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Silicon Valley's Tech Employees Are Getting Nervous (vanityfair.com)
An anonymous reader quotes an article on Vanity Fair: Private tech companies are feeling a contraction in Silicon Valley. The funding that venture capitalists have thrown at start-ups is dwindling, in small seed rounds and mega-rounds alike. There's a new postmortem written weekly about a start-up that's run out of cash and shut its doors. Start-up executives are sobering up, realizing that their companies actually need a path to profitability. Now, not wanting to be stuck on a sinking ship, tech employees are thinking about the bubble, too, as they plan their career moves.
I worked at a start up that was actually *close* to profitability. One Friday the board had a meeting to raise what was assumed to be the last round of funding before going public. The funds would be just to support operations until the IPO. Anyway, the company was already carved up so the board agreed to dillute the class A holders, the ones who started the whole thing. They forgot that one of those holders still had more interest in the company, he owned all the office furniture. So over the weekend he came in with movers and took all of the desks, chairs and filing cabinets. Of course they left all the contents, computers, books etc on the floor. It was a surreal Monday. I had 10 developers quit on me that day..
Harrison's Postulate - "For every action there is an equal and opposite criticism"
Only downside is, most of these kids will come breezing into our communities (outside of Silly Valley) and compete for the same jobs.
While at my end it's no big deal? I can see a lot of developers in places like Seattle, Portland, Austin, et al getting nervous all the sudden as the recruiters stop soliciting the locals as much as they used to.
Quo usque tandem abutere, Nimbus, patientia nostra?
Most people don't know anything about economics. Even economists don't really know that much about economics--something I realized when I started looking at actual modern economic theory and found only naive observations and general rules with no understanding of mechanism.
Take a look at the job creation narrative. We've seen all kinds of talk about things like trickle-down economics (which actual economists know is bullshit--let's be fair: it's pundits and politicians who believe that crap), leading to this ideal where you give businesses income tax cuts and they create jobs. ... How? Even a cursory examination of market economics in a macroeconomic context says that's nonsense--enough nonsense that you can check for the fallacy of common sense and verify that, yes, the sensible conclusion *is* sensible and the one about trickle-down is ludicrous.
Businesses aren't charities and don't create jobs out of excess profits just so some bloke can get by. Common sense; but this is not sufficient because common sense is often wrong and stupid.
Businesses don't pay wages.
Every product has a cost, which ultimately comes down to wage-labor: in aggregate, the shelf price of a product is its wage-labor cost plus some profit margin. You pay your employees's wages, plus payroll tax, plus benefits; if you charge less than the fraction of these wage-labor costs involved in making a product, you run at a net loss, and go insolvent. That means the minimum sustainable price--the price the consumer must pay--is wages. When GM negotiates for 100 million tonnes of steel per year for 10 years to make cars, the steelmaker goes back to multiple coal and ore suppliers and does the same, and everyone starts competing by lowering big profit margins closer to *and* *never* *less* *than* their costs--which, down the whole supply chain, comes down to squeezing out the aggregate profit margins and bringing the price of steel closer to the cost to a vertical monopoly owning the mines, fuel supplies, and all production mills. It can't go any lower.
You can't supply a product consumers can't afford, which means the consumer base making up the product's market has to be able to pay all of the wages involved in making, moving, and selling the product. The manufacturing wages have to be paid; the transportation wages have to be paid; the logistics wages have to be paid; the retail wages have to be paid. All kinds of taxes are involved. After that, you slap on some mark-up that a sufficiently-sized consumer market will tolerate (and can afford) and you make a profit. If the consumer can't afford it, none of those jobs come into existence.
So we have senators talking out one side of their mouths about "Job Creation", and out the other side they're talking about levying sales taxes (a particularly destructive way to artificially raise the cost-basis of a product to the consumer). We have Social Security OASDI applied to the broad consumer base as a 12.4% income tax--6.2% levied on your paycheck and 6.2% levied on PAYROLL (holy shit that's daft)--rather than as a dedicated flat or progressive income tax. They find every way to destroy jobs while talking about the need to create new jobs.
These same people start talking about how they'll get us all free college so we have the ability to go find or *make* jobs for ourselves. They talk about small businesses and the American Dream, and draw up a narrative about how jobs come from hard work and dedication, and not from capturing the limited supply of consumer money.
It's not that they're all evil conspirators trying to distort and manipulate our economy; it's that they don't know, they don't understand. They think they have it right; they're just wrong.
When someone tells you small businesses are failing like crazy, think about where jobs come from.
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And when their gamble doesn't turn them into a millionaire, they're ready to blame the whole country.
I had a friend who got a receptionist job and became one of the early millionaires at Yahoo. She quit Yahoo, took her million dollars to buy a house in Silicon Valley and put herself through college to become a school teacher (her dream job). Friends from failed startups were extremely bitter at her for being one of the lucky ones. More so because she was in the right place at the right time and wasn't even a techie.
The majority are neither smug nor self-important. Yes, there some a-holes who write blog posts about how disgusting it is to have to occasionally see a homeless person or how ugly girls thing they're hot (4/9-ers.). But they are very much the minority. Most tech workers are fairly ordinary people, working to make a living, have a little fun, and hopefully own a home eventually... normal, everyday, "get on with your life and go about in peace" stuff. If everyone were as bad as those bloggers, you'd see stories about mid-Market Twitter and Uber employees making the homeless do demeaning tricks for food; which is obviously not happening.
Imagine all the people...
Capitalism does not guarantee a large middle class. The invisible hand of capitalism allocates resources to areas of growth, and that is not in 90% of the population, but only in the top 10% where the growth has been happening for the past 30 years. Perhaps the invisible hand of capitalism will leave 90% of the population in poverty, especially with new robotics and automation. What's going to happen to all the truck drivers when trucks are automated? What then? How do you think a populist like Trump is going to create high paying jobs for his followers if capitalism can't do it alone? Bread and circuses? No, he's going to do what Caesar did, take the money from the oligarchs and give it to his loyalists. That's why the Republican establishment is afraid of him.
The Moore-Murphy Law: The number of things that will go wrong will double every 2 years.