Thursday, December 08, 2011

Venkatesh Rao on Developernomics

Venkatesh Rao had an article on the Forbes web site on the valuation of software developers: "The Rise of Developeronomics". He comes closer than anyone else so far (including me) to describing how I see things going career wise for software developers, although it's written from the perspective of someone desperately trying to hire competent developers to compete in a world in which every company has to become a software company, explicitly or implicitly. It's worth a read.

[I]f you don’t have a skill, like baking, which the developer-centric economy can actually use, you are in deep trouble. One reason the Occupy Wall Street movement is not having the impact it seems like it should, based on sheer numbers of people involved, is that many participants simply have no cards left to play in this national game of economic poker.

Investing in good developers is such a good bet at the moment, that if you have money and you happen to find a talented developer who seems to like you and wants to work with you, you should give him/her your money to build something, anything, even if you have no really good product ideas (those are cheap; I’ll sell you a dozen for a dollar). If you don’t have money, you should offer up whatever other kind of surplus you do have. The NPV on a strong and positive relationship with a talented developer today is ridiculously high. If you gain the trust of a talented developer to the point that they are likely to drop any active gig in the future in favor of joining one of your projects, the value is through the roof. The world is your oyster, which you with your developer will open.

The idea of using Net Present Value (NPV) to compare the value of a software developer with alternative investments is one of those things that for me is initially surprising yet obvious in hindsight. In today's economy, where instead of owning a factory and a warehouse of parts all of a company's worth is in intellectual capital (which really means, in the brains of its employees), it makes sense.

Rao writes the blog where he ponders, among other things, organizational issues in high-technology firms, which is probably how he appeared on my radar screen. I don't always agree with him. Sometimes I'm not sure I'm smart enough to agree or disagree with him. But he's got some interesting ideas.


Demian L. Neidetcher said...

This sounds like developer dream land. I hope it's true, if the Internet and stable power disappear then we have other problems.

I'd sure like the future to be this rosy for software engineers.

Chip Overclock said...

I don't think it's as rosy as it might appear. For sure, Rao is only talking about the 10x developers, those engineers described by Fred Brooks as having ten times the productivity as the average engineer. This ten (or higher) productivity factor among certain developers has been well known for decades. As Rao points out, some developers have negative productivity. So for those developers who are not in the 10x camp, things do not look so good.

Rao also clearly sees potential bigger issues on the horizon, since he refers to this period in time, not so tongue in cheek, as "pre-apocalypse". I suspect he has some of the same concerns you do. As I've said before, I'm concerned that our immensely complicated high technology infrastructure is a house of cards.