Good work, Markus Wohlsen (Wired Mag), no wonder this list was tweeted 140+ times in the first two hours it got published.
I took it upon myself to reproduce it because, let's face, you don't make lots of money working on Wall Street (I believe the average bonus in S&T expected this year is $137K -and folks, that's for people with several years in the business, not for graduates)...it's more like you make lots of money for other people.
Compare bankers earnings to those of engineers and entrepreneurs working in Silicon Valley and your mouth drops. (Anybody out there cashing out their FB stock this month ? Will you please let me know how many millions you're dropping on your mansion(s) and how many around-the-world trip(s) you're doing)
Silicon Valley is where it's at. Entrepreneurship, innovation AND monetary gains.
You get more credit than you deserve for being part of a successful company, and less credit than you deserve for being part of an unsuccessful company. Success will help propel your career. At a fast-growing company, chances are good you’ll have a higher position two years after you join. When it comes time to leave the successful company, you’ll be able to write your own ticket -Stanford faculty member and entrepreneur Andy Rachleff
1. Arista Networks
2. Box
3. Chegg
4. Claudera
5. Drobo
6. Evernote
7. IMVU (I envy you too-my note)
8. Odesk
9. Palantir
10. SurveyMonkey (known to many, it is a survivor to the dotcom crash)
Not even an article. It's like 10 pictures and 10 sentence fragments. I doubt working at Survey Monkey or IMVU would be the rewarding experience that this "article" seems to allude to. There are plenty of other, more exciting ventures in CA that people would enjoy working for more than the 10 co's in this slideshow.
They don't go into how much those guys are making. I am familiar with Silicon Valley compensation, at least as of ~2 years ago. The payscale compares closely to Big 4 accounting (engineers start higher, but it evens our after a few years). The engineer who pushes through a groundbreaking project will get a bonus, but it will ultimately be a fraction compared to what the company gains. Remember, anything you create while employed there belongs to them.
If you start one of these businesses, or get in on the ground floor, you are going to make a killing. But I'd say that holds true for any business - I bet Steve Schwarzman's first few hires are doing alright. Founders don't hand out equity that easily - look at Zynga.
SV is very similar to Wall Street, in that if you don't have equity, you are ultimately lining somebody else's pockets. Working for a start up can be very rewarding, provided you pick the one that succeeds out of the dozens that fail.
What people don't realize is that you need to be one of the inner circle to have the remotest shot at making real money. Otherwise, you are victim of the same phenomenon in any other of our high-octane (e.g. high education requirement, high "prestige," high intensity, high [in relative terms] compensation) industries (e.g. law, finance, etc.): high earning potential relative to your other peers leaving college at the same time but an informal cap on your earnings until you are the true owner or driver of the business. This is true at a bulge bracket bank or within the MBB firms. Even if you are a rainmaker, you are salaried and handed a bonus based on what the owners (or in the case of publicly traded banks, the "drivers" of the company) think is fair. If you disagree, tough shit, pack your bags and leave.
Hence the phenomenon where the rainmaker looks around and says, "Why do I do all this for someone else's gain?" and takes his ball to play elsewhere, a la Moelis, Qatalyst, Greenhill, Harris Williams, etc. These guys recognize this phenomenon and are smart enough to know that it requires way less effort to change their positions on the chessboard than change the way the game works. In the driver's seat of their own firms, they now hold the reins. The same goes for law firms, consulting practices, medicine practices, and tech startups.
@WC rainmaker
Let's take the grand monster of social media, FB. As you can read in Fortune, employees' RSUs are worth around $5.2 billion. It cost them nothing-unlike traditional stock options.
FB has to use its credit lines just to pay that huge tax bill- $2.3 Bn. I mean the average tax hit is $1.1 M/per employee.
Every real estate agent I talked to in SV is amazed at the money flushing though and the bubble going on with these guys dumping huge money on property.
Of course the founders have the largest equity, but those 1000 (Ok let's say 1/2 of that, 500) newly minted FB millionaires weren't founders nor early investors. Didn't you hear about the FB janitor who is worth $800K on paper, and cashing out THIS month. That's not anecdotal, it is real. He's got a real name and a real job: sweeping floors.
Also, I'd like to know how these tech start-ups are ready and able to pay $150K base salary for recent graduates (with no track record, no employment record) when Wall St. bank base pay for a 1st Year IB Analyst is $70-$80k.
Yeah, you could argue there is a small bubble. Investors are desperate for yield. They see the growth of these tech companies, and want in. So they turn to angel investing/growth capital/VC, which in turn floods SV with capital. If not for investors, most of these startup founders wouldn't see a 7+ figure payday for years (although there are exceptions - I imagine Palantir is doing just fine, for instance).
I think the case of the FB janitor (and the cook at Google, etc.) is explained by the uneven development of these organizations. A lot of start-ups are cash poor, so they use stock options as a substitute for market wages. Even in the janitor's case: he probably worked for 20% less cash compensation (at first) in exchange for those options. A venture/angel backed organization needs to scrutinize every dollar.
As for the 150k base engineer salaries (is this for PhD level candidates? The last I heard it was ~90k plus a small signing bonus out of undergrad) I think it must be the market rate for an engineer. They don't want to pay that much, but they have to - although sometimes they can use stock options, as described above.
The downside is engineering pay doesn't rise too quickly. An experienced engineer is little more valuable than a fresh one and may even be an inferior programmer if they haven't pursued continuing education. This is actually one advantage of finance - the experience is cumulative. The best investors and dealmakers are 40+, which would be ancient in engineering.
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