Forbes: The Rise of Developeronomics

[ilconsiglliere]

http://www.forbes.com/sites/venkateshrao/2011/12/05/the-rise-of-developeronomics/

I dont buy the premise that every company is a software company and that software will eat the world.

The reason I say this if this is true we would not being a devaluation of the value of being a software developer. What we are seeing is the commoditization of the field. Even if a superior developer is 10x as productive as a cheaper one if he is more expensive the companies would rather throw bodies at the problem.

[I D Shukhov]

Since Rao, the author, believes that  "Now Every Company Is A Software Company" (and twice links to this article) it's a logical goal for companies to recruit and retain young, "10x" developers.  So he sets out in this article to explain how he thinks it should be done.

The emphasis is on "young" because: 

As a developer ages, and finds it harder and harder to switch technologies, at some point, he or she is considered hooked for the rest of their natural lives to some technology — Java or C++ or the Facebook API say — that they can be expected to grow old with. When a technology hits that point of maturity, talent that’s hooked to it starts getting devalued along with falling retention costs. The buffets become skimpier, compensation drops, churn is lowered, and the talent retires into the sunset with the technology. It’s quite poignant really, like a crew going down with a ship.

However,

really talented ones retain an evergreen ability to reinvent themselves around the latest, youngest technology layer, seemingly at will.

If you pull all this off successfully, as a large software company, an investment in a young person at age 12 will yield returns for you throughout their lives, whether or not they work for you directly. They will start out as pure investments, start yielding dividends by age 18 or so, return your investment by age 30, provide business model insurance as your company matures (a major reason Java is still relevant, for instance, is that there is a ton of talent still invested in it), and eventually turn into crisis insurance policies (this by the way, is the “flow” you have to manage, as opposed to a “stock” of employees on your bench).

At the end of the article he offers this analysis about how software developers can maximize their value:

Software developers are smart. By and large the vast majority clue up, and do so relatively early. The clueless 10x developer who gets traded around with as little friction as stocks or cash is rare indeed. If you find one, resist the urge to exploit him/her for immediate gain, and invest in getting them clued up instead. You’ll secure vastly more value in the form of relationship capital that way.

The natural reaction that forms once a good developer recognizes his/her own value is to turn to either an individualist-mercenary mindset or a collectivist guild-like mindset.

The individualists turn into hard bargainers as they carefully probe their own market value and frequently re-negotiate relationships. They carefully invest in keeping their skill-base current and avoiding being shunted into the sunset end of the ecosystem for as long as possible. This sort of developer likes to hedge bets, stay invested in multiple projects and keep one foot in the open source world at all times. They position themselves for massive upsides when that is a possibility, and the ability to walk away from failures with their own reputations intact where there is real risk. There is a reason star mercenary technical talent is the asset that gets sold fastest in a fire-sale when a startup crashes. There is a mad scramble for a CTO who successfully manages to blame the business end for the failure.

The other kind of developer turns to guild-like structures, which serve as centers of balance-of-power politics  in the constant wars against the developer-capitalists. Except that instead of taking on the dynamics of class warfare along an upper-lower dimension, the conflict takes the form of exit warfare along an inside-outside dimension. Rather than form a union to negotiate with management, the talented developer will simply exit a situation he/she does not like, and use guild-like resources to move to a better situation. Stock options are simply not as effective in limiting mobility as the power of Russian nobility to whip serfs into immobility once was.

The result is a precarious balance of power between developers and developer-capitalists, and a cyclic center-periphery flow of developer-capital, as individual developers take themselves in and out of circulation.

What exactly are the "guild-like structures"?  Open Source projects?  Online learning communities based around technologies? 

[The Gorn]

This guy is an asshole.

This guy is yet another shitstain attached to the veneer of this industry who determines in his infinite 25 year old halfbaked wisdom that some developers are morlocks and are stupid, and that other developers are old and therefore, ipso facto, worthless, but others are destined to be robber barons and wallow in riches like Scrooge McDuck in his gymnasium sized money vault because THEY DESERVE IT BECAUSE THEY ARE ANOINTED.

This guy can go f*ck himself.

"Dot com meltdown, assholes!!!?"

No, I'm not posting drunk.

[Carrie Cobol]

Agree 100%, Gorn.  It's full of generalizations, contradictions, stereotypes and utter nonsense.  Plus his bias is thicker than his skull.

[Origisaurus]

This is just another propaganda piece to justify cheap foreign labor.

Does this birdbrain, or the people pulling his strings, think that, after learning all of the 100-plus alphabet-soup thingies I have, I am "incapable" of learning one more?  And if one, why not two, etc. by induction?

The fact is that the people making up these stories can only believe them if they don't understand that software is evolutionary and no one can understand the current technology unless they know where it came from.  (IOW, the description is complete in and of itself.)  Of course, it is not necessary to believe the bovine excrement in order to write it, only to have the desire for a paycheck.  In fact, it helps to have no clue.

This is a slam at Americans of a certain age.  Is that racism and/or ageism?  This will be on the mid-term.

Much of this tripe comes from "managers" (don't get business process, but do know who to suck up to) who can't specifiy software and so can only blame the people who tried and failed to implement what they hoped he had been saying.  Maybe we need a few "freshers" from the Mumbai University of "What's Hindi Now" to correct the management deficiency. 

No, I don't make nice. 

[The Gorn]

Agree 100%, Gorn.  It's full of generalizations, contradictions, stereotypes and utter nonsense.  Plus his bias is thicker than his skull.

The problem I have with it is, G*d D*mnit, ASSHOLES LIKE THIS ARE CREDIBLE SOURCES THAT BUSINESS PEOPLE LISTEN TO.

Writings like this are like a scourge on this industry.

Preening as a key strategy.

[ilconsiglliere]

Agree 100%, Gorn.  It's full of generalizations, contradictions, stereotypes and utter nonsense.  Plus his bias is thicker than his skull.

The problem I have with it is, G*d D*mnit, ASSHOLES LIKE THIS ARE CREDIBLE SOURCES THAT BUSINESS PEOPLE LISTEN TO.

Writings like this are like a scourge on this industry.

Preening as a key strategy.

I agree totally with your statement. I use Forbes as a barometer how the uber assholes in companies think. Look at it this way, by reading Forbes its like looking into the mind of the enemy and getting a road map of how they think and what they are going to do. This article is utter bullshit but all the asshats in companies that think they know more than everyone else will read this and start quoting it verbatim.

I have lived through several iterations of this already. In the 90s we were all obsesses with quality and winning the Baldridge and Demming awards. Than we switched from that to some other crap. Right now we are all supposed to be "innovators". Companies are now hiring "VPs of Innovation", "Directors of Innovation" and all kinds of other crap. They all think they can be like Apple. But what they dont understand is that Apple's culture is like this. Its driven from the top down. Whether they will stay this way is unknown. But all the companies I have encountered are all on the "innovation" bandwagon.

BTW, I used to read the rag CIO for the same reason as Forbes. Knowledge is power.

[Slinky]

What I get out of this is that "people" are the problem. Older technologists get to a certain age and balk at getting thrown into the buzzword hamster wheel. So the solution is to find, ever younger, talent/cannon fodder.

On the other hand, look at who the audience for this article is. It's the same people who don't believe in investing in human capital. They believe in throw away workers. No wonder you get a piece of garbage like that written up. Anyways, I'm done with software development as a career.  Still in IS, but doing something else more rewarding. 

[TechTalk]

I have lived through several iterations of this already. In the 90s we were all obsesses with quality and winning the Baldridge and Demming awards. Than we switched from that to some other crap.

Imo, quality was really being pushed in the 1980s when Japan was eating our lunch.  Of course,  I am sure it was still being emphasized in the 1990s as well.  One reason why nobody wants to win the Baldridge award nowadays is because if you win then you are required to share the "secrets of your success" with the rest of the world!!!!

Right now we are all supposed to be "innovators". Companies are now hiring "VPs of Innovation", "Directors of Innovation" and all kinds of other crap. They all think they can be like Apple. But what they dont understand is...

Well, b-schools and the media have been harping about innovation and the "blue ocean strategy" for years now and de-regulation, the Internet. and globalization have had a big impact as well.  That said, different industries have different motivations to innovate.  For example, in the financial industry most companies are looking for new ways to make big profits in a short period of time.  In other industries, the reality often is "either you innovate or you will die".  What Redbox and NetFlix did to Blockbuster and Hollywood Video and what Amazon did to the large book store chains are just two examples of what I am talking about.

But all the companies I have encountered are all on the "innovation" bandwagon.

And they should be. 

But what they dont understand is that Apple's culture is like this. Its driven from the top down.

Okay, I think what you are saying is that Steve Jobs (the CEO) was the primary person at Apple who from day one was pushing innovation and he instilled this way of thinking into all faucets of the company.  That said, as your post mentioned companies are now hiring "VPs of Innovation" and "Directors of Innovation".  Doesn't this mean that at least some companies do understand that "it is driven from the top down"?

[David Randolph]

That said, as your post mentioned companies are now hiring "VPs of Innovation" and "Directors of Innovation".  Doesn't this mean that at least some companies do understand that "it is driven from the top down"?

The problem with such positions is that they are generally filled with people totally incapable of being innovative. Such positions are granted to someone who has sucessfully kissed his way up the ladder adopting all the latest buzz words on the way. Secondly, such positions are generally without any real power. Thus, no real innovations happen under them.

When we look at the history of disruptive innovations, they have almost always been done by outsiders or second or third level companies. That is because the top level companies have to protect their current markets and internal power structures. It is only those who do not have to protect any current setup who can take the risks to be innovative.

Back to the article: the writer is a typical tech writer - that is, he is months behind the curve. He talks about the Euro as if the last few weeks haven't happened, about the stock market ignoring the current rally, and about software as if people aren't figuring out how to get around the "shortage" he mentions. Based on the first few paragraphs, his suggestions are very out of date. In software, the situation is always far more fluid than he presents.

[The Gorn]

Memories in this industry are so short – they border on Alzheimer Syndrome. A problem in this industry is that very young people like the author who have no historical insight or experience in this industry believe that everything is completely new. It’s exactly like a horny 13 year old who thinks they invented sex.

Exactly the same mentality being expressed in this article – that developers are “rock stars”, that the sky is the limit on their compensation, that they are pivotal in all respects – prevailed during the dot com era that lasted until early 2000 and which also overlapped the Y2K reengineering cycle.

Back then there was a huge increase in the demand for all developers. Plain HTML coders were commanding over $50 per hour contract rates. Contracting was the gold rush at that time – you’d quit your job and become a “free agent” and your income would magically double or triple.

Companies back in the late 90s were in an “arms race” of inventing stupid pseudo-business reasons to throw dozens of programmers and millions of dollars at very mundane web site development. Pets.com, PeaPod.com and all the rest typified the era. Replace “typical stupid dot com fiasco” with startups and social media and you have today’s reality.

And programmers back then became VERY, VERY spoiled, entitlement minded, and jaded in a hurry. Just as they have done so today.

Concurrently, business around 1999 and later was racing to figure out how to knock the expensive contract geek off of his pedestal back down to the mud. Here in the US, the very simple and straightforward “answer” was the H1B visa program that imported extremely cheap talent into the US to counterbalance geek vanity and excessive wage demands. Which, due to the end of Y2K demand plus the end of the dot com market distortion, was really kind of unnecessary.

But in the early 2000s a typical contractor who earned $80+/hr was knocked back to perhaps $30-40 in some market situations.

And here is one blogger’s speculation on what the social media ***FAD*** (not eternal fact, not “thing we will live with to eternity”) means to the economy: http://www.oftwominds.com/blogdec11/Wall-Street-marketing12-11.html

Essentially, this blogger calls the social media ecosphere – part of what is driving this niche phenomenon of crazily preening programmers – a marketing Ponzi scheme to “over-market” to tapped out consumers.

I, like most experienced IT professionals, am tired of the preening that articles like this encourage – combined with the explicit age discrimination and labeling of older developers. Why don’t you people simply say “most developers over age 40 are absolute losers” and just be clear about where you stand?

There is no meritocracy. Today’s entitled, preening rock star programmer stud is tomorrow’s washed up loser who worked on the wrong things and therefore cannot do “newer” stuff.

This stuff is cyclical. There is absolutely no substantive difference between startup crazy 2012 and dot com crazy late 1999. In the latter case, the music ended when investors figured out that the upsides were limited and the business projections were irresponsible.

The words of infamy for investors in a couple of years will be names like “Groupon”.

And programmers are just plain underling programmers – usually employees, sometimes useful as innovators, but most stable and profitable businesses simply do not need a “10x developer” on a steady basis. Only a few years ago, a business author wrote “Why IT Does not Matter” and it was widely regarded as a seminal, credible statement of fact. The wheel will turn. We will soon be back to that “programmers in your organization are a liability, not an asset” thinking.

There goes your rock star cred, boys. And good riddance. Stop kissing your biceps long enough to figure it out and start banking that cash for a rainy day.

[TechTalk]

I think people need to keep in mind that articles written by writers at media companies such as Forbes are largely clueless about many of the topics that they write about.  Many seem to be young, underpaid, and inexperienced writers and those that have a regular column are often under pressure to produce an article in a short period of time .  If a forum member here thinks that a particular writer is clueless or getting paid to espouse an agenda which they happen to disagree with then perhaps he/she should post a comment on that website explaining their displeasure.

...Exactly the same mentality being expressed in this article – that developers are “rock stars”, that the sky is the limit on their compensation, that they are pivotal in all respects – prevailed during the dot com era that lasted until early 2000 and which also overlapped the Y2K reengineering cycle...

The Gorn, I didn't read the article, so, my guess is the long quote you posted comes from someone who wrote a comment on that article.  Anyway, the mentality that this person is speaking of never went away in places such as Silicon Valley and New York.  Except for a handful of online magazine websites much of the Internet media focuses their attention on the "Rock Stars" of the IT World.  For example, below is one article and two videos that cover that particular niche or aspect of software development. 

It's Always Sunny in Silicon Valley   http://www.businessweek.com/magazine/its-always-sunny-in-silicon-valley-12222011.html?campaign_id=rss_topStories

TechStars Episode 5
Oct. 11 (Bloomberg) -- Demo Day is here. The teams pitch their companies to a room full of 500 investors. The entrepreneurs need to nail their presentations, or blow their big chance at landing funding.
http://www.bloomberg.com/video/77330656/

Helping Startups Get a Leg Up
Paul Graham (owner of YCombinator) speaks with a reporter.  What I found interesting about this brief interview is that according to Paul Graham the initial investment process is still very healthy even though investor enthusiasm for tech IPOs appears to be waning.
http://www.businessweek.com/video#video=hyMWI2MzohKN8Kmb1SaTgkcgS-OZV8-5

David Randolph wrote: The problem with such positions is that they are generally filled with people totally incapable of being innovative...

Okay, I here what you are saying, however, it is NOT their job to be innovative.   The fact is that the lower you are in the organizational hierarchy the more difficult it is to be heard by those who are above you.  As a result, two ways around the problem of "employee idea contribution" that SOME companies have tried are the following:
 
Skunkworks -- A separate small, informal, highly autonomous, and often secretive group that focuses on breakthrough ideas for the business.

Idea Incubator -- An in-house program that provides a safe harbor where ideas from employees throughout the organization can be developed without interference from company bureaucracy or politics.

Getting these type of programs/groups started and managed is what people who are totally incapable of being innovative are suppose to be doing.

[The Gorn]

I think people need to keep in mind that articles written by writers at media companies such as Forbes are largely clueless about many of the topics that they write about.  Many seem to be young, underpaid, and inexperienced writers and those that have a regular column are often under pressure to produce an article in a short period of time .  If a forum member here thinks that a particular writer is clueless or getting paid to espouse an agenda which they happen to disagree with then perhaps he/she should post a comment on that website explaining their displeasure.
...
The Gorn, I didn't read the article, so, my guess is the long quote you posted comes from someone who wrote a comment on that article. 

Well, TechTalk, you need to read the article if you wish to comment knowledgeably. Because otherwise you are responding to comments here which only reflect our take on the article's points. Perhaps after reading the article first hand you would have an entirely different take than we do.

And yes, the comment I quoted was ripped from the comment stream attached to the article. (Forbes' comment view mechanism is not well constructed so viewing the original comment requires a bit of digging.)

Here is an attempt to seriously critique the article, separated from my ranting on the subject.

The buttons being pushed in the article comes from the following trio of contentions as a narrative, which I am abstracting from my reading of the article (and again, your view may be entirely different):

a) The cycle of innovation leading to new software products is now permanent. It will only increase, not decrease.

b) There are extremely few capable ("10x") programmers available in the industry to serve the needs of current technology innovation.  And "most" programmers who have been around industry for years are incapable of adapting to newer tools. So younger developers are now demanded.

c) And this demand will be permanent. And those younger, worthier, dynamic programmers with the jet fighter pilot like "right stuff" who are thus anointed by the Lord Almighty to be worthy of servicing now-permanent startup-dom's appetite for innovation will be blessed with great riches, influence, hookers and blow. Because they deserve to be worshipped as being the anointed, blessed saints that they are.


Each of these contentions is fallacious for these reasons.

a) The current uptick in software investment is temporary and will collapse when the return projections are determined to not be realistic. The current cycle of software invention demand is based upon investor hunger in a stagnant stock market for high returns and a commensurate investor faith in the "new" startup cycle. Investors are throwing money at the Groupons, LinkedIns, etc. in the hope that they will see better returns than investing in "stodgy" old tech and the baseline needs  of society like food, shelter, defense, basic commodities, etc. This party will end just as the very similar Dot Com bubble ended when it was determined that online merchants selling products and services often at high losses did not have viable business models. (I personally got a hell of a deal on pet food shipped free from Pets.com back in 2000. Today if you order pet food online the shipping costs are usually the same as the food price.)

b) This is the usual highly political, dismissive, insulting narrative that says that someone with prior experience is tainted and not acceptable as a hire. Which is how virtually the entire IT industry staffs. Programmers who are participating in staffing  decisions are practically feral in their disdain for anyone who does not reflect the same experience with which they are familiar. This is not new - it is recurring in each generation. The younger ones (who are making these staffing decisions) don't want to work with older developers. They don't like being told when they are wrong. So they simply silently reject them. Even when the skills match.

Also, the "new reality" of "incredible" demand for "exactly the right" programmers who know "just what to do" is used to justify wage busting with importation of guest workers. In other words, we must not utilize poorly skilled older developers and existing people - we must import smarter, more innovative programmers from the most advanced society on the face of the planet - India.

c) Commensurate with the investment cycle we are now in collapsing, this illusion of a new found wealth for "exactly the right" programmers will invariably collapse. Stupid money and investors drove dot com investment in 1999. Stupid money drives social networking-styled startups today. The same thing will happen when all these players realize a saturation in the market. 

The paychecks of these preening man-children are linked directly to a mass illusion by investors. When the illusion collapses, so will the paychecks.

In 2000, the stereotypical hated arrogant "Dot Com type" was a preening HTML programmer with no degree who earned up to $100/hr in some markets. Everyone laughed at that guy after the music stopped when he went to work as a barista.

In 2012 or so, the stereotypical hated arrogant "Startup type" will be a buzzword spewing social media clown who doesn't even have technical skills beyond creating a Twitter account. And when he applies for the barista job there will be 50 people in line ahead of him with enterprise coffee bean experience. 

As far as the "hard core" developers invested in the startup phenomenon are concerned, they will suddenly find that there is literally no market for their services. They tried startups but startups all tanked. They would build something of their own but every guy with some Ruby on Rails experience is doing the same thing.

Startups start at nearly the bottom of the food chain of IT investment. They are a sweat equity enterprise. Paul Graham and YCombinator raise that bar a bit with a rich network of contacts  and a modest cash investment in each sponsored startup.

But in general, when the investment bubble for this stuff collapses, there will be no hiding place for all of these developers who are beating their chests today. They can't go any lower in the food chain than where they were before. In 2001 there were lots of opportunities latent in internet technology and a lot of unemployed programmers who were committed to the industry started new software businesses.

The technology market will be far more consolidated when the startup wave ends in the near future than it was in 2001.

Eric Sink wrote this old essay on business opportunity: http://www.ericsink.com/bos/Whining_by_a_Barrel_of_Ro.html

This is a key quote:

Identifying all the opportunities for software products is like filling a barrel with rocks. We start by putting in the really big rocks like office suites and desktop operating systems. Soon the barrel is full and will hold no more large rocks. But smaller rocks can still be added easily. In fact, we have to add a surprising number of small rocks and pebbles before the barrel can be considered full.

In 2001 when the dot com phenomenon had collapsed, this metaphorical "market barrel" was full of large rocks and had lots of spaces between the rocks. There was plenty of space and room for lots of solutions.

By that analogy, I believe that the current market for software products and services, barring some real technological shift, is similar to such a barrel filled with pebbles. The startups today are like sand grains being added to the barrel because there are literally no product vacancies of major need remaining.

I suspect that the social media sphere of technological opportunity looks a bit like that barrel with a few large rocks in it - Twitter, Facebook, LinkedIn - and a whole lot of sand and pebbles taking up the voids. And the bottom of that social media market barrel is rotten and about to fall out.

In the aftermath we will see large numbers of unemployed former "founders". Who may actually be current "founders" but with little to their names but a worthless enterprise and no takers and no eyeballs to visit it.

The tech startup scene is a "commodity" version of self employment.  Self employment in one particular niche for the masses. Manufactured self employment.  That model has never, ever worked.  Everyone can't do the same thing as everyone else and be successful at it.

[I D Shukhov]

Gorn,  my understanding of the article is that of somebody giving advice to business owners in the Information Age, to wit that all businesses will be information businesses, that developers will be the lifeblood of the business and here's how to hire and handle them.

The audience is strictly owners hiring software engineering labor.   The ideal worker in this guy's world is a young and talented software engineer who should be brought into the fold of the business and shrewdly kept there.   Talk about equity and ownership might have been mentioned at the end (can't remember, and I'm not looking at the article again) when he says that most software engineers eventually "get it" and either go out on their own or start asking for a bigger stake in the company  (at which point they probably get shown the door -- although the author would have owners be flexible with the 10x programmers).

I think that if a startup is organized as a partnership, like a law office, say, and there is a clear  path to "make partner", then this is a very good thing and the owner-engineers "get it".   If these folks have never endured the career-stifling life of a FT maintenance programmer (which is what most programmers do) then all power to them.  I hope they never have to do it.

[David Randolph]

Identifying all the opportunities for software products is like filling a barrel with rocks. We start by putting in the really big rocks like office suites and desktop operating systems. Soon the barrel is full and will hold no more large rocks. But smaller rocks can still be added easily. In fact, we have to add a surprising number of small rocks and pebbles before the barrel can be considered full.

In 2001 when the dot com phenomenon had collapsed, this metaphorical "market barrel" was full of large rocks and had lots of spaces between the rocks. There was plenty of space and room for lots of solutions.

By that analogy, I believe that the current market for software products and services, barring some real technological shift, is similar to such a barrel filled with pebbles. The startups today are like sand grains being added to the barrel because there are literally no product vacancies of major need remaining.

I suspect that the social media sphere of technological opportunity looks a bit like that barrel with a few large rocks in it - Twitter, Facebook, LinkedIn - and a whole lot of sand and pebbles taking up the voids. And the bottom of that social media market barrel is rotten and about to fall out.

This really needs to be in the other forum, but I'll work with it here.

There is another part of this whole thing. Whenever a new technology or platform appears, there are several waves of putting rocks in the barrel. The rocks that were put in early on get taken out. Very few of them remain and new rocks are put in.

However, the process of putting rocks into the barrel is like a basketball team is warming up. They have a lot of balls on the court at once and many people are shooting at the same time. So, many balls do not go into the basket. Similarly, many rocks get found, picked up, and tossed towards the barrel, but do not go in.

Why mention this? Because the process of picking up rocks and tossing them towards the barrel means a lot of employment for software developers. It is very, very important to realize that this is a temporary phase. Once the barrel does get filled with rocks, most of them will be on the outside looking for new employment.

Periodically, there are new platforms that cause businesses to rethink how they are running their businesses and make new architectural demands on their IT. I think that we are seeing once of these new situations appearing, but it isn't social media. It is the demand by executives holding tablet computers for IT anywhere on any platform and the answer seems to be to go towards "cloud computing". I submit that this demand will be a stronger issue than social networking.