How a developer in Silicon Valley can become a millionaire? For several days now, the Internet community has been actively discussing a film by Yuri Dudy about Silicon Valley. Experts interviewed by the blogger talked about the structure of the world’s IT capital, and also described in detail the life and life of workers in technology companies.
The idea slipped through the film that many people came to the Valley, not for the sake of money, but to change the world, however, talented developers earn if not 300k USD / s, then at least a million USD per year. And in general, all the specialists who arrived quickly merged into the surrounding reality of startups and entrepreneurship.
I decided to figure out whether this is actually so or in reality, it is not so simple. To do this, I spoke with Denis Neklyudov, Staff Engineer at Lyft (a Uber competitor) and authorDevJobAccelerator. So, let's see how the career path of developers in Silicon Valley really looks like - from the start to millions of dollars in compensation.
Start: Valley Developer Tiers
In the USA, in many technology companies, the grading grid for engineers differs from the junior - middle - senior scheme that is usual in everywhere. There are more levels. Here are the most important ones: approximate distribution of levels and their names in large companies
Level 2: Interns
At American technology companies, internships are widespread. This is a great option for all parties: novice professionals can make good money, gain experience working on excellent projects and offers in the future, and companies find loyal talented engineers for the future.
Internships are a separate big topic, which was well disclosed in the first person in an interview with an intern who visited Google, Lyft, Nvidia, and Amazon right away. We, in the framework of our material, are only interested in money, that is, how much trainees can earn.
In reality, there are options in which trainees can earn $ 8-9 thousand per month before taxes. Internships usually last three months, that is, a "dirty" trainee can earn up to $ 27 thousand.
Level 3: Juniors
The first developer’s grade, which is already officially employed by the company. Often these are the positions that beginner developers offer based on their internships. This is convenient for the company: such specialists have already undergone onboarding, have mastered and proved that they can solve the necessary problems.
In the case of hiring following the results of the internship, developers can count on a good subscription bonus.
There are many rumors in the Valley about how big such payouts can be. For example, there is a tale that on Facebook when hiring engineers are paid the so-called Tesla bonus, that is, $ 70-80 thousand. This is enough to buy a Tesla electric car. Such a bonus is given to trainees who sign a contract with the company and come to work there after graduation.
As a result, according to various sources, Juniors at Silicon Valley companies can receive up to $ 230,000 a year. It's not so bad to start with, but it’s important to understand that in the Valley salaries actually consist of two parts: direct money and options (in startups) or shares (in large companies).
Options and stocks are also a separate big topic; in the framework of our article, it’s enough to say that their real value for the developer strongly depends on the success of the company.
This is especially true for companies that have not yet entered the exchange. If such a company goes bankrupt or is sold at a low price, engineers who own the shares will not receive anything. Such cases are not uncommon.
So remember: in the Valley, engineers' income is always called with the “promotional” part included. Earnings "in the money" here and now are significantly less.
Level 4: Middle developer
Junior developers who have already gained experience and can develop real features of the product without the help of a full-time mentor go to this level. Middles can count on an income of $ 150 thousand per year in real money and even up to $ 150 thousand in stocks. That is, the total amount is up to $ 300 thousand per year.
Level 5: Senior developers
In the Valley, this level is called terminal. This term is used because for 90% of developers this is the maximum, they will no longer develop further, instead of moving horizontally in the profession or going to management.
Most importantly, companies also do not expect developers of this level of further growth: everyone is satisfied with their current work. But if the developers of the third and fourth levels stop growing, then they will say goodbye to them.
Fifth-level engineers are the foundation of most American technology companies. Therefore, it is precisely such developers who are most in the Valley, and it is their companies that are transported from abroad.
The salary fork for L5 engineers is in the range of $ 170– $ 210 thousand per year in money and another $ 150– $ 300 in shares. Total senior developer salary may reach up to $ 400 thousand per year in a successful scenario.
Most importantly, companies also do not expect developers of this level of further growth: everyone is satisfied with their current work. But if the developers of the third and fourth levels stop growing, then they will say goodbye to them.
Fifth-level engineers are the foundation of most American technology companies. Therefore, it is precisely such developers who are most in the Valley, and it is their companies that are transported from abroad.
The salary fork for L5 engineers is in the range of $ 170– $ 210 thousand per year in money and another $ 150– $ 300 in shares. Total senior developer salary may reach up to $ 400 thousand per year in a successful scenario.
Level 6: Staff engineer and above
At these levels, no more than 10% of all engineers in Silicon Valley fall. These are isolated cases, but since we count money, we will pay attention to them.
Working as a Staff Engineer implies many responsibilities related to the direct development and prototyping of the architecture of business-critical products, as well as the management of programmers and testers. That is, such professionals are actively involved in every stage of the product’s life and play a leading role.
Compensations for these levels that are difficult to achieve are up to $ 500 thousand per year, and in some, especially successful cases, to the eighth level, income can exceed the coveted million.
At the sixth level and higher in most companies, the basic part of compensation does not grow so fast, remaining within the range of $ 200-300 thousand per year, but compensation for shares is growing actively, as in managerial positions, because the leader, like no other, should be interested in successful companies and raising prices on the stock exchange.
Separately, it is worth noting that the numbers can vary greatly between companies: some have bonuses and bonuses for good performance and some pay dividends on their shares.
Based on these figures, we see that even people with 15 years of experience, with excellent engineering skills, managerial and product skills, developed soft skills, can not so easily become millionaires in the Valley.
If you want to understand more about competencies at different levels -Square has a public ladder description.
Ideally, in the best-case scenario, when the developer was able to find an excellent accountant and optimized the tax base, the tax will be 25-30%. Moreover, 25% is almost fiction, not found in real life. In practice, figures of 30–45% are much more common, depending on the level of income: in the USA there is a progressive scale of taxation and in California the highest taxes.
So those developers who are counting on relocation in a company from California (each state has its own tax situation) should in the first year just count on a tax of 35–42% of the salary announced. Perhaps then you will be able to figure out how to optimize costs and reduce taxes to 30–35%, but this will take time.
When discussing income and expenses in California, there is also no way to get away from the cost of living and, in particular, real estate. Renting a good (that is, "not killed") studio in one of the towns of Silicon Valley can cost about $ 3,000 per month.
In San Francisco itself, prices are almost the same, but problems with expensive parking are added (it is worth paying $ 300 per month for it).
Having children further exacerbates the housing situation. In the United States, information is available on the quality of education in schools: parents can see the average grade that students receive on the basis of tests.
Buying or building your own home is also quite expensive. Land in the Valley is very expensive, like any “service” services, from builders to plumbers. When buying, you will have to choose from old houses, because few are being built. This will not affect the price: it’s almost impossible to find decent options for less than $ 1 million (although mortgage rates are quite low).
Many people choose the option to live away from work and spend a little more time on the road but save on rent. This is a matter of personal priorities and preferences, including climate: the farther from the ocean, the drier and hotter / colder (depending on the time of year).
About $ 130 per person per month on public transport. $ 1000–2000 will have to be spent on food (if you cook at home and dine for free at work).
From the pros: here it is much easier to regularly change iPhones and buy cars. Therefore, on the streets of the towns of the Valley, you can often find Tesla Model 3 than the Hyundai Solaris. It's simple: they are easy to take on credit or leasing.
Working as a Staff Engineer implies many responsibilities related to the direct development and prototyping of the architecture of business-critical products, as well as the management of programmers and testers. That is, such professionals are actively involved in every stage of the product’s life and play a leading role.
Compensations for these levels that are difficult to achieve are up to $ 500 thousand per year, and in some, especially successful cases, to the eighth level, income can exceed the coveted million.
At the sixth level and higher in most companies, the basic part of compensation does not grow so fast, remaining within the range of $ 200-300 thousand per year, but compensation for shares is growing actively, as in managerial positions, because the leader, like no other, should be interested in successful companies and raising prices on the stock exchange.
Separately, it is worth noting that the numbers can vary greatly between companies: some have bonuses and bonuses for good performance and some pay dividends on their shares.
Based on these figures, we see that even people with 15 years of experience, with excellent engineering skills, managerial and product skills, developed soft skills, can not so easily become millionaires in the Valley.
If you want to understand more about competencies at different levels -Square has a public ladder description.
How can a developer become a millionaire
There are two options. In the first case, developers often become virtual millionaires - at some point tax, authorities begin to consider them as such.
Going on an IPO at a high price, the stock price fell sharply in half. However, this does not take into account the tax, and the engineer’s value of the shares at the time of going public was counted as a profit to the engineer. As a result, the tax was disproportionately large. And of course, in the bank account of the engineer for the year, there was no million.
The second real option is to become an employee of a promising startup at the stage of its rapid growth. Engineers who got to Facebook in 2005-2006 and received, in addition to money, its shares, quite a millionaires have become. If the company is growing steadily, then with the receipt of shares (this is called vesting - engineers “unlock” part of their block of shares each year), you can significantly increase your income.
How option programs work
Even in the second, it would seem real, the case has its own subtle points. One of them is that any motivational program with the receipt of shares has a validity period. Usually, it is for four years. During this period, an engineer who continues to work in the company will have access to a certain part of the shares. As a result, he receives the whole package of securities promised to him.
That is, if we were promised a stake in the amount of $ 1 million, then each year we will additionally receive $ 250 thousand. If stocks rise in price - super, this is an additional income. If they become cheaper, then even $ 250 thousand a year will fail.
It may be that the engineer works well - and the company wants to further motivate him. For example, after a year of work, he will be given another $ 100,000 worth of shares that will be “spread out” for the remaining three years. This may constitute an additional increase. But in any case, after four years, the incentive program begins anew, the engineer must again wait for the “unblocking” of new stock of shares.
If the company has grown well, it is unlikely that the engineer will again be given the same percentage of new shares, most likely it will be noticeably cut. An essential role in these matters is played by the skill of negotiating and the general situation.
If the company itself is hunting a star engineer who has unique skills and experience, this is one situation. If the developer is just experienced, but “ordinary”, the positions in the negotiations will not be so strong.
That is, if we were promised a stake in the amount of $ 1 million, then each year we will additionally receive $ 250 thousand. If stocks rise in price - super, this is an additional income. If they become cheaper, then even $ 250 thousand a year will fail.
It may be that the engineer works well - and the company wants to further motivate him. For example, after a year of work, he will be given another $ 100,000 worth of shares that will be “spread out” for the remaining three years. This may constitute an additional increase. But in any case, after four years, the incentive program begins anew, the engineer must again wait for the “unblocking” of new stock of shares.
If the company has grown well, it is unlikely that the engineer will again be given the same percentage of new shares, most likely it will be noticeably cut. An essential role in these matters is played by the skill of negotiating and the general situation.
If the company itself is hunting a star engineer who has unique skills and experience, this is one situation. If the developer is just experienced, but “ordinary”, the positions in the negotiations will not be so strong.
Taxes and cost of living
Discussing numbers with lots of zeros is cool, especially in America. But taxes are no less cool here. And this topic is much more painful.
Ideally, in the best-case scenario, when the developer was able to find an excellent accountant and optimized the tax base, the tax will be 25-30%. Moreover, 25% is almost fiction, not found in real life. In practice, figures of 30–45% are much more common, depending on the level of income: in the USA there is a progressive scale of taxation and in California the highest taxes.
So those developers who are counting on relocation in a company from California (each state has its own tax situation) should in the first year just count on a tax of 35–42% of the salary announced. Perhaps then you will be able to figure out how to optimize costs and reduce taxes to 30–35%, but this will take time.
When discussing income and expenses in California, there is also no way to get away from the cost of living and, in particular, real estate. Renting a good (that is, "not killed") studio in one of the towns of Silicon Valley can cost about $ 3,000 per month.
A two-bedroom apartment will cost as much as $ 4000-5000 per month. A house on the hills of Los Altos, as in the video Dude, is $ 10,000–15,000 per month and the option will not be the newest, plus you will need to show a credit score, documents from work, etc. And at the same time, you will not be the only one so you have to go through the contest.
In San Francisco itself, prices are almost the same, but problems with expensive parking are added (it is worth paying $ 300 per month for it).
Having children further exacerbates the housing situation. In the United States, information is available on the quality of education in schools: parents can see the average grade that students receive on the basis of tests.
Of course, the higher the average school score, the more people want to arrange children there. Take to a school in America on the basis of registration: to get to a particular school, you need to physically live in the area assigned to it. So the better the school, the more expensive the property in the area around it.
District-independent private schools start at 20-30 k / year. By the way, kindergartens in the States are paid: for one child it is worth laying $ 1,000–3,000 per month.
Buying or building your own home is also quite expensive. Land in the Valley is very expensive, like any “service” services, from builders to plumbers. When buying, you will have to choose from old houses, because few are being built. This will not affect the price: it’s almost impossible to find decent options for less than $ 1 million (although mortgage rates are quite low).
Many people choose the option to live away from work and spend a little more time on the road but save on rent. This is a matter of personal priorities and preferences, including climate: the farther from the ocean, the drier and hotter / colder (depending on the time of year).
About $ 130 per person per month on public transport. $ 1000–2000 will have to be spent on food (if you cook at home and dine for free at work).
From the pros: here it is much easier to regularly change iPhones and buy cars. Therefore, on the streets of the towns of the Valley, you can often find Tesla Model 3 than the Hyundai Solaris. It's simple: they are easy to take on credit or leasing.
Conclusion
Silicon Valley can be compared with Hollywood: everyone knows the stars, but we can’t even imagine how many thousands of equally talented actors have not advanced above the roles in the crowd, with the corresponding earnings.
The valley is full of contradictions, there are many difficulties. Nevertheless, this is the best place in the world to work on innovative products that affect the lives of millions of people around the world.