ELI5: Why do tech workers make IB money and barely do any work

https://www.wsj.com/articles/these-tech-workers-say-they-were-hired-to-…

My friend who works at a FAANGM on one of their cloud teams has literally been pulling 80 hour weeks since he joined a year ago.

My theory is that these firms will always need top talent but they have over hired. Moving forward the number of dev positions in Big Tech will decrease as firms cut back on hiring, which means it will get way harder to get one of these roles. But the pay should continue given the need to attract top talent.

Similar to what you see in quant positions, where a tiny few make a ton of $.

My understanding is that this notion is actually quite rare, having worked with a ton of SaaS / Tech companies. The dudes who absolutely BANK without working a ton of hours are the prodigious ones who are just so fucking intelligent in coding and troubleshooting code issues that they are paid just to hang out, oversee shit and roll up their sleeves once in a blue moon but only when necessary. Also sometimes people who have previously built-out extremely high-value products / applications for their company get to the point where their product pretty much operates itself automatically but the guy that built it still gets to stick around and enjoy high comp for as long as the product he built keeps paying major dividends for the company. This was sort of the case with that one dude who worked at Twitter, that Elon Musk tried to shit on. A few years ago he sold a valuable company/asset to Twitter for about $100M, and now he gets to stick around and presumably is one of the higher paid guys on the crew. In that specific case I believe the SWE in question was actually actively working on high-priority projects though. 

The middle class of SWEs aint that rich though, they're typically either working harder these days (leaner staff) and/or are paid well but not $300-$600K as a 20-something well. At the end of the day these Big Tech companies are pretty sharky only once they have to be. If they notice the average SWE is making hundreds of thousands and only working a few hours a week they're going to cut staff until that's not the case anymore.  

So tech is a bit different than banking in that if you’re really good, you can code 10x faster than someone who is decently good. That’s why there is a very big spread between decent and amazing peogrammers and a lot of the very smart people can work 3-4 hours a day and still be way ahead of their peers. Then there’s the average programmers (and most people who graduate top schools with good GPAs fall into this bucket) and they do work 50-60 hours, you just don’t hear about them as much because it’s not as interesting

All of the above is true / correct. There’s a very small subset you see who make incredible money but they’re true outliers. There are others who work very long hours to get there in things like cloud, AI, etc. - it’s actually very comparable to IBD (albeit in a much cushier environment). The fluffy tiktok jobs are getting axed left and right and are mostly a low interest rate phenomenon. 
 

The other thing to keep in mind is that tech people are notorious for inflating their comp. People on Blind etc. will include stock appreciation and signing bonuses in their annual comp which skews things quite a bit and when you take that away the actual cash comp is a lot lower. 

Having hired/built dev teams...

1. A lot of dev comp stems from equity and equity-like vehicles. This is all underperforming quite badly now, so net comp is much lower.

2. Fixed comp in general has fallen a lot. I am hiring a CTO for one of our portfolio companies right now. Asks that were $400k are now $220k - $250k. This is because the idiots with VC funds have rightfully been eviscerated. 

3. A 10x engineer is VERY REAL. I have worked with some devs with insane output, they 100% deserve the premium. 

In some careers you can get insane leverage. Code is a clean form of leverage because there's no incremental cost in most cases. Not the case in something like IB or law. For example, your MD would need a larger team to scale revenue. Not the case with code, this is why GREAT engineers make bank. 

Tech right now as an industry is making supernormal profits and they have decided to share those with high potential programmers and engineers who could otherwise disrupt their business models.

Hi, I'm in SWE, can explain. There's a few factors at play here:

1. There are two very different job markets for SWE. There's the low-wage market and the high-wage market. The low-wage side of the market is writing basic client-side apps, web scraping, etc. Easy to write, hard to get wrong. These are the kinds of jobs you can go to a random freelance website and get someone to do for you. A lot of these jobs have been outsourced, but there are still some of these jobs in the US for interns etc. The high-wage side of the market deals with business-critical functionality. Imagine what would happen if Amazon's servers went down for 1 day. In that space of time, a huge amount of revenue would be lost, not to mention the damages to Amazon's reputation from all the other businesses that depend on its servers (via AWS). Amazon can't gamble on some random freelance developer to code their servers, so they select the top talent and pay them accordingly. The high-wage market involves skills like dealing with large codebases, correctness, scalability, and performance. These are skills that can't be easily picked up, so there's a high barrier to entry. I can elaborate on this more, but this is already a very long comment so I'll leave it for now.

2. it is very beneficial to keep a developer that's worked on a project for the last 5 years instead of hiring a new one, since they've had a lot of time to interact and gain a feel for the entire codebase. Switching costs are very high for employers, so they like to keep existing employees happy using various perks. Software companies with high turnover rates are unsustainable by design. Frequently, when a new developer comes on, they end up rewriting or misusing a large portion of the existing code. There is no real way to fix this, it's just the nature of the job.

3. It's more about trust than raw output, in the same way that the top legal and consulting firms charge based on trust and reputation, not because they can produce more pages of output per day. Going back to the Amazon example, if I'm a manager at Amazon and I hire a dev to work on some critical piece of AWS infrastructure, I have to trust that their code won't be buggy (which is surprisingly difficult). There are processes in place to mitigate this, such as code review and testing frameworks, but at the end of the day there's still a great deal of trust involved. It seems like easy work from the outside, like you say - surely 90% of college-educated people could learn it. I also thought this way when I was in high school. What's the big deal? Coding is easy! That all changed when I took my first college-level CS class. My first semester of college, all my perceptions of what it means to write good code completely changed. I realized that it is highly non-trivial. Writing good code is a very rare skill and one that takes a lifetime to learn, even for people who code as a career. And the big problem here is that if even one of your developers can't write good code, it can compromise everyone else's work.

4. As a group, we simply value our free time more. The maximum I would ever want to work is about 65 hours a week. If a firm came to me offering 7-figure comp in exchange for 90-hour workweeks, I probably wouldn't be able to do it for more than 6 months. But as I mentioned above, this just isn't sustainable. Software requires long-term employees. The IB model of "hire people, give them good pay for insane hours, and let them exit after a year or two" really doesn't work. Plus, you would be depriving yourself of a large pool of talent if you did this.

Having worked in Google and Amazon and some other techy jobs, I’ll give my 2 percent

1.  Those “Days in Life of xxx Tech worker” Tik Tok videos are soooo misleading !!! Tech has NDAs, so those video makers are not allowed to mention job content on social media despite their impulse to do so, Imao. So they only mentioned free food and chilling in the lounge etc, but not mentioning the work. In reality, tech people work 40-60 hours and also do on-calls late night.    

2. Tech people are NOT making IB money, I don’t know where you get that perception from. More like 60% of IB money honestly. IB associate make 400k, VP make 600k, and tech is no where close to that, many techies get stuck at L4 and L5 for 5+ years ( so they’re L4 when they’re 30 ) and keep making 250k for decades of their youth. Also promotion is really slow in tech companies. Unlike in IB where promotion is automatic once you hit the year mark, in tech promotion is way harder to come by

3. The engineers getting paid 400k at big tech / funds are NOT doing the same work as most bootcampers and low-end enterprise IT, despite both of them being called “SWEs”. Just like back office vs front office in finance, tech career also has distinction and disparity between different types of tech roles. The tech jobs that have low barrier of entry and good wlb are not the high-paying ones