|
|
|
|
|
|
by socratic
5251 days ago
|
|
|
Apple, Google, and Facebook all make around $1m revenue/employee and employ around 100,000 people. (Profit/employee is about $300-400k, incidentally.) While the average SV engineer isn't working at one of these companies, doesn't this mean that there are perhaps tens of thousands of engineers who are on average producing $1m/year in revenue? (If not, it seems like you need to argue for an extremely skewed distribution of the value that individual engineers are adding based on quality or area of expertise.) If one of these $1m revenue/year ("1MRPY") engineers starts a company with n 1MRPY engineer friends, is it so crazy to suggest that they might produce $x * n million worth of value over x years? (Even if they just build infrastructure and never turn a profit?) Or that they might be worth $4 * n million in revenue over a four year earn-out to an acquiring company? |
|
|
No. Just because total revenue divided by total headcount comes out to a million doesn't mean every engineer is contributing a million. For one thing, a lot of that revenue is return on investment - in the code, in customer relationships, in the "brand" generally - in previous years, nothing to do with current headcount. For another, the distribution is exponential. A few people contribute many times that million, while the majority contribute less, and many of those at the high end aren't engineers. So yes, engineers who contribute a million dollars to the bottom line do exist, but they're a very small minority. I've even been one myself, but not every year. Everyone in SV seems to think they're firmly established in that elite category. 99% of them are wrong.
"If one of these $1m revenue/year ("1MRPY") engineers starts a company with n 1MRPY engineer friends, is it so crazy to suggest that they might produce $x * n million worth of value over x years?"
It's not totally crazy, but it's very unlikely. Such engineers are rare enough, and in such high demand, and self-directed enough, that you're unlikely to get more than a couple of them to follow one vision even if you're friends. Then you have to find people with non-engineering skill sets who are as good in their respective fields, and convince them to join you. Then you'll probably still fail due to factors other than the quality of your personnel.
What we're facing here is the compounding of two errors. Everyone thinks they're in the top 1%, and that being in the top 1% for one skill set is enough to ensure success. In reality, most startups have average teams and many non-technical obstacles to overcome. I've been in nine startups myself. I'd hardly discourage anyone from trying, but overconfidence can prevent people from doing what they really need to, and overconfidence seems to be California's most abundant crop.