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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.
After 25 years in the software industry, I saw that this was becoming the norm. Outsourcing and cost cutting. And people wonder why software has gone to shit these days? The best people walk away from the industry as soon as they can.
This has been my experience as well. You can try to hire people in Eastern Europe or South America, but if you want working software, you're going to need to pay the same order of magnitude as in America.
"First they came for the slanderers and i said nothing."
I'd love to see some try and propose a tariff on all tech outsourcing efforts.
Want to hire cheap coders in some trash pit somewhere? 25% tariff.
Want to outsource your US teams to some shared services center in Timbuktu? 40%.
It won't happen, but it's good to watch certain types squirm.
I'm looking forward to the epiphany when Western managers and "entrepreneurs" discover that foreigners can do their work far better too.
I am sure that there are many other solipsists out there.
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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.
Have you used any software lately? There's no sense of quality or pride in work.
macOS had a bug where you could log in as root without a password.
Microsoft keeps breaking MSVC in horrible ways and their response is to tell you to wait a couple of years for the next major update. Windows gets bugs like preventing you from changing keyboard/layout input method settings, and they won't fix it until the next six-monthly update, by which time they'll have broken more stuff. The bug where files were deleted if you had custom library paths had been reported by "insiders" yet they still rolled out the update without fixing it. Oh and the way they've sacked their QA department and try to sell being an unpaid beta tester as being an "insider" is disgusting. You're just doing unpaid testing at the risk of your own data/productivity, you're not an "insider" in any meaningful sense.
Meanwhile, Red Hat has forgotten what "stability" means. RHEL7 has broken not just binary compatibility but also source compatibility for kernel extensions on a point release (the APIs for IPv6 stuff changed in an incompatible way), and they subsequently completely changed how Infiniband and RDMA work on a point release, breaking compatibility with everything that uses it. Their graphical installer now needs 2GB of RAM to run properly, even though you can actually run an installed system in 512MB. The default installation contains a whole pile of WiFi firmware packages and daemons that are only useful if your network configuration changes dynamically (like a notebook used on public WiFi) which you'd never need on a server. They've completely lost touch with their customers.
Games are all developed with a "ship buggy, patch later" mentality. There have been games released in a state where it's impossible to finish the first level. You know what was good about cartridge-based consoles with no connectivity? They needed some QA because it was expensive to pay for a run of mask ROMs that you had to dump in landfill.
Software is almost uniformly shit these days. Apparently no-one thinks it's worth making good software any more.