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How A Mysterious Tech Billionaire Created Two Fortunes -- And a Global Software Sweatshop (forbes.com)
An anonymous reader writes: Forbes magazine has an in-depth piece on Joe Liemandt. As you may be aware, Liemandt was the founder of Trilogy, a startup which has been credited to help put Austin on the tech map. He is also founder of ESW Capital, a private equity firm that is scooping up software startups left and right. Forbes called him "one of the most mysterious and innovative figures in technology."
But the story explores the approach Liemandt and his team took to acquire enterprise software companies, install new leadership, lay off staff and hire significantly cheaper tech labor abroad. And the numbers are compelling -- $15 an hour C++ programmers. Those are Amazon warehouse wages -- and those $15 programming gigs don't come with much for benefits. Plus, they require you to install software to your computer that tracks surfing, keystrokes and even takes screen grabs and photos via your computer's camera -- and this is typically on a gig worker's personal computer, not an employers' machine. The story opens with this: From an office suite on the 26th floor of the iconic Frost Bank Tower in Austin, Texas, a little-known recruiting firm called Crossover is searching the globe for software engineers. Crossover is looking for anyone who can commit to a 40- or 50-hour workweek, but it has no interest in full-time employees. It wants contract workers who are willing to toil from their homes or even in local cafes. "The best people in the world aren't in your Zip code," says Andy Tryba, chief executive of Crossover, in a promotional YouTube video. Which, Tryba emphasizes, also means you don't have to pay them like they are your neighbors. "The world is going to a cloud wage."
Tryba's video has 61,717 views, but he is no random YouTube proselytizer. He worked in sales at Intel for 14 years before serving in the White House as an advisor to President Obama's Council on Jobs and Competitiveness. Since 2014, Tryba has been the right-hand man of Joe Liemandt, one of the most mysterious and innovative figures in technology. In the 1990s Liemandt was the golden boy of enterprise software, a 30 Under 30 wunderkind before there was a Forbes 30 Under 30 list. Like Bill Gates before him, he dropped out of college, in his case Stanford, to start a company, Trilogy, and build his fortune. In 1996, at the age of 27, he made the cover of Forbes, and a few months later he appeared as the youngest self-made member of The Forbes 400, with a $500 million net worth.
But the story explores the approach Liemandt and his team took to acquire enterprise software companies, install new leadership, lay off staff and hire significantly cheaper tech labor abroad. And the numbers are compelling -- $15 an hour C++ programmers. Those are Amazon warehouse wages -- and those $15 programming gigs don't come with much for benefits. Plus, they require you to install software to your computer that tracks surfing, keystrokes and even takes screen grabs and photos via your computer's camera -- and this is typically on a gig worker's personal computer, not an employers' machine. The story opens with this: From an office suite on the 26th floor of the iconic Frost Bank Tower in Austin, Texas, a little-known recruiting firm called Crossover is searching the globe for software engineers. Crossover is looking for anyone who can commit to a 40- or 50-hour workweek, but it has no interest in full-time employees. It wants contract workers who are willing to toil from their homes or even in local cafes. "The best people in the world aren't in your Zip code," says Andy Tryba, chief executive of Crossover, in a promotional YouTube video. Which, Tryba emphasizes, also means you don't have to pay them like they are your neighbors. "The world is going to a cloud wage."
Tryba's video has 61,717 views, but he is no random YouTube proselytizer. He worked in sales at Intel for 14 years before serving in the White House as an advisor to President Obama's Council on Jobs and Competitiveness. Since 2014, Tryba has been the right-hand man of Joe Liemandt, one of the most mysterious and innovative figures in technology. In the 1990s Liemandt was the golden boy of enterprise software, a 30 Under 30 wunderkind before there was a Forbes 30 Under 30 list. Like Bill Gates before him, he dropped out of college, in his case Stanford, to start a company, Trilogy, and build his fortune. In 1996, at the age of 27, he made the cover of Forbes, and a few months later he appeared as the youngest self-made member of The Forbes 400, with a $500 million net worth.
This model works best for crappy near-end-of-life "enterprise" software, where all the original developers are long gone, and you're in maintenance mode.
These private-equity types buy up loads of failing enterprise software companies and offshore everything. They fund the purchase by loading up the victim companies with the debt used to purchase them.
It works best with _sticky_ software -- systems which are very, very hard for customers to get rid of. Bend over your customers, fuck them hard on recurring license revenue, do a little "labour cost arbitrage".
The spivs who are doing this are making BANK. The insiders are getting something like 40% return on capital, even accounting for losing bets. Investors are bashing down doors to invest in these equity funds.
I saw this with another notorious (and VERY large) San Francisco-based private equity outfit, who've pulls a similar caper, although not quite as draconian -- they have just opened an enormous development centre in Bucharest instead of pimping out contract developers online. Eventually, they'll wise up after chasing the cheapest competent developers in the world, and implement a digital treadmill, as these amoral worms have.
If you're running or working for an enterprise software company, here's a hard home truth: if you embrace mediocrity or fail outright, this is your fate: you'll be bought out by these vultures, cut up for scrap, and everything you've worked for will be worth ought, while these fat cats walk away laughing.
Out of Every 10 Silicon Valley Jobs Pays Less Than In 1997, Report Finds
Go back and RTFA. That article talking about NON-technical jobs in Silicon Valley: Grocery clerks, truck drivers, waitresses.
These non-techs have seen their incomes stagnate in the face of soaring housing prices, while the techs have prospered.
Go back and RTFA. That article talking about NON-technical jobs in Silicon Valley: Grocery clerks, truck drivers, waitresses.
Funny that's what I did when I saw your comment. The article makes no mention of technical vs non technical. It does however mention highest paid against all others and points out that the large tech companies are paying less as a percentage of their revenue to employees.
Your reading comprehension stinks. From the article:
Nine out of every 10 Silicon Valley jobs pays less now than when Netflix first launched in 1997, despite one of the nation’s strongest economic booms and a historically low unemployment rate that outpaces the national average.
While tech workers have thrived, employees in the middle of Silicon Valley’s income ladder have been hit hardest as their inflation-adjusted wages declined between 12 and 14 percent over the past 20 years, according to a study from UC Santa Cruz’s Everett Program for Technology and Social Change and the labor think tank Working Partnership USA, which examined the economic impact of technology companies.
Technology workers saw a median wage increase of 32 percent over the past 20 years, the study found. But Silicon Valley workers in virtually all other areas lost ground during that time. Across all jobs, wages for even the highest-paid 10 percent increased just under 1 percent, the study found