Wonderful writing, I loved the way it circled several times around the central issue - the value of work, and I particularly liked this conclusion - much validation and reward in our society is driven by how much people are willing to pay you for your chosen work, and it's very hard to separate your self-worth and confidence from that. It's hard to reconcile when your values don't meet those of the people around you, as expressed in the salaries for various jobs, which vary wildly without much sign of reason or relation to what society ostensibly values. I think what he's trying to get at is why we overvalue these jobs, which on the face of it are not particularly rewarding either to society or the individuals doing them (apart from monetarily). If you ask people in the street whether we need another Facebook, most would say no, and yet we have hundreds of inchoate and uninspiring replacements being worked on and funded right now, so it's hard to see where the demand is coming from, or why this work is valued so highly, and whether it is in fact a bubble which will burst.
Going back to 17C Holland there was probably a huge demand for market traders able to distinguish fine differences in and trade tulip bulbs, until all of a sudden there wasn't - this is the kind of illusory value the writer posits for today's fêted startup web workers. I'm not sure I entirely agree, but it shouldn't be dismissed out of hand, because he's not just saying it's unfair, but that it may be unjustified.
The price of a word is being bid to zero.
This sentence near the end cuts to the heart of the matter for me - for writers or other producers of original content like photographers there is a cruel and dismal comparison to be drawn between the wages of those paid to frame content and present it to the world, and the wages of those who produce the content. The creative content (writing, photography, art, travel guides etc) is all in demand, but no-one wants to pay for it, perhaps because it's so easy to produce something yourself, and so hard to distinguish the fine differences in quality which separate a remarkable piece of writing or photography from the mediocre.
>> If you ask people in the street whether we need another Facebook, most would say no
Don't take this as a disagreement with your whole comment (it isn't), but one trap that people fall into is equating what people say they want with what they actually want - at least as expressed by what they are willing to pay for, which is what shareholders and VCs care about.
There was an article on HN a day or two ago about how asking people to bet on political propositions affects their stated beliefs - when there's no cost, people will happily spout whatever their favoured party's line is, but if you ask them to put their money where their mouth is, they will often skew away.
VCs are investing based on where they think people will actually put their money, not on where they say they will. If evidence is that people spend a lot of time social networks, AND evidence is that advertisers will pay money for web adverts to people, then it might follow that a new social network is a good investment.
The main issue as I see it is that as we use money as a proxy for value, we disproportionately weight the desires of the rich over those of the poor. A service for rich people (e.g. an online photo sharing website) doesn't need to produce much utility to be worth a lot of money, whereas a service for poor people (e.g. clean water for poor villages) can produce a lot of utility and still be worth little money.
VCs are investing based on where they think people will actually put their money, not on where they say they will. If evidence is that people spend a lot of time social networks, AND evidence is that advertisers will pay money for web adverts to people, then it might follow that a new social network is a good investment.
If VCs were funding companies which made solid profits from customers and were therefore able to pay the VCs a multiple out of that profit I'd find this argument that money talks more convincing. As it is it seems that value for internet companies is not based on revenue or even potential revenue.
This disconnect between the money invested and the money earned completely breaks the connection you talk of - customers willing to put their money where their mouth is. Someone in the chain is paying lots of money, but it certainly isn't the actual end users or customers of most startups - often they run at a loss for a substantial period, and then they have no way to turn their free readers/users into paying ones in sufficient numbers to support their valuation or the money put in. VCs really don't care about that though, as long as they are paid more than they put in - that can easily happen if the companies are bought by larger corporations like IBM or Yahoo in the mistaken belief that the customers can be converted - the question of revenue then becomes academic as the companies are folded into a larger parent and the actual value impossible to discern.
It's an interesting time to be alive and an interesting market to be working in, but I do find the distortions created by massively inflated valuations and companies built just to be sold on worrying. Forgive me though, I must stop wittering on HN and get back to work now :)
While I think you are right that there is a difference between what people say they want and what they actually want --
I would suggest that there is also a difference between what people actually want, and what people demonstrate with their behavior, what they actually do.
What people do is not neccesarily what they want either! For all sorts of reasons. Poor self-control, costs/risks (financial/social/psychological) to doing what you really want, etc.
Just becuase someone spends money on something doesn't actually mean that, in an ideal world, they want to be paying for it, or want it in their lives.
>The main issue as I see it is that as we use money as a proxy for value, we disproportionately weight the desires of the rich over those of the poor. A service for rich people (e.g. an online photo sharing website) doesn't need to produce much utility to be worth a lot of money, whereas a service for poor people (e.g. clean water for poor villages) can produce a lot of utility and still be worth little money.
That is the essence of free markets. If you look up the "welfare theorem's" you will see that the free market promises to do precisely what you describe: maximize the weighted sum of individual utilities, where the wealthier individuals generally have higher weights.
Ultimately, it is in human nature to care more about oneself and one's family (and possibly other people who you consider to be part of your in-group) than others. The free market just happens to make this fact very stark. Each time I buy a coffee for myself instead of donating to a poor village, I cannot avoid the conclusion that I care more about my momentary happiness than whether someone in that village gets some avoidable disease.
People are willing to pay for Heroin because it scratches a chemical itch in our brains. People don't say they want heroin because they intellectually know it ruins their lives and does nothing positive for them.
> One trap that people fall into is equating what people say they want with what they actually want - at least as expressed by what they are willing to pay for
Another trap people fall into is equating what people are willing to pay for something, with the amount of value that's actually able to be captured in the market for that item.
The finance industry, say, is able to capture a lot of the value they create (some might say more than they create). Some other industries, less so.
The price of an already taken photograph, or that of a pre-packaged software or web service tends towards zero, however if you want original content, or to build software, hiring the talent to do it is going in the opposite direction (e.g. good wedding photographers charge a lot of money, as photos may be cheap and plenty, but good photographers aren't neither cheap or plenty).
> this is the kind of illusory value the writer posits for today's fêted startup web workers
The real value of a "web worker" is not in its ability to write PHP to serve HTML, but rather in their ability to find and solve problems. Good engineers that solve problems will always be in demand. Example: I would put an engineer to do marketing, because a good engineer would know how to do measurements, statistics and A/B testing.
>so hard to distinguish the fine differences in quality which separate a remarkable piece of writing or photography from the mediocre
I just paid several thousand dollars to a wedding photographer for my wedding. That is pretty standard from what people tell me. I wouldn't say that no one is willing to pay for content. It depends on the content.
I would argue that the premium you are paying for the wedding photos is attributed to the service rather than the content. You are paying several thousand dollars to a professional photographer rather than a hundred bucks to your nephew so that they do not mess up your special day. While I'm sure the photos are exquisite, no one else would pay several thousand dollars for the exact same photos you received.
>The creative content (writing, photography, art, travel guides etc) is all in demand, but no-one wants to pay for it, perhaps because it's so easy to produce something yourself, and so hard to distinguish the fine differences in quality which separate a remarkable piece of writing or photography from the mediocre.
The real reason is not really that people don't want to pay for it, but rather it's available for free, so there's no need for most people to pay for those things. If there were no free travel guides etc., people would still pay for them.
A comparable situation is happening with newspapers. People will pay for news if they cannot get them for free. Since you can these days get news for free, a lot of people are getting rid of their newspaper subscriptions.
Unfortunately I feel we're in a negative spiral, where good content (e.g. quality reporting and analysis, as in the example in the article) competes with free content which is just good enough to draw attention and pay for itself with advertising. Something is lost there, and in the rush to make everything free we're also losing the incentive for quality journalism or investigative writing, which are just too expensive to sustain on advertising alone.
If that results in a gradual erosion of quality as less and less effort is put in to researching and writing articles, and more and more of the content is churnalism or opinion pieces, then it's a net loss for everyone - eventually the adverts will be more interesting than the real content which lives in the interstices of advertising - I think that would be a shame. I've seen that happening in major newspapers in the UK like the Independent or the Guardian. We've seen the same in television with the rise of Reality TV etc - cheap to produce, controversial, and the perfect filler to squeeze between advertising segments.
In response to you and grey-area about news: yes I get news for free, and it is normally good enough. But... Some of the recent reporting from the NYT has really made me reconsider paying for a news subscription, just to be able to fund great investigative reporting. If I wasn't in a low income country making low income wages it would be a no-brainer. But I really do think that there is a market for high quality reporting, and people willing to pay for it.
Basically, the majority of people cannot appreciate art. Abstract ideas and brilliant commentary are simply not valued by the majority as much as a working system, even if it's as obvious a concept as Facebook. When you hire someone to write something, it's almost impossible to predict the audience's reception to it. When you make a website, a logical machine, you at least know you have something less abstract. A website is more tangible than a piece of prose. Words indeed have no value in themselves.
You would expect the people who make the software that facilitates web publishing to be paid more on average, no? Developers get paid more because they make the stuff that people want -- stuff that does something or solves a problem. It's that simple.
The value of a lot of these apparently lightweight B2C apps is derived primarily from the attention that they get from their users. If you can build something that gets attention, then that's worth a lot of money.
In a world where people are spending less and less time watching TV there is now a huge imbalance between corporations who have lots of money and want attention, and huge numbers of people with smartphones and limited attention spans. It's like a thunderstorm, all these electrons trying to get to Earth, then suddenly, Bang! Instagram. These valuations, and the developer salaries they fuel are just a by-product of all that money trying to get from point A to point B.
Google got huge by inventing one new channel for that money to flow through. And a pretty brute force one at that: You searched for "laptop" here are some ads for laptops... It's still ahead of everything else though, which is basically a re-implementation of the old TV campaigns but on the web. If someone could only figure out how to show you laptops just before you thought of searching for laptops, then they would be even bigger than Google.
"In a world where people are spending less and less time watching TV there is now a huge imbalance between corporations who have lots of money and want attention, and huge numbers of people with smartphones and limited attention spans. It's like a thunderstorm, all these electrons trying to get to Earth, then suddenly, Bang! Instagram."
Wow. That's the most vivid explanation for it all that I've ever seen. Thanks for that.
"If someone could only figure out how to show you laptops just before you thought of searching for laptops, then they would be even bigger than Google."
Yes, new advertising innovations have power. Partially positive, partially negative.
But most new startups don't invent new advertising techniques. They don't grow the amount of attention. They just fight for the piece of the current attention pie.
And In similar fashion to reality TV relative to game of thrones, they offer crappy but addictive products.
Am I the only one that wants coders to stop feeling guilty and devaluing themselves?
The plumber analogy is off base. Web development is incredibly more complex than plumbing in a home. Importantly, web development changes extremely fast while plumbing is largely the same as it has been for decades.
The web and the developers that have created all of the sites and apps on top of it has added tremendous value to our economy and world. Web developers have streamlined almost the entirety of our lives and created enormous productivity gains.
The things that we create may seem trivial to us, but are fantastically valuable to society.
Jet packs and flying cars were always a terrible benchmark to measure human technological progress against. Iterative improvement has created a world of fantastic possibilities.
Good development is hard, and requires a lot of knowledge. Value yourself and feel good about what you are doing.
As a developer who also knows plumbing (and other trades), I'd beg to differ. When I talk to neighbors and friends, most of whom are highly "technical", they look at me in disbelief when I suggest they resolve a plumbing (or carpentry or mechanical) issue on their own. I get the "I have no idea where to start", or "I don't have any tools", and so on. It's not a lack of available information, it's the fear, in many cases extreme fear, of the ramifications of not "doing it right": a flood in the house, a wall that collapses because you hacked through a supporting structure, an electrical short that burns the house down, and so on.
You build a website and maybe it doesn't work right (has bugs). In most cases, no one dies or gets hurt. You mess up plumbing, electrical, etc and that's not the case at all. It's easy to look down on the non-technical trades since we live in a time that glorifies (like the OP says) the art of programming. But next time you have a major plumbing issue, your heat pump goes on the fritz, you car dies on the highway, consider how helpful it is to know RoR, Java, C#, etc. Not too much...
I'd like to point out that a good plumber can make almost as much as a web developer. I know a plumber who makes $90k. People gladly pay premium money for a good plumber for the same reason they will pay for a good developer: the costs and headache they save by making sure the job is done right are well worth a high upfront cost.
Is this really the case? Growing up, my family did pretty much all of their own plumbing/carpentry/electrical work, so I'm kind of surprised that that's not the norm. Its honestly not that hard to figure out, and its also pretty easy to make sure that messing up doesn't do any long-term damage.
The extreme of this was when we spent a year or so finishing our basement; everything from framing to wiring/plumbing to painting was done on weekends by us. I wouldn't say that I "know" any of those trades, but I know how to look up instructions on the internet or ask someone at Home Depot.
Just because there are more ramifications doesn't make it more complex. Proving a mathematical conjecture is more complex than driving a forklift, even though driving a forklift is dangerous to yourself and your surroundings if you aren't careful, while solving a mathematical conjecture might give you a paper cut at worst.
Additionally, I'm not one to invoke the class war most of the time, but am I meant to feel bad that value is going to me rather than to suits and investors? Don't make me laugh.
Good development is hard, but so is just about every job.
I've been attempting to farm, a job that popular media will have you believe any slack-jawed yokel can do, for the past few years. It has been quite an eye-opening experience, making programming seem like child's play by comparison. If any slack-jawed yokel can do a job that is more difficult than development, where does that leave developers?
You are right that we should value ourselves and feel good about our accomplishments. Being able to develop software is a pretty significant one. But we should not feel the need to minimize other professions to make ourselves feel that way. They are doing things that are just as complicated and important, and they should feel equally good about those accomplishments.
A lot of people would agree that empathy is one of the large components of what makes us "human", and that's rather vague, but it does make evolutionary sense for why empathy is useful for societal progress. And guess what, perspective is crucial for empathy. If we assume for a minute that almost nobody really lacks empathy, then what could be the only possible factor that produces an outcome like the one described in that link above? I'm sure most of us tech people aren't narcissists/sociopaths, so the only thing that could explain it is a skewed perspective that makes it permissible to rationalize a lot of the nonsense around us as being 'okay', or 'not relevant' to us. Empathy is a function that takes perspective as an argument, and if we assume that our empathy functions are correct (no reason to think they aren't usually), shouldn't it be good when we realize it's giving us the 'wrong outputs', and then do something actionable about it like try changing our perspective (or input)? I've battled with a lot of self-criticism and depression myself, but I see nothing wrong with this. On the contrary, it seems like the healthiest thing we could do as we approach a possible 'bubble' scenario.
I think the problem is that the OP is labeling what he's arguing with as "web development" when it's really more of a subset of startup culture that he's referring to, not all web developers (he lauded the 'adults' that created Rails remember? I'd say they're 'web developers').
Also, it isn't that things are trivial to us, it's that they can be trivial, period. It just doesn't look that way from the outside, so we benefit (and are congratulated) for "daring" to look into the black art that is computer programming and actually producing something, anything... imagine if it were socially deemed adventurous to look into plumbing, it would have a similar outcome (albeit without all the VC nonsense probably).
Also:
> Jet packs and flying cars were always a terrible benchmark to measure human technological progress against.
Not really, because we do have jetpacks (albeit not exactly efficient/affordable ones), and lets not forget that Google is developing self-driving cars! I'd say the notaion that any vehicle could drive itself is an even crazier idea than having something that's redundant with a small glider/aircraft at this point, and I'm sure people from the 1930's would probably agree.
So then why wouldn't it be good to use existing ground-breaking projects as benchmarks for human progress and value? A lot of web startups sure do fall short of that benchmark too.
> I think the problem is that the OP is labeling what he's arguing with as "web development" when it's really more of a subset of startup culture that he's referring to, not all web developers
You hit the nail on the head. I'm a web developer, and what I do is build websites and other online solutions for non-profits. They range from the very small, to the very large (many millions of dollars in budget). I'm paid less because most of our clients pay less, but I'm happy with my contribution to society, and that's what matters to me.
It's not the job, it's the context in which that job is performed.
What you consider virtuous may produce no economic value. Or maybe it does. There's no rigid formula that connects them and the Just World Hypothesis is an illusion that traps fools and wisemen alike.
Attempts to browbeat the world out of "is" and into "ought" have been universal failures and I retain every confidence that it will be ever thus.
James Somers might find Hayek's writing to be a bit repetitive and languid; but he will find the ideas illuminating. It seems like his father tried, but failed, to make the insight really stick.
There has never been a Just World where Virtue = Value. No matter how badly we want it, there can't be. And trying to forcefully make one generally just makes it much worse.
I didn't feel like the author was trying to prove anything, or was trying to get people to pursue more "virtuous" pursuits. It is simply a personal reflection on the state of the startup ecosystem and what it means to be a computer programmer.
Trying to reconcile the virtues of what he does with his economic value is pointless. They're just not connected.
Demand for Ruby on Rails plumbing is ultimately connected with the current wishes and desires of most of the planet's population and has nothing whatsoever to do with how he, or anyone else, feels about it.
Nonsense. Just because "is" will never fully attain to "ought" does not make vain the pursuit of a better, more just world.
> Attempts to browbeat the world out of "is" and into "ought" have been universal failures
There are so many examples (a single one of which disproves your "universal" claim) of idealists bring "is" more into alignment with "ought" that it would be almost impertinent to even begin enumerating them. Here's a small handful: Civil Rights movement, Women's Suffrage, and (from an economic perspective, since that what you seem to insist can never be touched by notions of "ought") the rise of Organized Labor, which made it possible for former wage slaves to earn a decent living wage.
If Hayek and Rand make you feel better about the fact that most of us over-earn relative to the "virtue" of our labors, fine. But IMHO it is best to be honest about the inequities and fortuitous circumstances which make our success possible.
I wasn't speaking of all cases of is/ought. I was referring to the idea that virtuous jobs should be valuable jobs and vice versa -- that the system of production can be turned to produce according to a ranking function of virtue. Civil rights and suffrage aren't jobs or economic production; they're matters of custom and law, which Hayek also discusses as similar but distinct forms of spontaneous order.
You correctly pointed out that the value of labour has been affected by simple economic considerations more completely than any theory of the native goodness of honest toil.
Rand's cardboard aliens all seem very smug and self-assured and basically I think her books have done more harm than good.
Hayek's tone is an exasperated old school master. He just wants people to understand that you can't create -- as in design or ordain ab initio -- a working economic system that aligns to virtuous ends. It will break.
I don't know. I do think that without virtue there can be no value, if these are properly defined. (Virtue corresponding to filling human needs, value being economic value.)
Is entertaining people virtuous at least potentially? if so, then there is nothing wrong with selling video games, movies, music, or whatever. If not, however then you have a problem because while the world make seem nice on paper (no money to Hollywood since that would take away from cancer research), it isn't a world any of us would like to live in.
The problem is from where I sit that the expected value (what investors will put in things) is wildly out of proportion to the actual delivered value to customers. I think this is even true of giants like Facebook, so what we get are speculative bubbles because investors are assuming there is more value than there is.
> I do think that without virtue there can be no value, if these are properly defined.
This is an unproductive line of argument because either of us can just keep moving the goalposts until we're exhausted.
Economic value clearly doesn't follow any "gut" virtue. Here's how an early moral theorist put it in a notoriously influential book:
I returned, and saw under the sun,
that the race is not to the swift,
nor the battle to the strong,
neither yet bread to the wise,
nor yet riches to men of understanding,
nor yet favour to men of skill;
but time and chance happeneth to them all.
Generally speaking, attempts to create ranking functions for virtue lead to mismatches with the observed state of the world. You line up the list of virtuous things (curing AIDS, feeding poor people) and the list of valuable things (Ruby on Rails programmers, inanimate chunks of metal) and discover that they just don't line up. At all.
But if you try to impose a virtuous order, it all goes kerflooie. Because the whole system of production and allocation relies entirely on value. When you take value you away, it stops working. Partial enforcement leads to partial derangement and in general, creates new evils, requiring still further ranking functions ... it spirals out of control thereafter.
We read this:
Dear friend, it is not possible for man to avert that
which God has decreed shall happen. No one believes
warnings, however true. Many of us Persians know our
danger, but we are constrained by necessity to do
as our leader bids us.
Verily 'tis the sorest of all human ills, to abound in
knowledge and yet have no power over action.
And imagine ourselves to be men and women both of knowledge and power. But it was always an illusion.
I'm doing a pretty poor job of explaining all this. Hayek's Social or 'Distributive' Justice does a much more convincing, thorough and erudite job. It was published in the second volume of Law, Legislation and Liberty, also in The Essence of Hayek.
edit: by the way, your blog about LedgerSMB and PostgreSQL is bloody marvellous.
People in 20-30 ages neither have virtue, nor know the meaning of value. They structure their lives around "fun", which is definable, post-hoc.
edit: by post-hoc I mean, facebook was never meant for memes, but it does now. So you say "facbook is about fun memes", "XXXX was fun". Both of them were not in the original idea, but you express the fallacy.
The fact is, the 15-30's people doze off in a third rate movie, have fun by poking and squeaking.
And I have watch, ppt's about my company's future.
Very well written article, I always enjoy reading stuff from the intersection of writers and coders. What I found startling was how different my experience has been to that of the author's at the start of the article.
I've put up with some horrific jobs paying miserable money in some of the most uninspiring industrial parks you could imagine. I've taken work in dingy Victorian offices so cold that I've had to program through thick gloves. I've accepted commutes taking up to three hours and incorporating four different kinds of transport. More than once I've spent 18 hours on Saturday and Sunday circulating my CV to every job opening and recruiter even slightly relevant to web development.
Reverse interviews? People clamouring to have coffee with me? Beer constantly close to hand?? These are unheard of things. Conditions are definitely better for me now but my skills certainly don't mark me out as a celebrity. Maybe the financial bubble of the dot-com era has been replaced by a cultural bubble, one that I'm definitely not part of.
It's particular to the New York startup scene. There is a lot of money sloshing around and startups have a different hiring strategy than in Silicon Valley. It's quick to hire, quick to fire. I've had six figure offers without even going through a real interview. This leads to a lot of churn. One place I worked at ran through three almost entirely different engineering teams in 18 months. It will be interesting to read if the author of this article still has the same job in the fall.
Silicon Valley is a bit different. There is usually a gauntlet of multi-day interviews even for the lowliest position at a startup nobody has heard of. It's even more of a gauntlet at the large, established companies. I've heard of someone doing 10 days of interviews at amazon.com, and they are a company most want to avoid. Companies are very afraid of hiring the wrong person.
As you have noted, most everywhere else the developer is made to feel lucky to work at a folding table in an unheated area next to the men's room.
Not necessarily true. I think if you aren't in those tech places (beyond SV and NYC, there are other hotbeds too), you have to get known amongst a tech community and this is where social shines. I've been open sourcing software fairly frequently lately and was contacted by potential future bosses at three very well-known companies for software engineer roles, two in California and one smack-dab in Manhattan. I've also been leveraging things like Show HN and putting stuff in appropriate subreddits to get an initial jump. Once you break the trending barrier in your language of choice on Github, it's practically smooth sailing. Getting on the most-starred today (just on Objective-C) has resulted in two extra days of blog posts, tweets and mentions from all over the internet that I didn't even solicit at all. Two of my open-sourced repositories ended up trending number one overall on Github for a day each. I think if you make stuff that helps coders, and position it correctly on sites that care about that, then it's easier to get noticed and technical directors are more willing to consider you for a job (why wouldn't they hire someone that makes their team more productive).
I have a BA in Art with a minor in Advertising. If I can get noticed using these tactics, then surely people with CS or EE degrees can too.
I did 10 interviews at Amazon, for a freaking sales job. 3 on the phone and then they flew me from DC to Seattle for a 7 more interviews in one day. After all that I didn't get an offer.
The problem is that it's hard to show your real skill level (especially on back-end work) so getting access to these better jobs is 90% how you market yourself and where you are (New York and Silicon Valley rents are horrid, but worth every penny in comparison to 95% of places) and only 10% based on your skill level (much less unrealized potential).
You don't have to be a celebrity, but you have to be some combination of accessible and validated.
The good news is that marketing yourself is actually a lot easier than programming. You don't need a natural social acumen to do it. I know this because I'm pretty good at it and certainly do not have natural social talents.
If you want to experience "reverse interviews", you have to be in a technology hub.
That said, the dynamic is not as engineer-favorable as people make it out to be. Sure, a good engineer can get 5 in-bound contacts from recruiters per week-- again, that has more to do with self-marketing than skill level-- but most of those don't mean anything. Most often, it's just an invitation to send a resume into the normal process.
I think the real issue is that there's people with lots of money that are willing to fund a lot of different companies in the hope of stumbling across the next facebook. Result? A whole host of well funded but ultimately useless apps and websites. Meanwhile, the people who can make these websites are making lots of money.
It's probably a bubble to some extent. Eventually, if the return from all these web apps is less than the money spent on them, the money will dry up. (I'd imagine that this will be the case - most of the value of the most-recent crop of high-value tech startups seems to be based on hype and even bigger companies buying them, rather than profitability or revenues). In the mean time, there's still people queuing up to fund things they don't understand. The biggest thing to remember about bubbles is that they always seem to keep growing far longer than any sensible person would expect. Will the money run out eventually? Probably.
People with lots of money have been disappointed by the performance of traditional investment vehicles for the past 5 years; meanwhile a lot of extra money has been put into the financial sector.
If you're a fund with $100 billion under management, dropping $2 billion into various venture funds is a reasonable part of the mix. Multiply that by the fact that several hundred funds, banks, trusts and companies collectively control trillions of dollars and these little 1 or 2 percent investments pump billions of dollars into tens of thousands of companies with collectively perhaps a few hundred thousand employees.
When every buyer is cashed up, prices for sellers rise.
(I don't know much about this but) I kind of believe it is a good thing that the traditional investment vehicles are not that good anymore. That was like betting on the outcome of the players of the roulette, right? Money against money against something that may make money. This last bit, investing in something that might make money, brings the world new ideas. It's probably a completely incorrect picture I'm drawing here though.
Investments almost work on a loss leader model - while there is still decisions made on who to invest in (some VC firms/investors/angels making wiser decisions than others), they are still banking on the small percentage of those investments actually making a return on investment. This return covers the failed investments that they might eventually write off.
The general rule is 1/3rd of investments will fail, 1/3rd of investments will under perform and 1/3rd will meet expectations - and to put that in to a better perspective, "expectations" should be read as a 5x to 10x return on investment. A better firm might be able to skew that more to the successful side, while another firm might be more on the failure side.
I don't think the money will "run out" - but the better firms (think USV, Sequoia, Accel, etc) will continue having the experience in finding successful startups and the smaller firms might just not see the return on interest and exit the game.
The money will definitely slow down if the return from the industry as a whole (the industry being SaaS and web apps) is less than the investment levels put in. It's worth remembering that while the initial investors in Facebook have seen amazing returns which will subsidise other investments for decades to come, those returns are only because the hype in the industry as a whole has lead other people to buy into facebook. Facebook itself has fairly low revenues and they're struggling to grow them. Equally while anyone who'd invested in instagram would have walked away with a nice sum, the money to fund that acquisition came from the same Facebook investment.
There's a lot of hype about "tech" (in this context really only web apps) which has lead to a lot of money pouring in from people desperate to grab a slice of the pie. The reality is that while web apps and SaaS is a large industry, the size of the investment funds targeting the industry is due to hype and investors saying "me too" rather than a reflection on the available revenues. You have to look at even the success stories in this context.
The money won't run out completely, but if the money from investors late to the party slows down then the value of the successful web apps will fall to levels which reflect their revenues.
Not sure I understand why we shouldn't have another facebook - sure it's not disruptive anymore - but facebook needs competition and social it is a massive market.
I don't hear anyone saying - don't bother making a smartphone unless you are Apple or Samsung (of course this might have been Motorola or Nokia in the past :-) )
Not all web developers are "plumbers". If you are working on websites with heavy traffic, then you need to use complex algorithms to scale. That needs someone who is comfortable with algorithms, and that needs a quite lot of thought.
The author describes simple CRUD websites and then equates all of web development to trivial tasks like that. Even scaling simple CRUD needs a lot skills, intelligence and ingenuity.
And talking of design, there is a reason some pieces of art are valued so much. A designer who designs a great website is an artist too, and deserves as much compensation.
Engineering the plumbing systems for the burj requires a different set of skills, but it's not done by plumbers. The actual plumbing part is pretty much the same as in any structure.
I agree. There are some that are worth a lot of money. But to be worth that kind of money you need deep domain knowledge. I won't pay $120/hr for someone to tinker with jQuery. I will pay that for a machine learning specialist.
The fact is that 'coders' are today's version of auto mechanics in the 70s. The barrier to entry is low- an old box, a linux distro, google- and off you go. So everybody who can't do something else can give it a try. Some will fail; some will succeed at a low level, and a few may find their calling. And a lot of people will pay for it because they don't know the difference.
But the one's who are truly good- who obtain that domain knowledge- are valuable. In their domain.
Perhaps you've been very lucky or found some especially naive people (right out of grad school, perhaps). Your rates immediately struck me as the kind of rate you would quote if you'd never, in fact, tried to hire somebody skilled. I allow the possibility you have been lucky and successful.
In general you'll be paying upwards of $250/hr for a machine learning specialist (sometimes upwards of $500/hr if they have a modicum of talent and experience) and more than $120/hr for a front-end webdev who can claim anything more than "I've heard of jQuery." Those are contracting rates of course; hiring somebody at salary has its own costs.
I'm not sure using increasingly complex algorithms makes a programmer move into some kind of new title bracket. You are still a "plumber", you just have to use more complicated distribution systems to deal with the increased building size (to stick with the analogy).
I stopped reading about 1/2 way into the article. Brace yourself, the rant is coming...
<rant>
Too many red flags springing from a delusional, narrow-minded view which looked no further than the bloated world of Valley startups. Hope mr. Author could cast his eye to some other corners of the world (no, even other parts of the States) and witness the bleak reality of a career called web development. Startups are just a small part, albeit the highlighted part of the system. What would you then call those developers who do back-breaking work, with a fraction of your starting salary, in a dead-end career path surrounded by an equally depressing environment? Low-class web developers? They are just like any other programmers out side, people who chose coding as a profession. Before all the perks, freedom and fun, this is a job. You work for your pay, period. I am sick and tired off seeing another article with a viewpoint through rose-tinted glass about values of coders. Enough is enough. </rant>
<conclusion>
There are overpaid programmers and there are underpaid programmers, everywhere in the world. I probably fall into the underpaid camp, that's why I feel annoyed seeing way too many articles with BS about the cool $100k IT jobs for fresh graduates. Where I stay, it probably takes an above average fresh grad 5-6 years of doing good jobs while hopping around (startup/MNC/whatever) to come somewhere close to $100. The media just does not ever cover the average Joe programmer's career path, but this is the reality.
</conclusion>
Do you realize there is actual back breaking work - and coding isn't it? And that making $100k after 5 years is still about twice the median income for a family, and goes a lot farther in places with a low cost of living than it does in New York or the bay area. And that if you want a higher paying job, it is on you to find it and get hired?
Of course I meant in the industry itself. Project-based programmers working until midnight for $40k annum with no extras, that's back-breaking alright. Working 9-6pm, comparatively for $80k isn't.
Read the whole thing and my opinion is now slightly more favourable yet I maintain my point of "see more, hear more". I get the author's standpoint yet it irks me that he seems to think the majority of web developers out there are overpaid for doing less than meaningful work. What about those who cursed the job day in day out but stuck with it for the paycheck while looking out? Do they question the same things? Yes, but getting paid this month is more important and no, other parts of the world don't usually get severance packages.
The article is someone's opinion and I'm merely expressing my own as well. Everything is debatable because the industry is so much different from one city to another, let alone countries. Unless this is entirely dedicated to one part of the States, otherwise it is good but flawed argument.
Well, I didn't even read through the whole article. Your comment prompted me to go back and read everything, and I failed to see where the agreement lies.
My point was that the author questions the values of his work from a rather high vantage point, which may be valid but it annoyed me. For a well-informed opinion to be made, I'd think that it takes an amalgamation of different viewpoints, not just from the high medians. Besides, one must see how everyone else in the same profession has it in other areas. $80k for the 1st job? Not many places around the world, seriously. Based on how much underpaid/overpaid you are comparatively to your responsibilities plus where you stay, each combination forms an entirely different set of values to question, different set of objectives to purse. That is why I found the article well-intentioned but not well-informed and in a way, misleading as most articles involving start-up programmers.
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Going back to 17C Holland there was probably a huge demand for market traders able to distinguish fine differences in and trade tulip bulbs, until all of a sudden there wasn't - this is the kind of illusory value the writer posits for today's fêted startup web workers. I'm not sure I entirely agree, but it shouldn't be dismissed out of hand, because he's not just saying it's unfair, but that it may be unjustified.
The price of a word is being bid to zero.
This sentence near the end cuts to the heart of the matter for me - for writers or other producers of original content like photographers there is a cruel and dismal comparison to be drawn between the wages of those paid to frame content and present it to the world, and the wages of those who produce the content. The creative content (writing, photography, art, travel guides etc) is all in demand, but no-one wants to pay for it, perhaps because it's so easy to produce something yourself, and so hard to distinguish the fine differences in quality which separate a remarkable piece of writing or photography from the mediocre.
Don't take this as a disagreement with your whole comment (it isn't), but one trap that people fall into is equating what people say they want with what they actually want - at least as expressed by what they are willing to pay for, which is what shareholders and VCs care about.
There was an article on HN a day or two ago about how asking people to bet on political propositions affects their stated beliefs - when there's no cost, people will happily spout whatever their favoured party's line is, but if you ask them to put their money where their mouth is, they will often skew away.
VCs are investing based on where they think people will actually put their money, not on where they say they will. If evidence is that people spend a lot of time social networks, AND evidence is that advertisers will pay money for web adverts to people, then it might follow that a new social network is a good investment.
The main issue as I see it is that as we use money as a proxy for value, we disproportionately weight the desires of the rich over those of the poor. A service for rich people (e.g. an online photo sharing website) doesn't need to produce much utility to be worth a lot of money, whereas a service for poor people (e.g. clean water for poor villages) can produce a lot of utility and still be worth little money.
If VCs were funding companies which made solid profits from customers and were therefore able to pay the VCs a multiple out of that profit I'd find this argument that money talks more convincing. As it is it seems that value for internet companies is not based on revenue or even potential revenue.
This disconnect between the money invested and the money earned completely breaks the connection you talk of - customers willing to put their money where their mouth is. Someone in the chain is paying lots of money, but it certainly isn't the actual end users or customers of most startups - often they run at a loss for a substantial period, and then they have no way to turn their free readers/users into paying ones in sufficient numbers to support their valuation or the money put in. VCs really don't care about that though, as long as they are paid more than they put in - that can easily happen if the companies are bought by larger corporations like IBM or Yahoo in the mistaken belief that the customers can be converted - the question of revenue then becomes academic as the companies are folded into a larger parent and the actual value impossible to discern.
It's an interesting time to be alive and an interesting market to be working in, but I do find the distortions created by massively inflated valuations and companies built just to be sold on worrying. Forgive me though, I must stop wittering on HN and get back to work now :)
I would suggest that there is also a difference between what people actually want, and what people demonstrate with their behavior, what they actually do.
What people do is not neccesarily what they want either! For all sorts of reasons. Poor self-control, costs/risks (financial/social/psychological) to doing what you really want, etc.
Just becuase someone spends money on something doesn't actually mean that, in an ideal world, they want to be paying for it, or want it in their lives.
That is the essence of free markets. If you look up the "welfare theorem's" you will see that the free market promises to do precisely what you describe: maximize the weighted sum of individual utilities, where the wealthier individuals generally have higher weights.
Ultimately, it is in human nature to care more about oneself and one's family (and possibly other people who you consider to be part of your in-group) than others. The free market just happens to make this fact very stark. Each time I buy a coffee for myself instead of donating to a poor village, I cannot avoid the conclusion that I care more about my momentary happiness than whether someone in that village gets some avoidable disease.
Such is the predatory nature of the capitalist.
Another trap people fall into is equating what people are willing to pay for something, with the amount of value that's actually able to be captured in the market for that item.
The finance industry, say, is able to capture a lot of the value they create (some might say more than they create). Some other industries, less so.
The price of an already taken photograph, or that of a pre-packaged software or web service tends towards zero, however if you want original content, or to build software, hiring the talent to do it is going in the opposite direction (e.g. good wedding photographers charge a lot of money, as photos may be cheap and plenty, but good photographers aren't neither cheap or plenty).
> this is the kind of illusory value the writer posits for today's fêted startup web workers
The real value of a "web worker" is not in its ability to write PHP to serve HTML, but rather in their ability to find and solve problems. Good engineers that solve problems will always be in demand. Example: I would put an engineer to do marketing, because a good engineer would know how to do measurements, statistics and A/B testing.
Cuts to the heart of it indeed: "The pitcher cries for water to carry and a person for work that is real."
http://writersalmanac.publicradio.org/index.php?date=2006/09...
I just paid several thousand dollars to a wedding photographer for my wedding. That is pretty standard from what people tell me. I wouldn't say that no one is willing to pay for content. It depends on the content.
The real reason is not really that people don't want to pay for it, but rather it's available for free, so there's no need for most people to pay for those things. If there were no free travel guides etc., people would still pay for them.
A comparable situation is happening with newspapers. People will pay for news if they cannot get them for free. Since you can these days get news for free, a lot of people are getting rid of their newspaper subscriptions.
If that results in a gradual erosion of quality as less and less effort is put in to researching and writing articles, and more and more of the content is churnalism or opinion pieces, then it's a net loss for everyone - eventually the adverts will be more interesting than the real content which lives in the interstices of advertising - I think that would be a shame. I've seen that happening in major newspapers in the UK like the Independent or the Guardian. We've seen the same in television with the rise of Reality TV etc - cheap to produce, controversial, and the perfect filler to squeeze between advertising segments.
but it's the sad fact of me outperforming my peers, in something that is essentially a big pile of junk and waste of time.
i'm now thinking about going to some neuroscience lab in the states to get a ph.d and build something meaningful again.
Basically, the majority of people cannot appreciate art. Abstract ideas and brilliant commentary are simply not valued by the majority as much as a working system, even if it's as obvious a concept as Facebook. When you hire someone to write something, it's almost impossible to predict the audience's reception to it. When you make a website, a logical machine, you at least know you have something less abstract. A website is more tangible than a piece of prose. Words indeed have no value in themselves.
You would expect the people who make the software that facilitates web publishing to be paid more on average, no? Developers get paid more because they make the stuff that people want -- stuff that does something or solves a problem. It's that simple.
http://en.wikipedia.org/wiki/Loss_aversion
In a world where people are spending less and less time watching TV there is now a huge imbalance between corporations who have lots of money and want attention, and huge numbers of people with smartphones and limited attention spans. It's like a thunderstorm, all these electrons trying to get to Earth, then suddenly, Bang! Instagram. These valuations, and the developer salaries they fuel are just a by-product of all that money trying to get from point A to point B.
Google got huge by inventing one new channel for that money to flow through. And a pretty brute force one at that: You searched for "laptop" here are some ads for laptops... It's still ahead of everything else though, which is basically a re-implementation of the old TV campaigns but on the web. If someone could only figure out how to show you laptops just before you thought of searching for laptops, then they would be even bigger than Google.
Wow. That's the most vivid explanation for it all that I've ever seen. Thanks for that.
Unless, of course, Google Now gets there first.
But most new startups don't invent new advertising techniques. They don't grow the amount of attention. They just fight for the piece of the current attention pie.
And In similar fashion to reality TV relative to game of thrones, they offer crappy but addictive products.
The plumber analogy is off base. Web development is incredibly more complex than plumbing in a home. Importantly, web development changes extremely fast while plumbing is largely the same as it has been for decades.
The web and the developers that have created all of the sites and apps on top of it has added tremendous value to our economy and world. Web developers have streamlined almost the entirety of our lives and created enormous productivity gains.
The things that we create may seem trivial to us, but are fantastically valuable to society.
Jet packs and flying cars were always a terrible benchmark to measure human technological progress against. Iterative improvement has created a world of fantastic possibilities.
Good development is hard, and requires a lot of knowledge. Value yourself and feel good about what you are doing.
You build a website and maybe it doesn't work right (has bugs). In most cases, no one dies or gets hurt. You mess up plumbing, electrical, etc and that's not the case at all. It's easy to look down on the non-technical trades since we live in a time that glorifies (like the OP says) the art of programming. But next time you have a major plumbing issue, your heat pump goes on the fritz, you car dies on the highway, consider how helpful it is to know RoR, Java, C#, etc. Not too much...
The extreme of this was when we spent a year or so finishing our basement; everything from framing to wiring/plumbing to painting was done on weekends by us. I wouldn't say that I "know" any of those trades, but I know how to look up instructions on the internet or ask someone at Home Depot.
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I've been attempting to farm, a job that popular media will have you believe any slack-jawed yokel can do, for the past few years. It has been quite an eye-opening experience, making programming seem like child's play by comparison. If any slack-jawed yokel can do a job that is more difficult than development, where does that leave developers?
You are right that we should value ourselves and feel good about our accomplishments. Being able to develop software is a pretty significant one. But we should not feel the need to minimize other professions to make ourselves feel that way. They are doing things that are just as complicated and important, and they should feel equally good about those accomplishments.
What the OP here is describing, is exactly the mentality that leads to this nonsense: http://programmingisterrible.com/post/50421878989/come-here-...
A lot of people would agree that empathy is one of the large components of what makes us "human", and that's rather vague, but it does make evolutionary sense for why empathy is useful for societal progress. And guess what, perspective is crucial for empathy. If we assume for a minute that almost nobody really lacks empathy, then what could be the only possible factor that produces an outcome like the one described in that link above? I'm sure most of us tech people aren't narcissists/sociopaths, so the only thing that could explain it is a skewed perspective that makes it permissible to rationalize a lot of the nonsense around us as being 'okay', or 'not relevant' to us. Empathy is a function that takes perspective as an argument, and if we assume that our empathy functions are correct (no reason to think they aren't usually), shouldn't it be good when we realize it's giving us the 'wrong outputs', and then do something actionable about it like try changing our perspective (or input)? I've battled with a lot of self-criticism and depression myself, but I see nothing wrong with this. On the contrary, it seems like the healthiest thing we could do as we approach a possible 'bubble' scenario.
I think the problem is that the OP is labeling what he's arguing with as "web development" when it's really more of a subset of startup culture that he's referring to, not all web developers (he lauded the 'adults' that created Rails remember? I'd say they're 'web developers').
Also, it isn't that things are trivial to us, it's that they can be trivial, period. It just doesn't look that way from the outside, so we benefit (and are congratulated) for "daring" to look into the black art that is computer programming and actually producing something, anything... imagine if it were socially deemed adventurous to look into plumbing, it would have a similar outcome (albeit without all the VC nonsense probably).
Also:
> Jet packs and flying cars were always a terrible benchmark to measure human technological progress against.
Not really, because we do have jetpacks (albeit not exactly efficient/affordable ones), and lets not forget that Google is developing self-driving cars! I'd say the notaion that any vehicle could drive itself is an even crazier idea than having something that's redundant with a small glider/aircraft at this point, and I'm sure people from the 1930's would probably agree.
So then why wouldn't it be good to use existing ground-breaking projects as benchmarks for human progress and value? A lot of web startups sure do fall short of that benchmark too.
You hit the nail on the head. I'm a web developer, and what I do is build websites and other online solutions for non-profits. They range from the very small, to the very large (many millions of dollars in budget). I'm paid less because most of our clients pay less, but I'm happy with my contribution to society, and that's what matters to me.
It's not the job, it's the context in which that job is performed.
Value is not virtue.
What you consider virtuous may produce no economic value. Or maybe it does. There's no rigid formula that connects them and the Just World Hypothesis is an illusion that traps fools and wisemen alike.
Attempts to browbeat the world out of "is" and into "ought" have been universal failures and I retain every confidence that it will be ever thus.
James Somers might find Hayek's writing to be a bit repetitive and languid; but he will find the ideas illuminating. It seems like his father tried, but failed, to make the insight really stick.
There has never been a Just World where Virtue = Value. No matter how badly we want it, there can't be. And trying to forcefully make one generally just makes it much worse.
Trying to reconcile the virtues of what he does with his economic value is pointless. They're just not connected.
Demand for Ruby on Rails plumbing is ultimately connected with the current wishes and desires of most of the planet's population and has nothing whatsoever to do with how he, or anyone else, feels about it.
In literary terms: he's tilting at windmills.
> Attempts to browbeat the world out of "is" and into "ought" have been universal failures
There are so many examples (a single one of which disproves your "universal" claim) of idealists bring "is" more into alignment with "ought" that it would be almost impertinent to even begin enumerating them. Here's a small handful: Civil Rights movement, Women's Suffrage, and (from an economic perspective, since that what you seem to insist can never be touched by notions of "ought") the rise of Organized Labor, which made it possible for former wage slaves to earn a decent living wage.
If Hayek and Rand make you feel better about the fact that most of us over-earn relative to the "virtue" of our labors, fine. But IMHO it is best to be honest about the inequities and fortuitous circumstances which make our success possible.
You correctly pointed out that the value of labour has been affected by simple economic considerations more completely than any theory of the native goodness of honest toil.
Rand's cardboard aliens all seem very smug and self-assured and basically I think her books have done more harm than good.
Hayek's tone is an exasperated old school master. He just wants people to understand that you can't create -- as in design or ordain ab initio -- a working economic system that aligns to virtuous ends. It will break.
Is entertaining people virtuous at least potentially? if so, then there is nothing wrong with selling video games, movies, music, or whatever. If not, however then you have a problem because while the world make seem nice on paper (no money to Hollywood since that would take away from cancer research), it isn't a world any of us would like to live in.
The problem is from where I sit that the expected value (what investors will put in things) is wildly out of proportion to the actual delivered value to customers. I think this is even true of giants like Facebook, so what we get are speculative bubbles because investors are assuming there is more value than there is.
This is an unproductive line of argument because either of us can just keep moving the goalposts until we're exhausted.
Economic value clearly doesn't follow any "gut" virtue. Here's how an early moral theorist put it in a notoriously influential book:
Generally speaking, attempts to create ranking functions for virtue lead to mismatches with the observed state of the world. You line up the list of virtuous things (curing AIDS, feeding poor people) and the list of valuable things (Ruby on Rails programmers, inanimate chunks of metal) and discover that they just don't line up. At all.But if you try to impose a virtuous order, it all goes kerflooie. Because the whole system of production and allocation relies entirely on value. When you take value you away, it stops working. Partial enforcement leads to partial derangement and in general, creates new evils, requiring still further ranking functions ... it spirals out of control thereafter.
We read this:
And imagine ourselves to be men and women both of knowledge and power. But it was always an illusion.I'm doing a pretty poor job of explaining all this. Hayek's Social or 'Distributive' Justice does a much more convincing, thorough and erudite job. It was published in the second volume of Law, Legislation and Liberty, also in The Essence of Hayek.
edit: by the way, your blog about LedgerSMB and PostgreSQL is bloody marvellous.
edit: by post-hoc I mean, facebook was never meant for memes, but it does now. So you say "facbook is about fun memes", "XXXX was fun". Both of them were not in the original idea, but you express the fallacy.
The fact is, the 15-30's people doze off in a third rate movie, have fun by poking and squeaking.
And I have watch, ppt's about my company's future.
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I've put up with some horrific jobs paying miserable money in some of the most uninspiring industrial parks you could imagine. I've taken work in dingy Victorian offices so cold that I've had to program through thick gloves. I've accepted commutes taking up to three hours and incorporating four different kinds of transport. More than once I've spent 18 hours on Saturday and Sunday circulating my CV to every job opening and recruiter even slightly relevant to web development.
Reverse interviews? People clamouring to have coffee with me? Beer constantly close to hand?? These are unheard of things. Conditions are definitely better for me now but my skills certainly don't mark me out as a celebrity. Maybe the financial bubble of the dot-com era has been replaced by a cultural bubble, one that I'm definitely not part of.
Silicon Valley is a bit different. There is usually a gauntlet of multi-day interviews even for the lowliest position at a startup nobody has heard of. It's even more of a gauntlet at the large, established companies. I've heard of someone doing 10 days of interviews at amazon.com, and they are a company most want to avoid. Companies are very afraid of hiring the wrong person.
As you have noted, most everywhere else the developer is made to feel lucky to work at a folding table in an unheated area next to the men's room.
I have a BA in Art with a minor in Advertising. If I can get noticed using these tactics, then surely people with CS or EE degrees can too.
You don't have to be a celebrity, but you have to be some combination of accessible and validated.
The good news is that marketing yourself is actually a lot easier than programming. You don't need a natural social acumen to do it. I know this because I'm pretty good at it and certainly do not have natural social talents.
If you want to experience "reverse interviews", you have to be in a technology hub.
That said, the dynamic is not as engineer-favorable as people make it out to be. Sure, a good engineer can get 5 in-bound contacts from recruiters per week-- again, that has more to do with self-marketing than skill level-- but most of those don't mean anything. Most often, it's just an invitation to send a resume into the normal process.
It's probably a bubble to some extent. Eventually, if the return from all these web apps is less than the money spent on them, the money will dry up. (I'd imagine that this will be the case - most of the value of the most-recent crop of high-value tech startups seems to be based on hype and even bigger companies buying them, rather than profitability or revenues). In the mean time, there's still people queuing up to fund things they don't understand. The biggest thing to remember about bubbles is that they always seem to keep growing far longer than any sensible person would expect. Will the money run out eventually? Probably.
If you're a fund with $100 billion under management, dropping $2 billion into various venture funds is a reasonable part of the mix. Multiply that by the fact that several hundred funds, banks, trusts and companies collectively control trillions of dollars and these little 1 or 2 percent investments pump billions of dollars into tens of thousands of companies with collectively perhaps a few hundred thousand employees.
When every buyer is cashed up, prices for sellers rise.
The general rule is 1/3rd of investments will fail, 1/3rd of investments will under perform and 1/3rd will meet expectations - and to put that in to a better perspective, "expectations" should be read as a 5x to 10x return on investment. A better firm might be able to skew that more to the successful side, while another firm might be more on the failure side.
I don't think the money will "run out" - but the better firms (think USV, Sequoia, Accel, etc) will continue having the experience in finding successful startups and the smaller firms might just not see the return on interest and exit the game.
There's a lot of hype about "tech" (in this context really only web apps) which has lead to a lot of money pouring in from people desperate to grab a slice of the pie. The reality is that while web apps and SaaS is a large industry, the size of the investment funds targeting the industry is due to hype and investors saying "me too" rather than a reflection on the available revenues. You have to look at even the success stories in this context.
The money won't run out completely, but if the money from investors late to the party slows down then the value of the successful web apps will fall to levels which reflect their revenues.
I don't hear anyone saying - don't bother making a smartphone unless you are Apple or Samsung (of course this might have been Motorola or Nokia in the past :-) )
The author describes simple CRUD websites and then equates all of web development to trivial tasks like that. Even scaling simple CRUD needs a lot skills, intelligence and ingenuity.
And talking of design, there is a reason some pieces of art are valued so much. A designer who designs a great website is an artist too, and deserves as much compensation.
I imagine plumbing the Burj Khalifa needs a different and more advanced set of skills than plumbing a prefab home.
The fact is that 'coders' are today's version of auto mechanics in the 70s. The barrier to entry is low- an old box, a linux distro, google- and off you go. So everybody who can't do something else can give it a try. Some will fail; some will succeed at a low level, and a few may find their calling. And a lot of people will pay for it because they don't know the difference.
But the one's who are truly good- who obtain that domain knowledge- are valuable. In their domain.
In general you'll be paying upwards of $250/hr for a machine learning specialist (sometimes upwards of $500/hr if they have a modicum of talent and experience) and more than $120/hr for a front-end webdev who can claim anything more than "I've heard of jQuery." Those are contracting rates of course; hiring somebody at salary has its own costs.
Expensive (per hour) developers are often far cheaper.
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<rant> Too many red flags springing from a delusional, narrow-minded view which looked no further than the bloated world of Valley startups. Hope mr. Author could cast his eye to some other corners of the world (no, even other parts of the States) and witness the bleak reality of a career called web development. Startups are just a small part, albeit the highlighted part of the system. What would you then call those developers who do back-breaking work, with a fraction of your starting salary, in a dead-end career path surrounded by an equally depressing environment? Low-class web developers? They are just like any other programmers out side, people who chose coding as a profession. Before all the perks, freedom and fun, this is a job. You work for your pay, period. I am sick and tired off seeing another article with a viewpoint through rose-tinted glass about values of coders. Enough is enough. </rant>
<conclusion> There are overpaid programmers and there are underpaid programmers, everywhere in the world. I probably fall into the underpaid camp, that's why I feel annoyed seeing way too many articles with BS about the cool $100k IT jobs for fresh graduates. Where I stay, it probably takes an above average fresh grad 5-6 years of doing good jobs while hopping around (startup/MNC/whatever) to come somewhere close to $100. The media just does not ever cover the average Joe programmer's career path, but this is the reality. </conclusion>
The article is someone's opinion and I'm merely expressing my own as well. Everything is debatable because the industry is so much different from one city to another, let alone countries. Unless this is entirely dedicated to one part of the States, otherwise it is good but flawed argument.
My point was that the author questions the values of his work from a rather high vantage point, which may be valid but it annoyed me. For a well-informed opinion to be made, I'd think that it takes an amalgamation of different viewpoints, not just from the high medians. Besides, one must see how everyone else in the same profession has it in other areas. $80k for the 1st job? Not many places around the world, seriously. Based on how much underpaid/overpaid you are comparatively to your responsibilities plus where you stay, each combination forms an entirely different set of values to question, different set of objectives to purse. That is why I found the article well-intentioned but not well-informed and in a way, misleading as most articles involving start-up programmers.