CXO

Developers: Want to make serious money? Don't work for a startup

Big companies pay more, but here's the secret as to why.

Silicon Valley is fueled by the myth that startups are the road to riches. While startups remain "the only way to get 20 years of experience in five," as popular blogger Parker Thompson ( aka Startup L. Jackson) has written, "don't join a startup for the [!%!%%] money," he warned.

For filthy lucre you're going to want to work for The Man.

Or The Woman, if you will. As O'Reilly's latest salary survey confirms, "the bigger the company, the higher the salary." Oh, sure, you can get a fat equity stake in a startup. However, as Thompson suggested: "Your equity is probably worthless." With this in mind, where is the best place to sell your soul to corporate America and get stinking rich?

Big, boring, and lucrative

When I lived in the Valley, one of my neighbors was an Oracle lifer. As I've flitted from startup to startup, he has remained there, collecting a hefty paycheck while cashing in options or restricted stock units (RSUs), year after year. I've had a company or two get acquired, but were we to tally up the final paydays for our efforts, I'm positive his take-home pay would be much, much bigger than mine.

This rings true with advice given by Jackson:

If you want to get rich, your best bet on a risk-adjusted basis is to join a profitable and growing public company. Google for short. Make $200-500k all-in a year, work hard and move up a level every 3-5 years, sell options as they vest (in case you joined Enron), and retire at 60, rich. This plan works every time.

SEE: The 10 best and worst entry level jobs of 2017 (TechRepublic)

It also rings true with O'Reilly's salary data. While just one metric for measuring the financial aspects of a career, salary is the one certain variable in one's pay. By that measure, bigger is better.

For example, working for a startup-sized company (2- to 100-person companies), which represented a third of O'Reilly's respondents, will net you a median salary of $65,000. While not bad, that's $15,000 lower than the overall median, and a big step down from the $78,000 median earned by those at companies with 101-1,000 employees. Add one person to the employee count (companies sized 1,001-10,000), and you'll make a median salary of $91,000.

Sell out for real to a mega-corp (10,000+ employees), however, and you'll be bringing home $103,000. Not too shabby. Your soul wasn't worth much, anyway.

Oh, and those salaries at smaller companies, sized 2-100 and 101-1,000? They plummeted 17% and 15%, respectively, over the last year. So big is looking better and better.

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Image: iStockphoto/cmexonat

Big is beautiful

The question is why. Anyone who has spent much time at a big enterprise already feels that Dilbert is sacred scripture. Despite institutionalized inertia, however, the very fact that a big enterprise is, well, big, says something about it, as Brian Suda and Roger Magoulas summarize from the O'Reilly findings:

The majority of companies don't make it to their fifth birthdays, which indicates that those that do are onto something. Older, more experienced companies probably also know that it is expensive to recruit and train new team members, so offering higher salaries to keep people can be worthwhile in the long run.

SEE: Is data scientist the most rewarding tech job? New report says yes (TechRepublic)

Nowhere is this tendency toward oblivion more apparent than in the startup world that Silicon Valley reveres. The software industry represented a third of the O'Reilly respondents, and tends to be where new technologies first take root. Despite this, the median salary for developers in the software industry ($73,000) is $7,000 less than the overall industry average.

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O'Reilly Media

One takeaway from this data may be that developers who want to get paid more will tend to stand out, and get paid accordingly, outside the competitive software industry. Developers are in top demand, but with software "eating the world," the ability to cash in on that talent may well depend on getting out of the software industry and into old-school, bigger enterprises in manufacturing, media and entertainment, etc.

Indeed, I suspect what we're seeing is just that: Big enterprises are modernizing, and software is critical to doing so. It's not simply a matter of big companies being able to afford to pay more—startups, blowing through VC cash, can (and often do) certainly spend lots of money on developers. But on balance, big companies have more at stake in getting software right, and are willing to pay for it.

Also see

About Matt Asay

Matt Asay is a veteran technology columnist who has written for CNET, ReadWrite, and other tech media. Asay has also held a variety of executive roles with leading mobile and big data software companies.

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