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.

Comments

GOOD.

[Thud457]

Give those special little snowflakes a taste of what everybody else has been living with for the last eight years.

Re:GOOD.

[convolvatron]

sure, maybe the snowflakes deserve some blame. i mean who wouldn't want to bathe in money in
exchange for working on something trivial like an instant messaging service that doesn't scale or an
ad distribution network.

its just that they were so smug and self important about it

but really, the blame lies in the investment community. they get to bathe in alot more money, and
ostensibly their job is to direct some fraction of the collective social resources towards efforts that
will further enrich themselves, and indirectly society as a whole. at least that's my guess as to
what this whole 'weath creation' narrative is.

except that they dont seem to be very trustworthy, seems like we get dutch tulips all the time. loans,
electricity, tech, loans, tech, tech.

Re:GOOD.

[Aighearach]

I think it is funny people automatically assume that it takes a "bubble" to cause this.

Venture Capital management strategy is to run each startup so that it has a less than 1 in 10 chance of surviving. They usually target 1/14th or so. They want to maximize the size of the ones that succeed, not the percentage that succeed.

People go to work for a startup but don't know that, they should learn about who they work for before taking a job IMO. They just figure they're special and the world should be fair to them, even if fairness would call on them to understand their own part in it.

There is no bubble, because there isn't extra money getting invested. Duh. And most startups are supposed to fail. It is the system. What a dumb story. Also true: if you work experience is just at failed startups, you get harder to hire because those companies are seen in the market as having different culture than the more traditional businesses that care about surviving. And most tech jobs are in other places, not just in one small part of California. For people with non-startup skills, there is even still usually a worker shortage.

Re:GOOD.

[Penguinisto]

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.

Re:GOOD.

[Trailer Trash]

Give those special little snowflakes a taste of what everybody else has been living with for the last eight years.

Apparently you don't have facebook. My Democrat friends post another fake graphic every day showing how the economy is doing just *great*, better than ever! and everybody has a job and Obama has saved us. Except for Bernie Sanders supporters, who say Obama did a great job in recovering the economy but the rich people are making life bad for everybody.

By the way, everybody now also has health insurance! Yes, because the IRS will fine you a couple thousand bucks if you don't - which somehow means everybody has it. Don't ask how to get from point A to B there.

Re:GOOD.

[__aaclcg7560]

My Democrat friends post another fake graphic every day showing how the economy is doing just *great*, better than ever! and everybody has a job and Obama has saved us.

My Tea Party relatives in Idaho send me emails about how terrible the economy is with 92 million people out of work, how black women will cut off the heads of white men with guillotines and black men will rape white men at FEMA camps, and Donald Trump will save us from our sins. Another day in the right-wing echo chamber.

Re:GOOD.

[bluefoxlucid]

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.

Re:GOOD.

[__aaclcg7560]

There is no such thing as a worker 'shortage'.

After the dot com bust, I saw a study that the IT industry will have a critical shortage of skilled workers from baby boomers retiring and Southeast Asian countries stop exporting their workers by 2035. I went back to school to learn computer programming and get my technical certifications. I got out of a dead end job in the video game industry and got into the IT industry. I'm looking forward to making more money over the next 20 years as the shortage becomes a reality.

Re:GOOD.

[Penguinisto]

This, right the hell here.

As an aside, I've found that during the interview with a startup, you *always* begin discussing the business' long-term plans, discuss their financials, discuss their profit strategy, and learn enough to understand the answers... doubly so if you're not getting any stock (I go for cash/salary anyway - worthless stock is worthless if the company goes tits-up). If they get all nervous or their answers start getting all buzzwordy, end the interview there and go look somewhere else, unless circumstance says you have no other choice.

I've lost count of the times when I interviewed at some startup that tried to sound like The Next Big Thing(tm), and everyone runs for cover at the very mention of even the minor question of "How much revenue do you project over the next five years, and what is your strategy to improve it?"

( The funniest was when one "IT Director" replied to that very question with "Why should you care? You're just orchestrating the servers?" Why was it funny? Because the look on his face was priceless when I told him that "Well, I won't blindly slave away for some random VC chump, good luck finding someone stupid enough to work for you, and the interview is now over. Good day, gents.")

Re:GOOD.

[Aighearach]

Small businesses always have a high failure rate, even in a boom. Often it is the same evaluation; they take loans that mean if they fall below some profit projection, they go out of business. But if they grow as well as they imagine, then they grow faster, quicker. If you don't "leverage" (read: borrow) then you're seen as some sort of bumpkin. And it is true, you'll only grow slowly without taking on debt. But you also aren't at inflated risk of going out of business. If you're in the black you can just shrink and survive in most situations where your projections or growth attempts don't work out.

Re:GOOD.

[__aaclcg7560]

You are still not understanding the terms you are using.

I based my technical career around an expected shortage based on well-defined demographics in the long-term future. Not a perceived shortage to suppress wages by hiring managers in the short-term future.

Re:GOOD.

[ShanghaiBill]

its just that they were so smug and self important about it

I am sorry to disappoint you, but I live and work in the valley, and I have seen no signs of the contraction described in TFA. My smugness has not diminished.

Re:GOOD.

[JaredOfEuropa]

I have the opposite attitude: I would not work for a startup if they do not offer stock or options as part of the deal (and not the kind that needs to vest and are void if you leave, i.e. the kind that they can screw you out of if they want to, like they did to many people at FaceBook). If I think the company has little future, I would not want to work for them anyway. But if they hit it big, it'll be partly due of my hard work (and believe me, you *will* work hard in a startup that's taking off). And in that case I'll want my payday as well.

But in general I agree: you should treat a job application as an "employer application" as well; it's a two way deal. Unless you don't have the luxury to turn down an offer, do look carefully at whom you're going to work for and be prepared to say No even if the money's ok. And don't believe you're going to learn all about the company, their culture and their way of working from the website that they expect you to scrutinize beforehand; often it comes down to asking the right questions at the interview. I've once turned down a prospective employer who made a very decent offer. I told them I thought their company wasn't a very good fit for the way I prefer to work, and I got the same incredulous look in return.

Re:GOOD.

[luis_a_espinal]

You are still not understanding the terms you are using.

I based my technical career around an expected shortage based on well-defined demographics in the long-term future. Not a perceived shortage to suppress wages by hiring managers in the short-term future.

Bingo. It is refreshing to see someone who gets it. Look for shortages and capitalize on them. That's the way to thrive in software/IT. This field is not for the inflexible.

Re:GOOD.

[SvnLyrBrto]

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.

Re:GOOD.

[__aaclcg7560]

The funniest was when one "IT Director" replied to that very question with "Why should you care? You're just orchestrating the servers?" Why was it funny? Because the look on his face was priceless when I told him that "Well, I won't blindly slave away for some random VC chump, good luck finding someone stupid enough to work for you, and the interview is now over. Good day, gents."

I had a interview with 3DFX in 1997. The interview with the QA manager went as expected, but fell apart when I got interviewed by the PR manager. If you ever read the Dilbert comics, a hardware company run by the marketing department was doomed to fail. I declined the job. A few years later, they decided to compete with their own customers by manufacturing their own video cards. Not surprisingly, they filed for bankruptcy in the dot com bust.

I also had an interview with Nvidia in 1997. That lasted four hours as a dozen engineers interviewed me. I didn't get the job. Not surprisingly, they're still around.

Re:GOOD.

[jedidiah]

They also should be scared witless of Bernie. They have screwed over the working class enough and caused enough chaos that people are starting to listen to commies and not run away screaming into the night. This is a not unexpected result of a financial meltdown of epic proportions.

The 1% have primed the situation for their own downfall due to their greed and lack of foresight.

Re:GOOD.

[jedidiah]

Well, Obamacare was all about making sure everyone has health insurance. Obama even wiped his butt with the Constitution in the process. So if ANY one has a sob story now, it's all on Obama.

He's the white knight that was supposed to have solved this problem with a purely partisan effort.

Of course any Democrats will try to shout you down if you have one bad thing to say about the ACA or what's happened with insurance afterwards. They don't want to hear about any unintended consequences or gaps in Obama's solution.

Re:GOOD.

[__aaclcg7560]

Unfortunately, tech types rarely understand economics because they do not understand, among many things, human activities.

Baby boomers are retiring and the workforce (tax base) is shrinking over the next 20 years. Social Security and Medicare will consume two-thirds of the federal budget. Taxes will go way up to pay for everything else. These are undeniable economic trends. You can plan for this or you can pretend it won't happen. I'm planning for it.

Re:GOOD.

[__aaclcg7560]

the truth likely lays in the middle

The middle of the road has dead armadillos and yellow lines.

Re:GOOD.

[invid]

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.

Re:GOOD.

[CaptSlaq]

What happens in California will just ripple over to Seattle, Portland, and Austin. VCs are VCs, and if people are worried about their jobs in SV, they better be worried in Austin, especially because if companies start laying off, they will be keeping their core offices in California, and axing the satellite offices elsewhere. Austin has a lot of companies, but not enough to stand alone if the economy tanked in California. You can't sell your new ads your new dot.com is making, if most potential buyers are in survival mode or at the courthouse filing bankruptcy paperwork.

In some ways, Austin is just a relatively cheap suburb of SF, or Santa Cruz... except located about 1750 miles away.

That "cheap" part is why I expect Austin to wind up doing better than the valley in the long run.

Re:GOOD.

[Anonymous Coward]

>My smugness has not diminished.

Verily, your smugness may have increased!

Re:GOOD.

[pnutjam]

A "socialist" is not a "commie". Your spouting pure hogwash. There is plenty of room for higher incomes to absorb higher taxes.

Re:GOOD.

[ShanghaiBill]

Let's face it, white collar, upper middle class and upper class people do not live an "ordinary" lifestyle by definition

We have to deal with a lot of problems that "ordinary" people do not. For instance, we can't just hop in the car and go on a trip, without first doing a web search for Tesla charging stations. For some destinations, there are no chargers enroute, and we have to take the spouse's BMW instead.

Re:GOOD.

[HiThere]

If you go for stock options, determine to what extent they can be diluted through the issuance of additional stock, and who gets the money when that additional stock is sold. You may be surprised.

Re:GOOD.

[Darinbob]

The media completely misunderstands Silicon Valley. Even the media within the Bay Area gets it all wrong. They think it's a society full of entrepreneurs when those people are a very small minority. Most jobs here are not at startups, and most people seem to prefer that. Salary is better than stock options. We don't hang out at parties and discuss business ventures as some media stories seem to to imply. Silicon Valley also isn't as high tech as it once was. I mean everyone treats Google as their darling but it's a freaking advertising delivery service. Smugness is up in San Francisco, though again the media gets confused and seems to think it is a part of Silicon Valley (at the same time that they think Twitter and Uber are high tech).

Re:GOOD.

[david_thornley]

The job of the investment community is to make money for their investors. They have one job, and they'd better do it. If this means frantic trading of tulip bulbs, that's what they'll do. If we want resources to go into more productive things, we need to figure out how to make that more profitable than teaching people how to flip real estate.

oh, not the encryption ban?

[bill_mcgonigle]

Their own Senator plans to leave a smoking crater where the Valley was. Maybe they can plant orchards again.

http://thehill.com/policy/cybe...

Tried the startup culture, hated it

[Anonymous Coward]

Never again. I value my personal time with my wife and children too much to devote it to a mere job, no matter how "good" that job may be. I'm interested in working with interesting tech, primarily things relating to command line tools, regexp, pattern matching, you get the picture. I left the startup culture for good and went to non-profits. Why? Because I have more latitude with how I work and what I work with than I ever did following some young, inexperienced founder(s) hellbent on getting rich. I work 40 hours a week, 8-5, Monday-Friday. These are normal, healthy hours. Anything else is for monkeys and those foolish enough to believe working 70 hours makes a difference.

You have one life. The time you have is precious. There is no rewind button. Do what you love, but do it largely for yourself or your family if you are married and have children.

Re:Tried the startup culture, hated it

[Notorious G]

This is why Silicon Valley companies blatantly discriminate against older workers - older meaning anyone over 35. They want only those young, stupid, kids who still idolize the death march coding sessions, mistakenly think meals being catered in is a perk for their benefit, and nerf gun wars between cubes are so cool. I'm so done with any company on the West Coast. Whatever it is they're doing out there, I don't want to be a part of it.

Re:Tried the startup culture, hated it

[__aaclcg7560]

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.

What is old is new again

[Anonymous Coward]

They're all too young to remember the dot-com bubble bursting 15 years ago. We're living in the same times.

Re:What is old is new again

[Desler]

But but but all those VCs were telling us there was no bubble! And everyone knows that VCs are honest-to-a-fault people!

Re:What is old is new again

[Virtucon]

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..

Re:What is old is new again

[Aighearach]

As somebody who was there, I have to say no to that. Everybody knew there was a bubble, and the VC argument wasn't that there was no bubble; it was that some people were going to keep getting very rich before it burst, and since nobody knew when it would burst and how many companies would survive, it didn't actually matter until it happened. And they were right on all those points.

Like the recruiter on the radio, back in `99 said: there is a big worker shortage because of the bubble, and that doesn't mean that if you have a murder conviction you can find office work. That would still be hard. But if it was only manslaughter, lets talk.

woot

[grub]

It's like the late 90's again except we have cooler mobile phones.

Re:woot

[Mattcelt]

Bollocks to that. I would give anything to have my tap-to-text, 12-key keypad phone back again. I would much rather have a phone that does phone things - and only phone things - well, and a separate device that does all the other business.

So stuff the 'cooler' mobile phones. Give me something that doesn't have to guess what I'm trying to type because it isn't designed for anyone with fingers bigger than a six-year-old's.

Re:woot

[mrchaotica]

I miss the Internet of the late '90s, before every company started trying to track, analyze and monetize everything I do.

"Start-up executives are sobering up"

[Nutria]

This is why, once upon a time, executives were middle-aged men who'd had enough time to learn why profits are required for business to function.

Some advice

[jgotts]

Unless you are an executive, favor cash compensation, not equity. Make the decision for yourself how you want to invest your cash, if at all.

Work for a company that is making something legitimate today.

Work for a company that is making a profit, not wasting naive investors' money.

Factor in cost of living increases for the amount of time that you expect to work at the job. Let's say for example that you're moving to a city in the Silicon Valley region. If rents are going up 10% per year in that city then what they're paying you is going down 5-10% per year in real terms. (As rents increase, the cost of everything else increases, too. As rents climb even higher, the cost of living is completely dominated by what you spend on rent.)

F*ck Silicon Valley. It seems like no matter how high you get paid, you're screwed. Work somewhere where making $60,000 will allow you to live comfortably, in other words, virtually anywhere else in the United States.

If you can't save any money, you're not living comfortably. You're just getting by.

Slowdown? Wha Slowdown?!

[__aaclcg7560]

For those of you who don't read The Wall Street Journal in the morning, companies are hiring in San Francisco.

More companies in San Francisco plan to add new jobs in the next six months than in the last half year, according to a new report, bucking concerns about a tech slowdown and its impact on the region's economy.

http://blogs.wsj.com/digits/2016/03/17/what-slowdown-san-francisco-execs-plan-more-new-hiring/

Re:dupe from 1999?

[Moof123]

No, the key was collecting underpants. Have you learned nothing?

Wait...

[argStyopa]

...so you're telling me that Twitter isn't actually worth $15 billion dollars?

Phht.

Next, you're going to tell me Uber's not worth $62 billion.

OH NO!

[NetNed]

Oh my gosh, we feel so bad for them....


Signed,

No one in Detroit.

Re:Anxiety as a Service (AaaS)

[Verdatum]

I don't fully understand how selling Anxiety as a service could turn a profit, but I do hear a lot about anxiety, so it must be pretty important! How do I invest!?