Wednesday, August 24, 2005

Google driving up the cost of Silicon Valley talent?

Google, Mr. Hoffman said, has caused "across the board a 25 to 50 percent salary inflation for engineers in Silicon Valley" - or at least those in a position to weigh competing offers. A sought-after computer programmer can now expect to make more than $150,000 a year.

I think most people have it wrong: software engineering talent has been too cheap for too long. Today, to entice someone to study software engineering, you would have to offer sufficient incentive to:

  1. overcome the fear that 4-6 years studying computer science would be rewarded by all the good jobs going to India
  2. medical school and law school all have potentially higher rewards, and are also more highly regarded professions (with also a more balanced male/female ratio)
  3. the fact that winner-takes-all is even more prevalent in computer science than anywhere else
  4. the average career of a Silicon Valley engineer is around 7 years, shorter than that of many pro atheletes!

Given all those disadvantages, the question should be why there are smart, talented, hardworking folks in software engineering at all. Well, the answer is typically that there is a chance for a big pay-off, if you work for the right company! The rising incomes of top Silicon Valley engineers needs to reflect that when all is said and done, Google is the only software company I've worked for in the last 10 years that can be said to have been almost completely engineering driven. That means that a similar offer from Google would be preferred by the discerning, intelligent software engineer than an equivalent offer from anywhere else. The following quote from the same article highlights the similarities to Microsoft in the 1990s:

Bill Gates certainly sees similarities between Google and his own company. This spring, in an interview with Fortune, Mr. Gates, Microsoft's chairman, said that Google was "more like us than anyone else we have ever competed with."

I will note that Microsoft was also in many ways, managed by smart engineers more than its competitors (like Borland, Lotus, IBM, Apple, or Netscape). They had more technical people in the upper ranks than their competitors, and perhaps that is why they had an edge --- the deep understanding of technology is important when technology is the battleground. Companies that pick non-technical CEOs too early in their lifecycle risk stunting their future growth.
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