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Outrageous Suggestion

To create a wildly successful company out of nothing, one should hire brilliant, passionate people, and pay them extremely well.

This is how Apple, HP and Microsoft all became successful.

There is another method that is frequently proposed - to hire whoever will accept low salaries and poor working conditions. these companies do not become successful, although this method has been used to stabilize many companies that were plagued by excess success.

A corallary to this is that any companies paying below the 75% percentile on salaries is not a company where there is either opportunity or bright coworkers.

Dennis Atkins
Saturday, April 12, 2003

Unless that company is hiring outside of it's core competencies... Some of the largest companies in the world hire mediocre *somebodies* for some jobs.

www.marktaw.com
Saturday, April 12, 2003

Dennis,

what is your source in saying this?

Prakash S
Saturday, April 12, 2003

If you accept a more liberal definition of "pay" to include stock options in lew of salary then I think the original statement is correct. That's what MS did for quite a while.

Matthew Lock
Saturday, April 12, 2003

I thought Apple, HP and Microsoft were founded by brilliant passionate people who worked very hard at first but did not have a lot of money.  It was after they took off that they could pay more to keep the companies growing.  I don't know about HP but both Apple and Microsoft owe a lot of their success to outside events.  Visicalc made the Apple II a useful tool for accounting which brought in large sales to the accounting firms.  Microsoft was a modest success selling Basic until IBM asked them to build the OS for the PC.

The Dot Com's tried the idea of big salaries and bright people and it did not work too well.

John McQuilling
Saturday, April 12, 2003

Dot coms were actually a good example of the OP's point. Dot coms were generally attempts by non-developers to cash in on capabilities of technology, and those non-developers made heaps more than the developers in just about every case.

It's trendy to snipe at Microsoft now, but you don't change the world by being dunces. They hired the best and understood software engineering and development.

On a personal level, I've seen the cheap-staff effect at work in several companies I'm familiar with. One lost $6 million, one went bankrupt and the other is on the way.

.
Saturday, April 12, 2003

"I thought Apple, HP and Microsoft were founded by brilliant passionate people who worked very hard at first but did not have a lot of money."

They were started by a few extremely brilliant hardworking poeple, but would not have reached multibillion dollar size without consistently hiring above-average developers.

Still, nontechnical companies can manage to survive with crappy IT departments.  There are Fortune 500 companies with software managers who don't know what version control is and programmers who don't know what recursion is.  They'll still waste millions due to their reluctance to pay for good developers, but the sheer bulk of the rest of their core business still enables them to make money.

It still amazes me that most corporations cannot wake up to the fact that they could actually save money by paying 80% above average to attract a developer who can do the work of 5-10 average developers.

T. Norman
Saturday, April 12, 2003

Any successful company has got a leader with a Passion for a vision, drive to get their goal, understanding of how to get to their goal and the ablity to see and take advantage of an oppertuity.
Bill Gates realized when IBM asked him for compilers for IBM's new PC he had a great oppertuity. Then when Digital Research seem to refuse tosell IBM CP/M 8086 Bill found an bought a company that made a CP/M rip off (QDOS) renamed it and MSDOS and the rest is history.  It was his drive and vision that made MS what it is today, for better or worst.

A Software Build Guy
Saturday, April 12, 2003

Microsoft's pay scale is actually designed to pay at the 65th percentile for salaries. In fact, until a couple of years ago they paid at the 50th percentile.

Pseudo Nym
Saturday, April 12, 2003

Microsoft work on the principle of giving equity.

Also there is the value of the kudos.

A large number of MS programmers are in agency placements who receive no health care or benefits. This caused considerable ill-feeling.

Paying the best and brightest well started well before the dotcom boom. Think, HP, Xerox, Intel to just name three. The whole of the boom in computer hardware was based on the fact that it was the engineers who got control of the company.

Stephen Jones
Saturday, April 12, 2003

Right,

-> Cheap staff is no bargain if you are intending to create a great company with great products that is to become profitable.

-> Dotcoms did not hire passionate competant people, which should be oxbvious from looking at the low quality of dotcom products (nonexistant product=low quality) and thorough mismanagement and squandering of funds on idiotic superbowl ads, lear jets and snazzy office buildings. Their purpose was not to create a successful profitable company with desirable products, but to get rich off an IPO and then cash out.

-> MS pay is low now and they are no longer a high growth company. This emminently proves my point. I am talking about creating a great company. Once a company becomes an elephant, it is hard to kill no matter how it is managed. As it is, MS DOES pay well for critical products where they are trying to take over the market, like with the xbox group, showing they understand this principle only too well. The low pay employees at MS are teh ones who are working on unimportant products. (unimportant = Ms already owns 75% or more this market segment and there is no room left for growth).

Dennis Atkins
Saturday, April 12, 2003

The dot-com phenomenon was not necessarily as tidy as you think it was. In most of the dot-coms I knew of, including the one I was involved in, the people trying to get in, get rich, and get out were the investors (typically VCs), and not necessarily the engineers and mid-management, who as often as not got screwed when the VCs came in with their money.

High growth, too, was an off-shoot of VC demands, and it was inevitable that you'd hire bad people when you have to fill 50 seats in 6 months.

Brad (dotnetguy.techieswithcats.com)
Saturday, April 12, 2003

Brad,

My recollection was that the engineers and management were just as caught up in the get rich *hysteria* as the VCs. I got phone calls from everyone I knew at one time or another either bragging about their good fortune or begging me to go work for their place because it was a sure thing everyone was going to be a billionaire.

Admist all the hysteria what was lacking is any common sense about developing products or services anyone really wanted, or designing them in any fashion other than throwing junk together as quickly as possible in time for a superbowl ad or a comdex convention. Maybe there were good developers working for some of those companies but with few exceptions, they failed to use their alleged talents to create anything worthwhile.

Dennis Atkins
Saturday, April 12, 2003

There's a lot that happens when an organization goes from 5 developers to 50. It's not simply a matter of some great engineer telling everyone to screw off while (s)he does all the work. It just doesn't happen.

The good engineers at our company were buried in process and mentoring. When you have to deliver an enterprise level software package in 9 months starting with nothing and nobody, you might as well just go home. I don't think a lot of people realized this until they went through it the first time. I know I'll never do it again.

Brad (dotnetguy.techieswithcats.com)
Saturday, April 12, 2003

Why does pay have so much to do with it?  What about startups that are great places to work, but don't pay oodles of money?  The impression I get from this forum is that money talks, and little else.  What about a peopleware workplace that doesn't pay so much?

If I had to try to explain why everyone seems so money-driven, it'd be that money is a measure of whether or not you're valued, respected and treated right.  Is that the case?  Or perhaps it's, "if this industry sucks and you're gonna treat me like shit, you better pay me a lot to put up with it."

In any case, I believe companies can be built without paying big bucks.  It doesn't mean you don't care about people, it might mean you just don't have a lot of money.  In general, one reason people don't like taking low-paying jobs is that they think the owner is taking home all the money and taking advantage of them.  Solution: Open books.

aa
Saturday, April 12, 2003

You can build a successful company by having yourself and your partners taking little or no salary until things get off the ground.

But when it comes to hiring people, 99.9% of the time the employees aren't going to get any benefit from such a sacrifice.  If it succeeds, they don't own enough of a slice of the company to pay back for the lost time and foregone income.  And if it fails, which it usually will if you are so starved for cash, they have nothing.

To even consider joining at that salary, the original poster should be getting at least a 10% ownership in the company.  If they aren't willing to offer that, they are just looking for suckers to exploit.

T. Norman
Saturday, April 12, 2003

Oops, wrong thread ... I thought I was responding to the $1000/month salary thread.  Still, most of what I said holds true - there has to be an offer of ownership in the company to compensate for the subpar wages.  Not as high as 10% ownership if the salary is only slightly below average, but enough stock so the employee can really share in the company's future success (if it happens).

T. Norman
Saturday, April 12, 2003

T. Norman - excellent points.

But to that I would add: it's entirely possible to build a profitable company by hiring those occasional prodigies who are very very good, yet are too young and/or inexperienced to know that they are being exploited, and then manipulate them into working like dogs for a "cause". It requires lack of decency and ethics, but it can be done.

So I think it's a mistake to assume that a supranaturally low pay rate indicates no expectation of talent. In THIS industry, it's entirely likely that the $1000/mo startup is looking for an undiscovered Bjarne Stroustroup who doesn't have the self esteem to move out of his parent's basement.

I think the $12K/yr startup owners are betting on exactly that dynamic. If anon turns down the offer, they will hold out for the super cheap, super naive, superb, and super docile developer. And there are, surprisingly, a LOT more of them around than one would think.... not tons, but a perhaps 1/2 dozen per city in most 1 million pop. and up metro areas in the US.

Bored Bystander
Sunday, April 13, 2003

A common variation on the strategy Bored mentioned is the "fast track" carreer, frequently used in law and consulting firms.

Promise brilliant but naive young workers the opportunity to become a manager in 4 year, a director/partner/demigod in 15 years, -- if only they give up nice paychecks and personal life -- and then just keep postponing their promotions until they get the message.

down there in the food chain
Monday, April 14, 2003

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