So the recent article about CEOs conspiring to keep (those poor people) wages low made me think ....
(besides the fact that the article is not making a single mention that we are talking about the most highly paid engineers in the world - nobody would dare to write such an rticle about goldman sachs conspiring with other mega-banks to keep the comp. packages of investment bannkers low - and we are soon going to be talking about similar comps for senior engineers (ie 500K - 1M total annual comps..) )
So my simply realization was the following
- singularity theory of exponential progress is hitting the bay area earlier than other places, more disruptive companies here, bay area's market growing disproportionally
to the rest of the US/world
- larger market/cap => requires/buys more brains => physical limits and people inertia cause two things
- mega real estate bubble from rents to real estate price to commercial real estate price (aided by a restrictive residential market / cornerned commercial real estate market by a few real etsate tycoons)
- wage comps skyrocketing - at the base of the pyramid due to real etstate/living costs at the top of the pyramid due to the supply demand imbalance
- the first reaction by the mega employers is to do their own "cornering the marker" is bound to fail - there is no oligopoly - the circle of trust needs to keep on expanded as more and more new employers are breaking through (twitter etc) - we are seeing its unravelling now as the article points
- with a fully transparent (linkedin driven) talent marketplace there will be an all out war for talent - which will force the typical $1M/eng in acqui-hires to become more common in steal-hires
- the inbalanace between comps given to new from old employees (new getting 2-4X of what older hires get) will force more talent liquidity as well as startups that will make the last "secret" part of the talent marker visible (what people are actually making)
- that will feed further the push on salary increases across the pyramid of employees, the total impact to the profitability of the companies will be felt rather strongly
- the realization that r&d costs by a company are not fixed costs but are (almost like) variable costs, you need to keep on shelling out $1M/eng every 2-3 years to replenish your highly liquid talent - without them your technology advance is immediately reversed.
- the only escape hatch of this localized inflationary pressure that bay area will be feeling is to escape out of the bay area.
- it is questionable whether/when the friction do the problems above will counter-balance the increased advantages that bay area has due increased critical mass of the disruptive innovation key ingredients
- most probably the first step will be that companies will increase their telecommute programms with people living in surrounding areas (just like od did) with people from southern CA, washington, utah etc..
- younger companies - being the most unable to compete in this "war for talent" will be the fisrt ones to be forced to change into more/majority global employee teams
- younger companies are going to be the big fish companies in 2-5 years - bringing these trends to the mainstream tech companies of the bay area.
- companies will become global ready - people will be more comfortable running meetings remote - having their key contributors being remore as opposed to local
- startups and technologies will further fill the gaps that cause innefficiencies for remote people, from addressing collaboration issues, temporary housing isses, payrol tax issues
=> the above transformation will happen first - the next step will be to accept the full concept of truly global (as opposed to US only) on-demand online worker as the one pitched by OD
Another thought. In the past using bay area as a test market carried a huge caveat - "the rest of the world isn't like us"... However, as bay area becomes an increasing portion of the $s of the world certain startups that are not targeting people but $s can safely focus just here in the bay area and expect to get the lion share of the available market. Even for those companies that target consumers... you can make the case that bay area gives you a future-time window ab testing of what the rest of the world will be 2-5 yrs later right now (and that time-delay will tend to be come shorter and shorter in the future)
(besides the fact that the article is not making a single mention that we are talking about the most highly paid engineers in the world - nobody would dare to write such an rticle about goldman sachs conspiring with other mega-banks to keep the comp. packages of investment bannkers low - and we are soon going to be talking about similar comps for senior engineers (ie 500K - 1M total annual comps..) )
So my simply realization was the following
- singularity theory of exponential progress is hitting the bay area earlier than other places, more disruptive companies here, bay area's market growing disproportionally
to the rest of the US/world
- larger market/cap => requires/buys more brains => physical limits and people inertia cause two things
- mega real estate bubble from rents to real estate price to commercial real estate price (aided by a restrictive residential market / cornerned commercial real estate market by a few real etsate tycoons)
- wage comps skyrocketing - at the base of the pyramid due to real etstate/living costs at the top of the pyramid due to the supply demand imbalance
- the first reaction by the mega employers is to do their own "cornering the marker" is bound to fail - there is no oligopoly - the circle of trust needs to keep on expanded as more and more new employers are breaking through (twitter etc) - we are seeing its unravelling now as the article points
- with a fully transparent (linkedin driven) talent marketplace there will be an all out war for talent - which will force the typical $1M/eng in acqui-hires to become more common in steal-hires
- the inbalanace between comps given to new from old employees (new getting 2-4X of what older hires get) will force more talent liquidity as well as startups that will make the last "secret" part of the talent marker visible (what people are actually making)
- that will feed further the push on salary increases across the pyramid of employees, the total impact to the profitability of the companies will be felt rather strongly
- the realization that r&d costs by a company are not fixed costs but are (almost like) variable costs, you need to keep on shelling out $1M/eng every 2-3 years to replenish your highly liquid talent - without them your technology advance is immediately reversed.
- the only escape hatch of this localized inflationary pressure that bay area will be feeling is to escape out of the bay area.
- it is questionable whether/when the friction do the problems above will counter-balance the increased advantages that bay area has due increased critical mass of the disruptive innovation key ingredients
- most probably the first step will be that companies will increase their telecommute programms with people living in surrounding areas (just like od did) with people from southern CA, washington, utah etc..
- younger companies - being the most unable to compete in this "war for talent" will be the fisrt ones to be forced to change into more/majority global employee teams
- younger companies are going to be the big fish companies in 2-5 years - bringing these trends to the mainstream tech companies of the bay area.
- companies will become global ready - people will be more comfortable running meetings remote - having their key contributors being remore as opposed to local
- startups and technologies will further fill the gaps that cause innefficiencies for remote people, from addressing collaboration issues, temporary housing isses, payrol tax issues
=> the above transformation will happen first - the next step will be to accept the full concept of truly global (as opposed to US only) on-demand online worker as the one pitched by OD
Another thought. In the past using bay area as a test market carried a huge caveat - "the rest of the world isn't like us"... However, as bay area becomes an increasing portion of the $s of the world certain startups that are not targeting people but $s can safely focus just here in the bay area and expect to get the lion share of the available market. Even for those companies that target consumers... you can make the case that bay area gives you a future-time window ab testing of what the rest of the world will be 2-5 yrs later right now (and that time-delay will tend to be come shorter and shorter in the future)
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