By Art Reisman
CTO http://www.netequalizer.com
I know what you might be thinking ,”Really? High tech workers being exploited?” And my answer is yes. I’ll concede that this exploitation is not like the indentured servitude of the rubber barons of the late 19th century. The players are more sophisticated, but the motives are the same. Get a bunch of naive, young, impressionable people and waive a carrot with the possibility of riches and game on. Here is how it works.
Many top tech companies of today have started as more or less small unfunded garage shops, such as Google, Facebook, etc. Venture capitalists have taken note of this, and they have also noticed how some of these young engineers will work day and night once they get sucked into thinking that their idea is the next Facebook.
The odds of any company growing into a valuation of a billion or more is quite small. What products will take off, what idea will get picked up on social media? You just can’t predict this, but you can improve your odds by spreading your investment across a large number of infant startups.
From the investor standpoint, the equation makes sense. If you have a million dollars, you could perhaps fund one marginal existing company and hope they blossom; or you could take 50k and waive it front of 20 early stage startups who have not accomplished anything yet and are most likely running on fumes.
I see the articles 2 or 3 times a year in the local papers. Boston alone has 50 start up incubators. A typical investment company trolls these incubators, often sponsoring them, looking for promising, hard-working tech people with an idea and a prototype. They offer them a small amount of cash, perhaps a nicer work space, advice, and so forth in return for a percentage of the fledgling company. Is this evil or wrong? No, of course not. But there is the concept of subtle but very real exploitation going on here. I’ll get to that part shortly.
A typical deal works something like this. Come to our incubator for the summer, we will give you office space, advice, and 50k for the three month period. You’ll also get your company featured in a few newspapers and journals. Local newspapers love giving free publicity to these incubators, especially if some big name VC is behind them.
Most likely 18 of these startups are going to fail through no fault of their own, it’s just their idea/product will go nowhere. One out of twenty might struggle along and create a small viable company with a niche market. And perhaps, just one will return 1000 fold or more on their 50k investment. That is the game. Even that is a long shot, and you may have to play this game for several years before you hit that jackpot.
So now let’s take the 50k investment. Divide it by 3, for 3 months of summer and divide it again by 4, assuming the start up has four employees. That breaks down to about 4k per person for three months, and most of these blokes are working 80+ hour weeks minimum, because they are chasing a dream. That is the culture of a tech startup. Somehow, if you beat yourself into a tired frenzy, you are more likely to succeed, right?
Not really. There are some people who do these insane hours, but the good ones are knocking off at 40 and are much more productive. But that is another article for another time.
Conservatively, I can assign 300 hours a month per employee. That breaks down to about $4.50 an hour. Now granted, many of these tech startup people were working for free anyway before they struck a deal. So is this exploitation?
I don’t know, but take this into account – many of these investors are worth 100’s of millions or more and have multiple houses, boats, planes, etc. Essentially, when they buy a big stake in these start-ups, the engineers working for them now become their indentured servants. Yes, the company employees are also driven by the potential of a big payout, but the odds are stacked against them. Most will end up with a pile of credit card debt, and an old newspaper clipping for their resume. I would hope that if I were the investor in this scheme I would make sure the people in the trenches made a living wage, perhaps $20 per hour?
NetEqualizer News Blog 
Top Ten Article Teasers for May 2016
May 3, 2016 — netequalizerBy Art Reisman
CTO http://www.netequalizer.com
I was wound up and ready to write an interesting blog article today. Problem was , I had a serious issue getting started. I spent an hour or so with so many angles and things on my mind, that I just could not narrow it down and get started. Then I had an out of the box idea. I decided to use my freedom as one of the Editors of this blog to make my article the list of headlines and associated teasers of all the article ideas in my head. Who does that ?
Sorry if any of these leave you hanging.
Why do so many companies take technology advice from Gartner ? If their information was really that good, they would not need to be selling it.
The TSA is now talking about 3 hour lines at airports this summer. My instinct tells me this organization has realized a new-found political power. They control the airports and you must pay up if you want to fly.
Deep packet inspection. Is it dead ? A simple VPN tunnel renders it useless.
A competitor of ours, ETINC, has a really great explanation on why DPI does not work when trying to eliminate P2P . The case against Deep Packet Inspection.
Umpires and IT people nobody really likes them.
Do you hire two plumbers when one is sufficient to fix your sink ? No of course not . Your employer is no different they don’t want you on their pay-roll.
Mega Mansions and Bandwidth how much do we really need? I am expecting a tiny bandwidth movement where millennials compete on how small their bandwidth foot print is.
Does anybody pay for good content anymore ? I stopped reading Back Packer Magazine when their content every month became a list of product reviews .
How many people are moving to Colorado because weed is legal ?
The Home PC will be completely dead in 10 years. Replaced by the PC in Virtual Cloud.
Let us know if you want any of these expanded on for next week.
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