Business

Why do some programmers earn millions, and others – don’t?

What are the responsibilities of the programmer who earn 500,000 dollars a year?

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“I confess: I am a former employee of Google. My opinion may not coincide with the position of the company.

Question is a bit incorrect in the sense that Google gives no guarantee of income of 500 thousand dollars for programmers. As stated in the article, this includes salary and package of restricted shares (RSU). To explain how you can go to the highest level, I will draw an analogy.

Imagine that you are worker, who supplies the village with water, and you, of course, are high estimated. There are two types of workers:

WORKER #1: He takes one or two empty buckets, goes to the lake, fills them, returns back and gratifies twenty villagers. Along the way, he quenches thirst with water drawn from the lake, and then some of the remaining water collects for himself.

WORKER #2: He does not care whether he will get the “deserved” portion of water, which he will produce. Instead of taking a bucket, he takes a shovel, a small cup and disappears for a while. He digs a channel from the lake to the village and disappoints many villagers when comes back with the empty cup. But the older generation, for some reason, believes in him and wants him to keep working (they even feed the worker for not starving to death). Once he comes to the village and shows a steady stream of water. Now the workers of the first type are deprived of stake in the business. They need to look for a new activity and a new team. Worker of the second type, depending on which part of a channel belongs to him, receives the lion’s share of resources. Since the village wants to take over the channel and integrate it into their system, then eventually redeem it at worker #2, giving instead a property in the village itself, which is usually a piece of land.

The media are monitoring the worker of the second type and his unwillingness to part with the accumulated wealth in exchange for a high position in the hierarchy of the village (this chart of “holding” employee called “golden handcuffs”). Media portrayed it the way like another company has decided to entice worker of the second type, but it had an unexpected resistance. From the worker#1 point of view, who sees the situation as presented with the media, he was unjustly underestimated. Worker of the first type expected to be equally paid because the work carried out exactly the same time and was faithful to the village.

Let me now tell the real story. Once I met the New Year in the Monterey Bay and watched the young man who began to dig a hole in the sand. My wife enjoyed the atmosphere of the beach where no one really paid any attention to the guy. I pointed it out to wife and said, “Count a time, half an hour later all these people will dig a hole with this guy.”

30 minutes later he was able to dig a channel to the moat of his castle. The moat was filled after the tide of water, but that water is lighter than lead, the need to change the angle at which it enters, and it was what the guy was busy with. 5 minutes later he was joined by observing the process of children. 10 minutes later – a few adults. 15 minutes later – shy foreigners with cameras in their hands. In 60 minutes, one worker of the second type was able to inspire 15 workers of the first type and provide the full flow of water in the moat.

People do not often realize that an equal amount of effort does not give the same result. Worker of the second type was willing to break the rules, become an outcast and starve for an indefinite period of time to create an automated flow of water for the village. Worker of first type expects reimbursement of efforts in the form of salary for the implementation of the “skills” or doing “tasks”. His precepts do not match expectations. The main difference between two types of workers – is risk-taking without any warranty.

Perhaps almost all of the inventors of the village itself (in this case, Google) were workers of the second type, which could not quench the thirst of many years, have yet to establish the flow of billions of dollars. People who have a great package of restricted shares (RSU), is likely to differ in such things:

  • From the first days were responsible for the creation of something new, important and valuable;
  • Created this by accident under the guise of a minor project, which proved to be valuable;
  • Their innovative startup acquired;
  • Somehow (what is unlikely) acquired knowledge-monopoly the source of innovation.

Those who own the RSU and do not fall under this classification – are the fruit of our imagination.

Let me tell you another story. Probably, it will be more specific: in May 2009, a professional worker of the first type was trying to get a job at Twitter. He was refused. In August 2009, he sent a resume to Facebook. He was refused again. He decided to take the risk, borrowing strategy work of the second type, and create a “channel”.

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While he and his friend worked on the “channel”, they charged enthusiastic group which has grown to 55 people, senior citizens and other “villagers” have thrown them the bone: at first 250 thousand dollars, then 8 million and eventually 50 million from venture fund Sequoia Capital, when the success of “channel” was no longer in doubt.

Three hours before I wrote this post, on CNN announced that Facebook has bought “channel” created by the workers of the second type, for $19 billion (note, billion!). Facebook bought WhatsApp. And Brian Acton, after five years of working on the “channel” for Facebook has become the holder of the equity in the company, at which at one time he was refused.

Worker of the second type compares and discusses salary, because he does not sell its services to the village (the corporation). He sells unnoticed by others wealth. The village has essentially no choice but to grant him compensation in the amount of produced wealth. Wealth belonging to him can be sold in order to improve the position of both parties to the transaction (watch out for rising stock prices of Facebook).

Do you think that 55 employees of his startup will have to beat out Facebook salary of 500 thousand dollars a year? Or do you think that Facebook will offer them even bigger salary for keeping them from running away? The question is not about whether the parties agree. But about, if the representatives of the village sit on the other side of the negotiating table when the deal is making. And since we are talking about the only source of water for the village, it won’t do without extra zeros after the dollar sign.

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