Tech Progress and Market Dynamics in High Interest Environments

Tech will continue to grow steadily despite higher interest rates and reduced free distribution for startups.

### Tech Industry Insights Q&A
* 💰 Tech Industry Salary Trends: Companies like Shopify are adjusting salaries based on employee "**Mastery**" scores, potentially offering **incremental compensation increases**.
* 📉 **Big Company Layoffs:** Large tech companies are laying off employees, with Mark Zuckerberg citing two main reasons: **over-hiring during the pandemic** and **pressure from shareholders to increase profitability**.
* 🪙 **Crypto Impact:** The impact of crypto on the tech industry is seen as **diminishing**, with **less VC investment** flowing into the sector and some **disappointment among investors**.
* 🌊 Agile vs. Waterfall: A "mini waterfall" approach is becoming more common in project management, with **shorter planning cycles** and **more upfront documentation** reminiscent of traditional waterfall methods.
* 🌍 **Eastern European Market:** The Eastern European tech market is becoming more attractive to US companies due to **lower costs, cultural similarities, and potential tax incentives**.
* 🚀 Tech Hype vs. Reality: Differentiating between promising new technologies and overhyped trends can be challenging, with **past experiences and prototyping** being key factors in making informed decisions.

let's just go from the top. Um, so the first question: do you expect to normalize even in a higher interest rate environment? Tech progress earlier, even with when 5% was the normal. Do you do we just need to get a custom? Yeah, so, so this is this is a good question. Uh, and we have seen tech progress like up to 2008. You know, it was a high interest rate environment. And what we had back then, there were always technology leaps. So, the internet started in the 2000s despite high interest rates. It went there. I think if we see areas like AI actually, you know, like be as promising as they were, we'll probably see that progression. What I don't see is we've seen the internet and then smart internet in 2000 or 1995 and smartphone. They gave free distribution. So, when you were a startup, you could just, you know, do an internet startup in 2000, and there were not many websites. People came to you or found you. Your search engine showed you, and now we have

to buy ads again. Uh, on mobile, you could just launch an app. Uber was the first ride-sharing app, and they got free distribution. They got their customers through this distribution. I think this distribution does no, does, there's no more free distribution. If you launch your new AI startup and you know it's a great tool for people to know, you need to spend money and give it to Big Tech. You need to spend it on Google ads, the internet, or Apple with buying ads. So, I think this will limit the growth, but again, Tech will continue growing. There's more and more areas where we're going to be investing. I think it's just not going to be as crazy as we've seen it in, again, like 2021, 2020, but it'll keep growing nice and steady. I think we just got a really good taste of what that steep price looks like. All right, thank you. Um, next question is around Mastery. Um, are the two paths coming with similar compensation changes? So, obviously, I don't work at Shopify, but what I

understand, and the people that I talked to, they have not yet gotten their first raises. What happened is people speculated that they have been put on the Mastery score based on how much they're making right now, so they've kind of been adjusted. So, it's expected that when your Mastery goes up, your salary goes up, and they're speculating that it's probably connected. Now, obviously, like, is it going to be a... can you get a higher compensation package by just moving with Mastery versus being promoted? And this company's always tell you yes, it's possible, and they're always outliers in practice usually. And I'm not talking for Shopify here, but in practice, you will always get a larger compensation boost, like a raise, by going to the next level, but it will be more stressful, more expectations. So, I think like it's smart what they are doing, but I would expect smaller, more granular raises, smaller bonuses for people who increase their Mastery score. But again, there's a

bit of a career stability like being a solid senior engineer some these days is being seen a little bit as a maybe a bit more stable than being the one Tech lead on what if you don't need a tech lead anymore again I think tech leads are F but but you know what I mean yeah I think it just brings like a good motivator to you as well right to kind of have these incremental steps that you can kind of shoot for um all right next question um when it's about interest rates and startups why big profitable companies have layoffs this is uh this is what what we on with asking and it it seems to be so Mark Zuckerberg actually gave a pretty honest answer about this uh in uh a few months ago he went on on on a podcast and he said that he's seeing two types of layoffs one in 2013 and this is what Facebook has been doing as well the first wave of layoffs was uh because they over hired during the pandemic they thought that the growth would be higher

so they hire 10% or 20% more people. The grow is not as high, so they let go of the, I guess, excess. The second layoff is when companies do this first layout. They're like, Huh, productivity hasn't dropped. Can we do more? And this, it sounds ironic, but publicly traded tech companies, their mission is to serve the interest of shareholders and return as much profit as possible. And shareholders at Google, for example, have been demanding. They're minority shareholders, but they're demanding that Google decrease compensation packages or potentially hire fewer people to do the same work. And I think what's happening here is that those companies are starting to cut the less profitable parts. So, like when Google did layoffs, they actually laid off a lot of their bets, not their profit centers. So, it's, by the way, it's a really good question. I think it's just such, personally, I think it's such a silly strategy. And when you look at more traditional companies like banks, like insurance companies, who also have this

this whole thing and who've been around for like 50 or 80 years. They're not really doing mass layoffs 'cause they know it just wrecks morale. Like morale inside Google, I can tell you, I talk with people, it's rock bottom. People hate the fact that like this super profitable company that's more profitable than ever is firing them and they're realizing they're just numbers. And you know what a lot of them are doing? They're looking outside. They actually want to go to a startup where they feel they're going to matter from Google. So uh yeah, I I think you know it's a corporate uh leadership. It makes sense from a financial perspective when when from a CFO perspective. It it it makes sense and more and more of these companies are kind of led by CFOs looking after the shareholders, not necessarily looking for the 10-year horizon but more of the you know 1, 2, 3, 4-year horizon. Yeah, I mean like with these big companies with these layoffs, that safety goes away so it puts

the you know employees into that space as well. Um, all right, next question. Um, do you pay attention to crypto? Do you think it might be vacuuming out money from the industry, causing this trend as there might be less value brought for more? So, I keep an eye out on crypto every now and then. I covered it, I think about a year ago, when we saw a big decrease where crypto stars were also laying off pretty heavily. And also, I covered Coinbase. So, Coinbase spent in 2021. They paid $65 million to Datadog in observability, which is ridiculous because they're growing so fast in 2021 because the crypto prices were going up, their demand was going up. So, like, I do pay attention. I don't think crypto is sucking money out of the industry that much anymore. I think in 2021, there was a lot of VC investment that was going into crypto. It seems to be drying up. I think the industry is going to remain there. It seems that it's small. That's just

my opinion, you can always argue. Now we're actually seeing on social media, like these small coins trending and influencers promoting, but that is not the crypto companies. There are some crypto companies that are surprisingly resilient. So, I think it'll remain, but I just don't think we're going to see as much investment anymore. I think there's a lot of disappointment with investors. That's what I see. Yeah, those meme coins. Oh my. All right, um, so next question. So, are we going back to the waterfall model? Oh wow, okay. Yeah, that's a good one. So, I was talking with Ken Beck about this, and he was saying yes. I'm kind of saying like, well, I'm not actually that like waterfall used to mean back in the 2000 when agile came in. The waterfall meant that you plan for 6 months, you built it for a year and a half, and then you release it 2 years later. That was waterfall. Like, it was really, really long. And, but I think we I

think mini waterfall is back, and mini waterfall is how most companies work, which means you do some planning for a week. Like if you know you're going to build something for 2 months, which is a typical project, or if it's one month, you do two days of planning and talk it over, and then build it for two or 3 weeks, deploy it, and a month. But a lot of projects in midsize companies are about 2-3 months max, so you do like one or two weeks of planning, and you just talk it over with it, you build it, you release it in 2 weeks, and this is a mini waterfall. And this is what almost everyone does. And by the way, we had this criticism of agile that it turned into mini waterfall. A lot of companies are making this clear with RFCs, request for comments documents, upfront planning. So yes, it's back for better or worse, you know, you take your pick. I see someone nodding there, yeah, we agree. Um, all right, yeah, that's a scary

notion okay uh moving on um next question. How does it all uh how does all this apply to the Eastern European market? Are there any uh differences you see? This is a really good one because a lot of the what I what I did talk about was mostly so the reason I talk about a lot of the US and and also Western Europe. They drive a lot of the demand. We know that the uh America, especially US companies, starting to hire in Europe has just made a huge change to the market. A lot of you who are are here, if you're based here, and if you can work for a US-based company, either remote or they have a local hub, they will often uh offer better compensation. You can work with and just better career options later. It's easier to go. So I think uh I'm seeing that there's a big price consciousness uh worldwide. The US is the most expensive place to hire developers. You get a great workforce, people work really hard, same time zone. But for example, when Google let go uh I

think 200 workers from the Flutter team and some other teams they let go in the US, and they hired in Munich, which is still not Eastern Europe, but it's one of their hubs. I think there's going to be more demand to hire in these regions from US companies. There is something I haven't talked about; there's a US tax change that makes it very expensive and almost unprofitable for US companies to hire foreign developers. It's called section 174. I have an article; just Google section 174 pragmatic engineer where I go into this, which actually will mean that they will be incentivized to hire less. But what I still see in Europe, there's a really big cultural similarity with the US; there's less miscommunication, so companies like to hire from here. You know, Stripe opened an office in Romania, and I think more companies. Adobe has a massive office in Romania as well. Google opened an office in Budapest. I think more of them will try to come here, and I was just talking on

the meet-up with someone who works at either Accenture or one of the big companies, and they said that when they looked at their internal, like they employ people around the world. India was the cheapest, Hungary was the second cheapest from a company perspective. So, I think we'll see more, like just as I don't think we'll see much change. It might even pick up a little bit hard to predict, and maybe one last question. So, when you press the new button, how do you distinguish between technology leading to the future and overhyped dead ends, leaving you with dead-in-complete tech? This is a good one. I guess the easiest way to do it is you've already done the overhype dead end, and you got burned. And really, this is it, right? It's kind of like I think you sometimes need to just learn from your own mistakes. Like if you have the option, like I mean do your research, look into the easiest way, by the way, is do a prototype, right? Like see if this

thing works, but I'll give you an example. At Uber in 2017 or so, we had a lot. Every team could use whatever backend language they wanted, and we had Python, Node.js, Java, Go, Swift on the backend. I'm not sure if we had C# back then, but leadership said, Like, all right, we need to choose just one language that's going to be supported. There was a big war between the Java camp and the Go camp, 550 going at each other. It was really nasty. So, in the end, the decision was, We'll have both Java and Go supported officially. Go was still pretty new, and my organization going to choose my organization. We did payments. We chose Java 'cause we were missing core libraries. We liked how stable it was, you know, like it's a bit old school, but it works. And a lot of most teams, a lot of new teams chose Go, and a year or two later, the teams that chose Go, they were in a lot of pain 'cause that's when they realized that they're missing so

much basic stuff that think Java teams are already having, like just libraries, tooling, performance optimizations, etc. A few years later, Go has become arguably just as good. So, you know, like it's sometimes pain through suffering, right? Do your research, search, do the best decision that you can make, and this is what I mean. It's so hard, right? If there was an easy question, 'cause you don't want to be left behind, and if it's got a promise to become better, is that not a better business decision to go with it? So, be smart, do your research. All right, well, another round of applause for gay. Thank you so much. Show your love.

The software engineering industry in 2024: Q&A

The Pragmatic Engineer

Tech progress can continue even in a higher interest rate environment, as seen historically.

The lack of free distribution for startups now limits their growth, making it necessary to spend on advertising.

In terms of compensation changes at companies like Shopify, there may be a connection between Mastery score increases and salary raises, but moving up a level is likely to provide a larger compensation boost.

The Impact of Layoffs in Big Tech Companies

Big profitable companies, like Google and Facebook, have been laying off employees due to overhiring during the pandemic and a subsequent drop in productivity.

Shareholder demands for higher profits and reduced compensation packages have driven these companies to cut less profitable parts of their operations.

The mass layoffs have led to low morale among employees, with many seeking opportunities in startups where they feel they will have a greater impact.

The speaker keeps an eye on crypto and its influence on the industry, noting a decrease in VC investment and a drying up of funds.

While some crypto companies are resilient, there is a growing disappointment among investors.

The speaker questions the return to the waterfall model, highlighting the long planning and building phases associated with it.

The mini waterfall model is making a comeback in companies, with short planning phases followed by intense building and deployment periods.

This approach is common in midsize companies, where projects typically last 2-3 months.

The demand for talent in Eastern Europe is rising due to US companies hiring locally, offering better compensation and career options.

US companies are shifting their hiring focus to Europe, particularly Munich, due to a new tax change (Section 174) that makes it expensive to hire foreign developers.

The cultural similarity between the US and Europe is driving this trend, with companies like Stripe, Adobe, and Google opening offices in Eastern European countries.

Despite the challenges, there is still a strong demand for talent in these regions, and companies are likely to continue expanding their presence there.

Uber's backend teams used various languages until leadership decided to officially support Java and Go.

The choice led to a divide, with new teams opting for Go, only to later struggle with missing libraries and tooling.

Over the years, Go improved and became just as effective as Java, highlighting the challenges of making the right language choice.