (business and
| personal) uses a lot of freemium services from startups
| they will never pay for; they will simply leave the second
| they have to pay or when ads appear. And that has to happen
| for these companies to have a chance at all.
| DebtDeflation wrote:
| >There's a whole generation of tech employees that have never
| seen a down market.
|
| Indeed. I lived through both the 2008 financial crisis and the
| 2000 dot com implosion (also graduated high school and went off
| to college right during the 1991 recession). People who entered
| the job market after 2015 and know nothing except recruiters
| constantly hitting them up with mid six figure+ job offers are
| in for a rude awakening IMO.
| BoxOfRain wrote:
| What advice would you give to people who've not been in the
| tech industry during a recession yet?
| competenteng wrote:
| nfriedly wrote:
| 1) Make sure your spending is well below your income. Pay
| down any debt that you have and try to avoid taking on
| more.
|
| 2) Set aside some cash as an emergency fund: 3-6 months
| worth of spending is a good idea.
|
| 3) Set up automatic monthly investments in an index fund
| (ideally in a tax-advantaged account such as an IRA or 401k
| if you're in the US)
| nemo44x wrote:
| Save money and have enough to live on for awhile. If you
| don't have savings then immediately cut your cost of living
| down. If you do lose your job then don't just accept
| anything (remember, you have savings + unemployment +
| severance to live on for awhile) and use this time to
| sharpen skills and learn new things. Make yourself more
| valuable.
|
| I can't see the future but I don't think it's going to be a
| bloodbath like the .com crash. Engineers in particular are
| valuable assets for a company and expensive to recruit.
| Expect companies to cut back on perks and possibly raises
| for awhile if it gets bad. But I don't think we're going to
| see massive layoffs across the board.
|
| There's still a ton of money in the VC world. They just
| aren't spending right now.
| UncleOxidant wrote:
| > I can't see the future but I don't think it's going to
| be a bloodbath like the .com crash
|
| I think you're right, but I also think that we'll see a
| more general downturn than the .com crash was. Most
| people outside of tech didn't feel the .com crash. I
| suspect we're in for a recession that's closer to the '08
| crash which means it's going to take a while to come
| back.
| ramesh31 wrote:
| > If you do lose your job then don't just accept anything
| (remember, you have savings + unemployment + severance to
| live on for awhile) and use this time to sharpen skills
| and learn new things.
|
| This is terrible advice. An employment gap will make you
| radioactive to hiring managers during a recession. Even a
| terrible job will keep you in better standing for
| negotiation.
| nemo44x wrote:
| It could be but I'm not sure. Your CV displays your
| pedigree much like the name of your university. You'll
| also be very unhappy just jumping into a bad situation
| you are not enthusiastic about.
|
| I'd rather have a 4-6 month gap than taking on a bad job
| right away.
|
| But you do have a valid point that it's easier to find a
| job when you have one.
| csmpltn wrote:
| > "I can't see the future but I don't think it's going to
| be a bloodbath like the .com crash."
|
| The world has gone ever more dependent on tech since
| then. Tech is used everywhere now, pervasively.
|
| They're not re-introducing cash in cash-free economies.
| People aren't going back to carrying physical documents
| around and stashing them in high cabinets. Shopping
| online has only gotten more popular. Hanging out online,
| too. Agriculture, warfare, industry, you name it... it's
| not all "Uber, but for %s" out there. Somebody has to
| keep the lights on, right?
| sorry_outta_gas wrote:
| none of that requires current levels of investment
| matwood wrote:
| > I can't see the future but I don't think it's going to
| be a bloodbath like the .com crash.
|
| I agree. I've went through .com and the gfc, and key to
| both times was to make sure the company I was with was
| making money. While I think tech will see downward
| pressures on salaries, each company will be in a
| different situation. For example, if you're in a company
| that needs a runway, assume it may get cut short at any
| time. I expect the big techs who are making money to
| start scooping up some of the people cut from VC
| companies which is where the downward wage pressure will
| come from.
|
| The other side that is very different from both .com and
| the gfc, is that engineers are seen as assets even
| outside of tech companies now. Almost every company views
| tech as a competitive edge, and that is simply not going
| away. Salaries may level off and/or pull back some, but
| there is too much technology deployed to stop hiring
| completely.
| Clubber wrote:
| >Almost every company views tech as a competitive edge,
| and that is simply not going away.
|
| I hope you're right. In my experience, most large
| companies see tech as a cost center.
| mlom wrote:
| the entire point of large scale technological literacy is
| to replace the tech sector. no web app you write is going
| to be more useful to an organization than an
| administrative staff that just knows SQL and can use it
| on the fly for queries, reports, and analysis. software
| developers are working against the tide: think about how
| much simpler dev tools are than user tools. as users
| become more sophisticated then you expect them to need
| simpler rather than more complex tools.
| zeruch wrote:
| "as users become more sophisticated then you expect them
| to need simpler rather than more complex tools."
|
| That sentence seems inherently contradictory.
|
| ...and yet all the stuff being built by and large makes
| users less sophisticated as consumers and their
| 'technological literacy' questionable. At no point in the
| last 3 decades, and no one moving forward currently, has
| shown any interest in making the masses use SQL for
| anything at an administrative level, and users have shown
| ever less interest in how any of the tech works, or what
| it can do, as long as it fulfills whatever prima facie
| use case they care about.
| [deleted]
| DebtDeflation wrote:
| 1) Save money (get your expenses under control)
|
| 2) Keep some of your portfolio liquid
|
| 3) Prepare to hunker down at your current job for awhile
| (lose the job hopping mindset for the time being if you
| have it)
|
| On the other hand, consider that the time immediately after
| a recession passes can be a great time to do something new,
| start a business, etc. as you will be getting in early on
| the next business cycle.
| nomel wrote:
| To counter these answers a little...
|
| I saw the dot com bubble burst, and then made it through a
| round of layoffs in early 2k, and again near 2008.
|
| I saw people lose their homes, go bankrupt, and end up in
| bad positions. It really scarred me, to the extend where I
| won't work at a company that doesn't actually make
| something of value, or doesn't have an existing line of
| profit. I don't consider stock options when taking a
| position, since it's very rare they actually end up being
| worth anything significant, even with a buyout. I live well
| within my means so I can take a salary that's 1/2 and be
| ok, if needed.
|
| But, as the counter, you could easily, and rightly, claim
| that this has caused me to not make a significant amount of
| money by taking these less risky positions. Those risky
| positions pay more because they are risky, and everyone
| knows it.
| qiskit wrote:
| The standard 6 months of emergency fund, updated resume and
| just go about your life as normal. If you are a software
| developer, you'll be fine. Maybe it'll take you 3 months to
| find a new job rather than 1 month. Don't let fearmongering
| on forums and especially the news affect you or force you
| to make rash decisions.
| UncleOxidant wrote:
| It's kind of telling that "after 2015" (so 7 years) is
| considered a whole new generation of people in tech.
| sorry_outta_gas wrote:
| Pretty much, that's the time horizon for entry-senior in a
| lot of places
| bearjaws wrote:
| I think this is just the correction that was inevitable as hiring
| had become a cargo cult.
|
| Everyone was hiring so everyone felt compelled to hire, creating
| a feedback loop of insane wages and offers.
|
| Now its time to pay the bills and many organizations realize the
| engineers they hired cannot possibly provide the value necessary
| to keep their job.
|
| I know one individual who got hired as a Sales Engineer for a
| platform and they have almost no work lined up for him... for 4
| months now... He just sits making north of 200k for monitoring
| slack and answering community questions.
|
| You can tell which companies actually had a cost benefit analysis
| for their hires and they continue to hire for the roles they
| need, where as others over extended and have to layoff.
| gitfan86 wrote:
| I has a phone screen at Coinbase and they just threw out 380k
| as the salary without me saying anything as far as
| expectations.
|
| This reminds me of the dot com bubble. In 2000 people who had
| no software background and were making 50k would get offers for
| 80k, just for showing up at an interview and saying they know
| Java or HTML
| ForHackernews wrote:
| Huh, I guess this explains why so many otherwise-sceptical
| and intelligent engineers are so motivated to pretend 'web3'
| is a thing.
| MomoXenosaga wrote:
| It also explains why people go into tech instead of
| becoming a teacher or nurse.
| idkyall wrote:
| I believe they quoted me the same number recently. From what
| I recall this was dual purpose - letting you know up front
| this is the comp range, but I believe the recruiter also let
| me know that because it was algorithmic(75th percentile for
| my market/zip code) that it was also a non-negotiable offer.
| koblas wrote:
| Actually just had a discussion about this and putting the
| dollars out in front in the hiring process is something that
| more canidates are looking for in this competitive market.
| I'm sure it was said something like "this title (grade) pays
| 380k, is that's what you're hired at". Since levels.fyi has
| this all documented it still comes down to the interview and
| your ability to pass the interview and meet expectations for
| the level.
|
| What they're trying to do is get you to continue with the
| process and potentially slow down any other interviews by
| putting the total compensation out there at the start.
| heed wrote:
| Also notably CB doesn't allow salary negotiation [0] so
| they just throw out high sounding number up front.
|
| [0]: https://blog.coinbase.com/how-coinbase-is-rethinking-
| its-app...
| shawabawa3 wrote:
| > "so they just throw out high sounding number up front"
|
| Weird way to phrase it, makes it sound like they just
| make it up on the spot
|
| They have fixed salary per level, so they tell you
| exactly what you will make if hired
| bitwize wrote:
| The difference is today, they are subjected to a battery of
| interviews, tests, and rudimentary psychological evaluations
| to make sure they know Java or HTML, and are a "culture fit",
| meaning they have the personality of a smiling Alegria person
| from the company's advertisements and not that of a living
| human being.
| jonwachob91 wrote:
| Did they offer you the job or did they just state the
| expected compensation? b/c those are two different things.
| They could have told you the position paid $380k, and then
| assessed you were not qualified for the position and not
| extended an employment offer.
|
| And when I say you, I don't actually mean you. I mean anyone
| they held interviews with and stated the expected
| compensation.
| htormey wrote:
| I work at coinbase. We have standardized salary bands, this
| is just the salary at your level (comp plus equity, not sure
| if bonus is included). They are letting you know this up
| front to not waste your time.
|
| One other thing that's worth noting is that each year they
| give you a new equity grant. That grant I believe is priced
| based on the stock price over a period of 30 days in the
| first quarter.
|
| Handy for limiting your downside if you are bearish about the
| economy.
| [deleted]
| neill wrote:
| The issue they are raising is specifically that, $380k
| standardized salary band, what role is this? That number
| seems unsustainable.
| lupire wrote:
| And they gave that number out before they assessed
| candidate level. But maybe that was recruiting BS as the
| pay for the max plausible level.
| htormey wrote:
| Well yeah, that's what they think the candidates pay
| level will be. If the candidate doesn't perform well in
| the interview they won't get that offer.
| Infinitesimus wrote:
| 380 isn't even close to the max possible level. If this
| was an Engineering role, that a mid level salary.
|
| Your past experience can be a proxy for the role and
| level you're targeted for and thus, the comp target.
| PenguinCoder wrote:
| Mid-level salary where? That is an insane salary
| _anywhere_, no wonder the market is beginning to correct
| for those inflated "mid level" numbers.
| WaxProlix wrote:
| Mid level in SF, Seattle, and the bay, at any tier 1
| paying company. You also have places like Amazon and MS
| up here in the Seattle area who target more like the 70th
| percentile for pay, where as an L6 senior SWE new offers
| are still topping 500k/yr.
|
| The market _is_ hot, and might be in a bubble, but these
| are comp numbers that you could have seen even five or
| six years ago at the FB, Snap, Lyft, even Googles of the
| world.
| bombcar wrote:
| It also lets the candidates talk about it even if they
| aren't extended an offer - someone they mention it to
| might be the candidate the company is looking for.
| jen20 wrote:
| Usually positions are based on reqs rather than who walks
| through the door. The req will have a level attached, the
| level will have a salary band attached. I don't
| understand what you're trying to say here.
| nemo44x wrote:
| It'a pretty typical for higher level engineer roles and
| senior director and above manager roles for people in
| high cost of living markets.
| kodah wrote:
| This is the average salary of someone Senior - Staff in
| the Bay area. Coinbase indexes on the Bay for salaries,
| as many other companies do.
| htormey wrote:
| No. This is well paid but not out of the ordinary for
| someone working at a top tier tech company in NYC/SF Bay
| Area. Think Facebook, Apple, etc. see
| https://www.levels.fyi/ for levels and comparison.
|
| Some of those companies are doing hiring freezes right
| now but many are not.
|
| Salary bands are adjusted within the USA by zones where
| NYC/SF/Seattle are zone 1, zone 2 is 90% of base, zone 3
| is 85%. With equity component staying the same.
|
| Europe/Brazil/Canada are on a totally different lower pay
| scale.
| neill wrote:
| This is extremely out of the ordinary- Levels.fyi lists a
| salary of $224,000 for a Staff level SWE at Google
| ojbyrne wrote:
| I'm guessing 380k is total comp, which is 498k for staff
| at Google.
| more_corn wrote:
| That's low. I don't think they're using "staff" right.
|
| Also, Total comp in 224k is more like $400k. 15% bonus
| target is normal with a possible 2x performance
| multiplier. 100k/yr gsu stock. 50% 401k match. To say
| nothing of the perks. On-site gyms, fantastic food, free
| shuttles.
|
| Not that I'm advocating for working for goog, just
| saying.
| dasil003 wrote:
| The coin base is almost certainly total comp, especially
| since they give annual (rather than the standard 4-year)
| equity grants.
| fnbr wrote:
| Yeah, no way that Coinbase is paying $380k salary.
| georgeecollins wrote:
| I wonder if this is sort of imposter syndrome, where an
| engineer thinks a year of my time is just not worth $380k
| to $495k. We all know plenty of examples where good
| employees are worth this and much more to growing or very
| profitable companies.
|
| Ask for what you can get and realize that you are worth
| more than you realize in the right situation. And never
| begrudge a peer who earns a lot.
| mlom wrote:
| arcticbull wrote:
| levels.fyi shows $498,910 in total compensation for a
| staff level SWE at Google. Different companies compensate
| using a different blend of cash and equity. At a public
| company like Google, it's all liquid. Similarly, an E6 at
| Facebook gets $576,886.
|
| These are also roughly speaking first-year salaries. You
| can expect a refresh grant equal to 1/4 of a new-hire
| equity grant each year vesting over 4 years, plus a
| staff-level can get a signing bonus of $50-100K.
|
| After 3-4 years in a staff role you can easily be making
| $1-2M/yr.
|
| It's probably not 380K base, which is very high, it's
| likely 300K base + 25% bonus target = $375K, give or
| take. That's not hugely more than any of the mega-caps
| have been paying in cash comp for staffie's for like 5+
| years.
| UncleMeat wrote:
| > After 3-4 years in a staff role you can easily be
| making $1-2M/yr.
|
| Refreshes exist but this is a total lie. I'm staff at
| Google. Nobody at L6 is making $1M in annual
| compensation, even if they have their sign-on equity and
| three refreshes. Let alone $2M.
| arcticbull wrote:
| Ok so I'm speaking from personal experience and network.
|
| The point is that 3-4 years tenure is enough for
| significant appreciation in equity, especially in the
| earlier grants. Let's work an example, for someone who
| started 3 years ago.
|
| - May 2019. -
|
| Base: $225K.
|
| Equity: $880K grant = 785sh @ 1120/share = 220K.
|
| Bonus: $60K.
|
| Total: $500K.
|
| - May 2020. -
|
| Base: $236K.
|
| Equity: 196sh @ 1428/share = 280K.
|
| Equity: $220K grant = 154sh @ 1428/share = 55K.
|
| Bonus: $63K.
|
| Total: $634K.
|
| - May 2021. -
|
| Base: $247K.
|
| Equity: 196sh @ 2411/share = 473K.
|
| Equity: 39sh @ 2411/share = 94K.
|
| Equity: $220K grant = 91sh @ 2411/share = 55K.
|
| Bonus: $66K.
|
| Total: $935K.
|
| Trust me, if they've been there for 3-4 years, they're
| making more than 1M in total comp. If you back my example
| out to someone who started in 2018, those refreshers
| easily push them into 1.2-1.4M, and factor in promo
| grants?
| fshbbdssbbgdd wrote:
| The original grant runs out after 4 years. You don't just
| infinitely accumulate a higher annual comp through
| refreshers.
| UncleMeat wrote:
| Okay if the stock price _more than doubles_ in two years
| then yeah you can end up making a lot of money. This is
| why it is foolish to use vest price rather than grant
| price when discussing compensation. It isn 't actionable
| information.
|
| And Google wasn't giving $880k sign-on equity grants for
| L6 in 2019. You can't use todays numbers for past cases.
| And _then_ you are choosing a peak pay before it drops
| dramatically after the sign-on grant ends. And after all
| that, you aren 't even at 1M, let alone "easily 1-2M".
| With literally everything being used to pump numbers up,
| you don't get to where you cite.
|
| So yes, there are people at loads of companies who make
| way more money than advertised because the stock
| ballooned. But this is a completely useless way of
| analyzing compensation.
| arcticbull wrote:
| > And Google wasn't giving $880k sign-on equity grants
| for L6 in 2019.
|
| Note that Facebook certainly was.
| what_ever wrote:
| I don't have data to prove you otherwise, but I don't
| think 880k would be not possible as the initial stock
| grant for L6. FB gives that to E5 now so I am not sure
| why you think L6 can't get that even in 2019. The initial
| stock grant bands haven't changed that much. I even got
| 400k as the initial grant in 2017.
|
| Disc: Googler.
| arcticbull wrote:
| > So yes, there are people at loads of companies who make
| way more money than advertised because the stock
| ballooned. But this is a completely useless way of
| analyzing compensation.
|
| I couldn't disagree more. If half your total compensation
| is derived from stock, then you better be looking at
| yourself not just as an _employee_ but as an _investor_.
| And part of that means making projections.
| htormey wrote:
| Totally accurate and valuable information based on people
| in my network.
|
| You can make a lot of money working as a staff engineer
| at a top tier company.
| filoleg wrote:
| Levels.fyi lists that number as base cash salary, yes.
| Total comp for a Staff SWE at Google is easily breaking
| $500k. It is also not a secret to anyone that cash salary
| at most tech companies tops out pretty low, because as
| you grow in levels, cash becomes a smaller and smaller
| portion of your total comp.
|
| $224k/yr is below what a midlevel/L4 SWE would make at
| Google in total comp.
| htormey wrote:
| No you are incorrect. That 224k is base at google not
| including equity. Staff engineers at google get a bonus
| and the majority of their comp is in equity, just like
| coin.
|
| Source, I have a lot of friends who are former/current
| staff engineers at a variety of Bay Area companies. I
| also was a staff engineer at coin.
|
| Also if you want to earn something like this in cash go
| work at Netflix when they start hiring again. They give
| you the option to be paid in cash.
| neill wrote:
| It's not incorrect, salary does not include equity. Total
| comp would be a combination of salary, equity, and
| bonuses. The OP refers to salary, not total comp. I'm
| using their information to reply in their thread. Happy
| to re-asses conversation at total comp (a different
| conversation) if they are referring to total comp instead
| of salary.
| thebean11 wrote:
| Coinbase isn't paying $380k base either..are you just
| quibbling over the meaning of salary?
| UncleMeat wrote:
| I don't think it is quibbling. It is a really important
| distinction. Salary is (mostly) guaranteed. Equity isn't
| guaranteed at all.
| worik wrote:
| > Salary is (mostly) guaranteed
|
| Truth
|
| The salary I banked at the beginning of the month is
| guaranteed.
| ac29 wrote:
| >Equity isn't guaranteed at all.
|
| Especially not at coinbase, whose stock has imploded to
| the tune of -75% just this year, and more since IPO.
| thebean11 wrote:
| To quibble even more, it's much harder (legally) to take
| away unvested RSUs than it is to demote / reduce salary.
| htormey wrote:
| It's a bit pedantic to be honest. Multiple times it's
| been pointed out on this thread that the OP was referring
| to total comp so I'm not sure why this keeps being
| brought up.
|
| While equity in a public company can go down and go down
| significantly it's liquid. Especially in companies like
| coinbase that don't have a 1 year cliff, are public, it's
| a significant part of your comp and not funny money like
| you get in many early stage companies.
| htormey wrote:
| The OP is confused, I work at coinbase and that figure
| refers to total comp. Also levels.fyi is listing salary
| and not total comp for the google position he is
| comparing.
| rco8786 wrote:
| Why? Because it's higher than you're used to seeing? You
| don't even know what role that person was applying for.
| Is your position that 380k is just "too high", period?
|
| That number (or higher) has been the norm at a huge swath
| of stable and profitable tech companies for a decade+.
|
| I _am_ making an assumption that 380 is total comp and
| not base salary. I don't believe that Coinbase is paying
| 380 base salary for any non-executive position.
| neill wrote:
| I asked what the role was in the comment you are replying
| to. Do you have data to back up the "huge swath"
| assertion? Certainly there are a few individual companies
| that have been able to provide specialized roles a $380k
| base salary, and companies who have been able to provide
| that and above on total comp thanks to an amazing run on
| equity value over the past 10 years. I don't think anyone
| is arguing that there are situations when this happens,
| that's not the point. It's irregular, it's naive to think
| that is the norm.
|
| The OP specified salary- if they're referring to total
| comp, that'd be an important distinction for them to make
| in the future. Its anybodies guess what the actual value
| of equity in a total comp package will be a year from
| now. As an example, if you took a $380k TC package at
| Shopify 6 months ago and 40% of that was equity, it's now
| looking like $280k.
| htormey wrote:
| "I asked what the role was in the comment you are
| replying to. Do you have data to back up the "huge swath"
| assertion? Certainly there are a few individual companies
| that have been able to provide specialized roles a $380k
| base salary, and companies who have been able to provide
| that and above on total comp thanks to an amazing run on
| equity value over the past 10 years. I don't think anyone
| is arguing that there are situations when this happens,
| that's not the point. It's irregular, it's naive to think
| that is the norm."
|
| It's basically what the salary looks like in the USA at a
| top tier company in a top tier city. Go look at
| https://www.levels.fyi/ for base salary excluding equity.
| Equity goes up by level.
|
| As for this role, it sounds basically like a mid career
| engineers salary. i.e 5-12 years of relevant experience.
| Hard to know exactly because geography impacts salary
| bands at Coin.
|
| I can't remember what HR tells us, but I think we are
| targeting pay for the top 25% of companies/engineers in
| the USA.
|
| "The OP specified salary- if they're referring to total
| comp, that'd be an important distinction for them to make
| in the future."
|
| I work at Coinbase, it's not salary, it's total comp. I'm
| assuming the OP was a bit confused. At least half that
| figure is equity.
|
| "Its anybodies guess what the actual value of equity in a
| total comp package will be a year from now. As an
| example, if you took a $380k TC package at Shopify 6
| months ago and 40% of that was equity, it's now looking
| like $280k."
|
| As I mentioned earlier, each year Coinbase give you a new
| equity grant priced at the start of the year. I.e thirty
| day average, I believe.
|
| So if the equity tanks one year, the next year you will
| be reset to 380k total comp. Assuming of course we are
| not in a multi year bear market and you don't get laid
| off, which is always a possibility in tech.
|
| Also some companies, such as Netflix allow you to take a
| cash only salary that would be comparable to this.
| arcticbull wrote:
| Even if they were paying it as cash, it's likely $300K
| base + 25% bonus target = $375K.
|
| That's not insane for a staff engineer. A little high,
| but not impossible at any big tech company.
| itsoktocry wrote:
| > _Why? Because it's higher than you're used to seeing?
| You don't even know what role that person was applying
| for. Is your position that 380k is just "too high",
| period?_
|
| Perhaps because the company lost half a billion dollars
| last quarter and is in a controversial space facing
| regulatory scrutiny?
|
| > _That number (or higher) has been the norm at a huge
| swath of stable and profitable tech companies for a
| decade+._
|
| Yeah, stable and profitable.
| matwood wrote:
| > Perhaps because the company lost half a billion dollars
| last quarter
|
| So what? Last year COIN made $3.62B earnings. They may
| need to shift at some point, but I think it's incorrect
| to act like 1-2 bad quarters means a company should
| completely shift their plan. If anything, it's more
| important than ever to hire top people - which requires a
| decent salary.
| itsoktocry wrote:
| > _If anything, it 's more important than ever to hire
| top people - which requires a decent salary._
|
| These are not "top people", they are average people. This
| isn't Lake Wobegon, where all the kids are above average.
|
| > _So what? Last year COIN made $3.62B earnings._
|
| Only in Silicon Valley do people say "so what" to profits
| and quote revenue numbers. We're literally talking about
| high costs. Selling dimes for a nickel is simple, but not
| sustainable.
| matwood wrote:
| Not revenue. In 2021 COIN earned 3.62B _profit_ on 7.84B
| revenue. People are acting like COIN is one of these
| companies that has never made money. Last year they had a
| $14.50 EPS.
|
| 2021 Fiscal Year
| https://finance.yahoo.com/quote/COIN/key-
| statistics?p=COIN
|
| Of course past results are not indicative of the future,
| but in 2020 and 2021 COIN had positive earnings.
| phonon wrote:
| They actually made that in profits last year.
|
| https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/8e5e
| 050...
| mdoms wrote:
| What do you mean, so what? Have you not read the article
| under discussion?
| matwood wrote:
| Sure, an article where COIN wasn't mentioned. Given that
| COIN made a profit in 2020 and a very large profit in
| 2021 it's hard to place it as a VC cash burning company.
|
| COIN had a bad quarter and expects to have another. Are
| we seeing a shift away from crypto and tech or repricing
| which things will continue again? I think it's too soon
| to tell, hence my so what. COIN needs tighten up and plan
| for what's next. It doesn't mean they need to assume
| crypto is going to zero and the company is over - yet.
| htormey wrote:
| "Perhaps because the company lost half a billion dollars
| last quarter and is in a controversial space facing
| regulatory scrutiny?"
|
| Wouldn't you expect people to be paid more for working in
| a risky space? Also, please not Coinbase just announced a
| hiring freeze.
|
| https://blog.coinbase.com/employee-note-an-update-on-
| hiring-...
| lumost wrote:
| 6 figure wages were common for successful professionals
| in the 90s, why would you believe that inflation,
| economic growth, and increasing income inequality hasn't
| driven comp to roughly 4x that for successful
| professionals over the last 30 years?
| throw8383833jj wrote:
| Just for comparison, I work at a Non-FANG (SWE >10 years) in
| a expensive COL area and I make less than half that.
|
| I say, you take that offer.
| fatnoah wrote:
| > This reminds me of the dot com bubble. In 2000 people who
| had no software background and were making 50k would get
| offers for 80k...
|
| I accepted a $54k SW Eng job offer in 2000. To be fair, I had
| a Masters, but only 6 months work experience. I didn't break
| $80k until late 2003. Now I feel bad. ;)
| ouid wrote:
| I think you're misunderstanding the theory. Hiring without
| fixed length contract is just interviewing. It's somewhat
| expensive interviewing, but given the legend of the 10x
| developer, it is worth risking paying people more than what
| they are worth to try to identify them.
| mirntyfirty wrote:
| True, I'd claim that the 10x people exist but would be
| impossible to spot based upon resumes and many of their
| resumes would fail to hit the checkbox requirements of the
| organizations looking for them. Also, in general I'd claim
| that 10x people aren't necessary for most projects and tend
| to get stifled by bureaucracy.
| okaram wrote:
| 10x deba exist _for a given project_. The same dev can be
| amazing in one environment and suck on a different one.
| robbomacrae wrote:
| "cannot possibly provide the value necessary to keep their
| job."
|
| It's actually very much possibly for software engineers, at
| least, to justify high valuations. As an example when I joined
| Reddit my first task was to remake a data engineering server in
| scala that cut down the needed AWS machines by 70%. That cost
| saving already covered more than my salary in perpetuity and I
| was only 3 months in.
| onlyrealcuzzo wrote:
| The vast majority of startups aren't doing anything remotely
| complex enough to be able to save money on electricity by
| paying for developers to write more efficient software. Or if
| they can - the instances are few and far between.
|
| The vast majority of startups are also heavily cash-flow
| negative - so anything you do likely won't pay for itself.
|
| It's almost always a bet on a rosy future.
| lemonlime wrote:
| The vast majority of engineers earning these salaries work
| for "startups" like Google minting huge amounts of money on
| software built by these engineers. They are underpaid if
| anything. Do you really think management or shareholders
| (that get paid more for doing less) are the underpaid ones
| in this equation? Where else would the money go?
|
| The amount of revenue per employees at some of these
| companies is in the 7 figures.
|
| The "vast majority of startups" is not a useful unit of
| measure. Look at where all the people and the money
| actually are (FAANG).
| onlyrealcuzzo wrote:
| Define FAANG.
|
| Facebook, Apple, Amazon, Netflix, and Google employ <1M
| engineers in the US. There are 4.4M engineers in the US.
| IMTDb wrote:
| That does not change the point that most of the engineers
| earning insane salaries are working for FAANG
|
| There are 4.4M engineers in the US, but almost all of
| them make far less than the one working for FAANG.
| mhmmbt wrote:
| more_corn wrote:
| Not true. The vast majority of startups hemorrhage money
| with inefficiencies. I routinely cut tens of thousands of
| dollars a month off a startup's AWS bill. It takes me
| 30-45min. Why didn't someone else do it? Too busy, didn't
| know about it, didn't know how.
|
| I keep expecting to find a place that doesn't need some
| sort of efficiency cost-saving. I've yet to find it.
|
| The fact is there's a crap-ton of beneficial work to be
| done anywhere you look. It's not hard to justify a good
| salary in the software world.
|
| For example: what if your company could double the speed of
| your CI/CD system and halve the price? If you move your
| runners to spot instances in an auto-scaling group you can
| do that. What's the return on increasing the productivity
| of your eng team? Maybe eng salaries times percentage
| productivity improvement? That number is probably... large.
| gsibble wrote:
| I was paid $165k a year by a neobank startup to.....build
| their bank. It's now responsible for over $200mm a year in
| revenue. I was the sole engineer on the project.
|
| Good engineers are worth their weight in gold.
| lemonlime wrote:
| Yeah when I read takes like the guy you're responding to, I
| have to wonder: where should the money go if not to the
| people that built the product? Management? Shareholders?
| You can say that but those people are doing less work for
| more money already, so I don't buy it.
|
| Engineers like many people that build useful things,
| provide orders of magnitude more value than what they get
| for their labor.
| IMTDb wrote:
| Well...op left the company, so why should he still get a
| cut of their current revenues ? That does not seem very
| fair to the current engineers who a currently able to
| manage the $200 MM. As far as we know, the company really
| started working well when they were finally able to
| replace his crappy code with a better implementation.
|
| The money probably goes to management, who stuck during
| the entire story - which OP didn't. It also goes to
| current employees who, by their number alone require more
| money. And of course to stakeholder who paid for OP $165k
| when the bank was making $0.
| gsibble wrote:
| Actually no. They replaced me with 9 engineers to do the
| same amount of work and had to delay the project 6 months
| because they had me working 100 hours a week and renegged
| on a raise and a vacation.
| justsomehnguy wrote:
| This one.
|
| I did unimaginable things for one company, only to
| understand the value years later.
| bitwize wrote:
| You know who else asked themselves that same question?
| Karl Marx.
| kwertyoowiyop wrote:
| The Workers control the deployment to Production!
| yobbo wrote:
| By that logic, any salary < 70% of AWS cost is justifiable.
|
| In reality there is a job market, and there are office
| politics. These determine salaries more than "marginal
| revenue of labour". This means that as long as someone who is
| employable by office-political standards will do the job
| cheaper, the salary can be contested.
| warent wrote:
| People are calling this a correction... I don't understand the
| first thing about economics. Over the last quarter, the Nasdaq is
| down 25%. That's a correction? Seems pretty serious
| francisofascii wrote:
| And the Nasdaq is still up 116% over the last five years. So
| some would argue, that yes, it was and maybe still is
| overvalued.
| ticviking wrote:
| Ultimately probably. There's a lot of "value" that isn't linked
| to any work someone is actually doing. Eventually the price of
| companies depending on that illusion has to come down to
| reflect the reality.
| lumost wrote:
| People have called Tech bubbles since 2012, There have been at
| least 2-3 similar sell-offs over the last decade that simply
| lead to higher tech valuations within a year or two. Hence the
| term "correction" is used, this also helps assuage nervous
| retail investors that another '01 or '08 crash isn't around the
| corner.
|
| The difference between then and now is that interest rates are
| blasting through the roof along with inflation. The underlying
| question that CEO's need to think through is whether this is a
| long-term shift in the funding environment, or a short-term
| blip. If the latter, _actually_ taking the foot off the gas
| instead of _saying_ that you will could lead to missed growth
| relative to competitors.
|
| Now, in the event that its a long-term shift - there will
| certainly be firms who run into the wall from not taking their
| foot off the gas.
| __alexs wrote:
| > The difference between then and now is that interest rates
| are blasting through the roof along with inflation.
|
| The effective federal interest rate is 0.33% today. It was
| 2.4% before COVID...
| dgfitz wrote:
| > The effective federal interest rate is 0.33% today. It
| was 2.4% before COVID...
|
| I believe it is actually over double that and sits around
| 0.84
|
| https://www.newyorkfed.org/markets/reference-rates/effr
| lumost wrote:
| The absolute number doesn't matter so much as the change.
|
| If valuations rose because interest rates fell, then rising
| interest rates will do the opposite
| ffggvv wrote:
| The current fed funds rate is 1% (0.75-1.0)
|
| the next 2 meetings they plan to raise it by 0.5 each
| meeting. and then 0.25 each meeting after that until
| inflation is gone.
|
| in 2019 they started lowering it because they crashed the
| market by raising it to 2.5. which proves the point
|
| trajectory matters alot.
| missedthecue wrote:
| Look at the average mortgage rate...
| nonameiguess wrote:
| It's not, actually. People are just using the wrong term.
| Finance uses "correction" to mean an at least 10% but not 20%
| index drawback, with the correction period lasting until a new
| high is reached. When an index declines by 20%, they call that
| a bear market. It's just colloquial usage not matching the
| industry jargon.
| khyryk wrote:
| Because over the last 3 years just prior to this correction,
| QQQ (since we're talking about the tech sector here) had a CAGR
| of around 30%. Had it been climbing up at a CAGR of 10%, we'd
| be having a different conversation.
| nemo44x wrote:
| There's nothing being funded right now. If you didn't raise
| before earlier this year (and really late last year) and your
| runway is < 2 years then you're in a very precarious position. If
| you're hunting for a job, it has gotten very tight over the last
| month. Lots of pausing on hiring plans as companies adapt.
|
| Reminds me more of 2016 than 2k though.
| kasey_junk wrote:
| I switched jobs this month and found it to be the hottest job
| market I'd ever encountered. That can change quickly but it
| hasn't (hadn't) happened as of a few weeks ago.
| anthropodie wrote:
| I think we will need another 3-6 month to see full effect of
| whatever happened in last month everywhere.
| nemo44x wrote:
| I think a month ago was a totally different time than today.
| I know of a few companies that froze most hiring (including
| in cases where an offer was about to go out) temporarily with
| the last couple weeks.
|
| Of course I haven't sampled every company. Just a very sudden
| defensive position springing up more and more.
| Beltalowda wrote:
| I'm interviewing right now, and thus far still plenty of
| interviews. It probably matters what kind of thing you're
| looking for: I mostly prefer small outfits but stay away
| from SF-style "venture-backed" setups in the first place.
| Turns out that outside of the "bubble" the economy is just
| churning along as usual. The position I'm most excited
| about now is just a small self-funded company making
| something useful and is making a profit ( _shock and
| horror_ ).
|
| That said, I did have a job offer that was rescinded at the
| last moment (which is why I'm out of a job, since I quit my
| previous position - probably not the smartest move but I
| really hated it there, so...) but that could just be
| coincidence as well.
| bckr wrote:
| > That said, I did have a job offer that was rescinded at
| the last moment
|
| At what point in the process was it rescinded? Had you
| already accepted or even started the process of getting
| your equipment / Onboarding?
| Beltalowda wrote:
| After third interview on Friday: "I'll send a contract
| this afternoon, let me know what you think and when you
| can start". "Great, looking forward to starting!"
|
| Next Monday: "Oh sorry, no".
|
| But by then I had already quit. As I said, perhaps not
| the smartest move, but I hated it so much and I feel a
| lot happier since I quit, so _shrug_. It 's all good; no
| hard feelings. These things happen.
|
| Also, should be pointed out I didn't reply to a job
| vacancy, but applied via an "open solicitation" through a
| connection. So they weren't specifically looking for
| someone to fill a specific role, and it was more "hey,
| this looks like a good developer I heard good stories
| about, so let's talk!"
| ctvo wrote:
| Meta very publicly announced a hiring slowdown, Netflix is
| introducing levels and slowing down hiring, Coinbase is
| slowing down hiring, etc..
|
| Even with the above names slowing down hiring, I would
| guess big tech uses this opportunity to stockpile even more
| engineers to come out of this stronger. I don't see the
| competition for engineers that can pass those interviews
| slowing down.
|
| Startups? Yes, the cohort that raised 20+ million Series As
| in the last two years and spent lavishly at the height of
| this bull run will start being much more defensive.
| gnicholas wrote:
| NFLX may be slowing down hiring, but they also laid off
| 150 full-time employees, in addition to part timers and
| contractors: https://www.yahoo.com/lifestyle/netflix-
| announces-more-layof...
| pc86 wrote:
| Coinbase has frozen hiring, and even if Netflix is still
| actively hiring they just laid ~2% of their workforce
| earlier this week.
| matwood wrote:
| > Coinbase has frozen hiring
|
| The blog entry said they are _slowing_ hiring. While that
| is a big change from originally wanting to triple the
| size of the company this year, nothing that I 've seen
| said they froze hiring.
| riku_iki wrote:
| > Meta very publicly announced a hiring slowdown
|
| their revenue may just go to other companies (tiktok,
| google?) which will hire those engineers.
| bombcar wrote:
| Twitter is in a freeze, so combined that puts a lot of
| slowdown into the market.
|
| There may be smaller/other companies running to pick up
| the creme of the crop before the music stops, however.
| ctvo wrote:
| I would wager Google, Apple, Microsoft, Amazon, et al.
| all are more than happy to take in the supply slack. They
| compete for the same engineering pool.
|
| Would love to see data to the contrary vs. us guessing at
| this putting a lot of anything on the overall market.
| Apocryphon wrote:
| Meta ran into signs of trouble months ago, when the
| report in February announced they were shedding users for
| the first time. They're ahead of the curve. Netflix use
| has also dropped, and the stock price has followed.
| Coinbase is experiencing a crypto crash.
|
| Not that any of that are disconnected from larger
| economic trends, but they're also unique to each
| business's segment.
| 1270018080 wrote:
| I would say things have changed noticeably just in the last 2
| weeks (in terms of recruiter engagement, news about funding
| rounds, news about hiring freezes). If you started
| interviewing in early April it's a lot different than now.
| wooque wrote:
| not really, freelance platform I worked on briefly announced
| $55m series A yesterday, it's slowed down, but there are still
| money for the right companies I guess
| peyton wrote:
| If _announced_ yesterday, it's likely that deal was done
| months ago.
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