Why techies leave Big TechA job in Big Tech is a career goal for many software engineers and engineering managers. So what leads people to quit, after working so hard to land these roles?
Hi – this is Gergely with the monthly, free issue of the Pragmatic Engineer Newsletter. In every issue, I cover challenges at Big Tech and startups through the lens of engineering managers and senior engineers. If you’ve been forwarded this email, you can subscribe here. In case you missed it: the first two The Pragmatic Engineer Podcast episodes are out: Efficient scaleups in 2024 vs 2021 and AI tools for software engineers, but without the hype. Each episode covers approaches you can use to build stuff – whether you are a software engineer, or a manager of engineers. If you enjoy podcasts, feel free to add it to your favorite player. Ask a hundred software engineers what their dream company is and a good chunk are likely to mention Google, Apple, Meta, Microsoft, and other global tech businesses. This is no surprise:
With upsides like these and others, why walk out? To learn more, I asked several software engineers and engineering leaders who did precisely this. Personal experiences vary, but I wondered if there are any common threads in why people quit prestigious workplaces. Thanks to everyone who contributed. In today’s deep dive, we cover:
The bottom of this article could be cut off in some email clients. Read the full article uninterrupted, online. 1. Big Tech less stable than it wasLuiz Santana was a tech lead manager at Google in Germany, before leaving to cofound the health tech startup, Digitale Patientenhilfe. Before Google, he was a senior engineering manager at fintech N26, and head of engineering at ride-sharing app, FREE NOW. Luiz shares why he decided to say farewell to what looks like a techie’s dream job: ‘Some things helped me make the decision to leave Google:
‘Google changed a lot, which also made the decision easier:
‘Google makes it hard to leave. Some big factors held me back from quitting:
‘Personal circumstances made the decision to quit easier.
‘After a lot of back-and-forth, I finally pulled the trigger to join the startup. I’ve not looked back since!’ Luiz’s hunch about diminished job security echoes the reality. Since mid-2022, Big Tech has shattered its image for job security:
2. Professional growth in a startup environmentBenedict Hsieh is a software engineer based in New York City, who spent five years at Google, before quitting for a startup in 2015. Ben describes his journey: ‘I didn’t want to become a ‘lifer’ at Google. This was the specific reason I left Google: I felt I was headed in a direction of being stuck there for life. I was only learning Google-specific tech, and the position was not very demanding. I felt like I should be working harder and learning to create value on my own, instead of only functioning as a cog in the machine. ‘I’d stopped “exploring” and was mostly “exploiting.” There is a mental model I like called the explore-exploit tradeoff. Exploitation means you choose the best option based on your current knowledge. Exploration means you try out new technologies and approaches. Reflecting on my day-to-day work, it felt that almost all of it was “exploiting,” and I was doing very little “exploring.” It was too early in my career (and life) to stop exploring! ‘I think my mentality of worrying about not doing enough “exploring” is rare. Almost all my former peers are still at Google because the total compensation is really, really hard to beat! ‘Looking back, I was overconfident about how quickly I would grow in startup-land – both professionally and in the financial sense. I was willing to take the hit on significantly decreasing my total compensation, and getting a larger chunk of startup equity. I was impatient about hitting my “retirement number” by joining a fast-growing startup with much higher upside. ‘Also, to be frank, I figured that I could go back to working at Big Tech anytime I wanted: because I spent enough years there, and had a pretty good existing network.’ Ben joined a startup as a cofounder. The experience was not what he expected, as he wrote about: ‘I was miserable. We were working out of [my cofounder’s] unfinished apartment which was freezing cold in the middle of the winter and a constant reminder of all the things that weren't going well. I'm a low-conflict person who needs hours to calm down after an argument, where she preferred communicating via loud debate. ‘I was trying to learn all kinds of things that we needed for our business – how to work with clients, keep our servers up at all hours by myself, debug statistical anomalies in our data, or send out cold emails to find new business. I was the only one who could do these things, so I got them done. I woke up early in the morning and had trouble sleeping at night. Once I worked past midnight to compile a report for a client who'd requested a last-minute meeting in the morning, only for them to no-show, followed by an email two days later asking me why I hadn't found another way to send them their data. If I had asked my body what it wanted in that moment, it surely would have responded with incoherent screaming. It basically did that without being asked. ‘Our company folded in less than a year. ‘But in eight stressful and mostly unpleasant months I accomplished more than I had in the eight years before that. We made some money for our clients, and a minimal but nonzero amount for ourselves, and I was able to parlay the experience into an early position at a much more successful startup. More importantly, I learned how to just get things done when they need to be done, instead of feeling like a helpless bystander watching a car crash.’ Ben reports that the new startup he is working at is doing a lot better, and reckons he needed a “startup shock” to develop his professional skills beyond the (comparatively) neat and tidy confines of Google. 3. Closed career paths at Big TechA product manager based in Seattle worked in Big Tech for 14 years: 3 at Amazon, and 11 at Google, where they went from a product manager on a single product, to senior product manager, group product manager, and product lead for a portfolio of products. Despite promotions into influential positions, they quit the search giant for a fintech startup, as VP of Product. They asked to remain anonymous, and share: ‘I'd already decided to quit Google without a new gig lined up. This was because I couldn't find a new role that was a combination of interesting challenge, interesting people, and/or one that fulfilled my career goals. I had over 50 conversations inside Google for ~9 months. ‘I talked to many ex-Googlers and ex-Amazonians during interviews. I'd never heard of my current company prior to joining, but most people I met during the interview were ex-Googlers/Amazonians. They were tackling the worthy, difficult problem of building a truly modern fraud monitoring and management platform. ‘This company isn't a remuneration leader by any means. "Closing" a candidate – them accepting an offer – is a combination of:
‘Despite not knowing about them, it turns out this business has a strong brand in the banking software sector. They have established business moats, and the more I learned, the more impressed I was. ‘The company is in the middle of an organizational turnaround that I get to be an active part of, as a VP. This challenge appeals to me because I get to work with a really motivated set of people who are focused on making a big difference within the company, but also across the financial industry.’ This journey from Big Tech middle-management into leadership at a scaleup, makes a lot of sense. Making the jump from engineering manager or product lead, to an executive position, is close to impossible at Big Tech because the change of scale is vast. An engineering lead might have 10-50 reports, but a VP or C-level will oftentimes have 10x more. There are exceptions, of course, like Satya Nadella, who rose through the ranks at Microsoft, from software engineer, through vice president, to CEO. But in general at large companies, getting promoted to the executive level is formidably difficult. Scaleups offer a more achievable path to C-level. At the same time, tech professionals with managerial experience in Big Tech are often perfect fits for senior positions at scaleups. Recruitment like this can be a true win-win! A new executive gets to learn a lot by getting hands-on with strategy, attending behind-the-scenes meetings, liasing with the board and investors, and many other experiences that are simply off limits at Big Tech. In exchange, the scaleup gets a seasoned professional who doesn’t panic when facing decisions potentially involving tens of millions of dollars, and who can make correct, well-informed decisions – which is what Big Tech managers do, usually. 4. Forced OutWorking at Big Tech is far from perfect; the larger the company, the more organizational politics there is, some of it bad. Justin Garrison, former senior developer advocate at AWS, felt this after he posted an article that criticized the company, entitled Amazon’s silent slacking. In it, he wondered if Amazon’s sluggish stock price was the reason for its strict return to office (RTO) push, and whether it was a way to quietly reduce headcount via resignations. Justin shared other observations in the article:
Justin’s team was also hit by layoffs: his team was eliminated, but not his role. He was left in a limbo state of needing to find another role within the company, and was not offered severance. Justin suspected Amazon was aiming to avoid paying severance packages, and incentivised managers to put engineers on a performance improvement plan (PIP) and let them go without severance. In the end, Justin didn’t want to go through what he predicted would be a demotivating, unfair process that would end in him being fired. So, he quit. Afterward, he joined infrastructure startup Sidero Labs as head of product, building what they aim to make the best on-premises Kubernetes experience. Ways out of Big Tech manager conflictsThere’s a saying about quitting that “people don’t leave bad companies, they leave bad managers.” It contains a kernel of truth: a bad manager is often reason enough to leave because it’s the most significant workplace relationship for most people. At large companies, there is an alternative: internal transfers. As an engineer, if you feel held back by your manager or team, you can attempt to move. Internal transfers are usually a lot less risky– as someone changing jobs – than interviewing externally. With an internal transfer, you get to keep your compensation and network inside the company; in fact, you grow it. Also, your knowledge of internal systems and products is valuable. There are usually a few requirements for an internal transfer to happen:
5. Scaleups get “too Big Tech”An engineering leader spent four years at Snowflake after joining in 2019, right before its IPO. They’ve asked to remain anonymous, and share why it was time to depart the data platform: ‘Snowflake became “too Big Tech” for my liking. When I joined, there was a lot of uncertainty within the company and teams moved quickly. We had to make rapid changes, and four years later, things looked different:
‘I have to admit, none of this is for me; I’m more of a “move fast and build things” person. At the same time, I acknowledge that many people felt very comfortable with these changes, and thrive in them! ‘The reality is that the company became successful, quickly. I enjoyed being part of the ride and helping create this success, but the change in culture made it feel less close to me than the “old” culture. “Working at a scaleup that became “Big Tech” made it so much easier to leave! I’m certain that having Snowflake on my resume gave me a huge head start on someone equivalent from a medium or lower tier company. If I didn’t have Snowflake on my resume, recruiters would have skipped over me, and hiring VPs would be extremely skeptical. ‘So while there have been lots of changes in culture thanks to the standout success of Snowflake, it gave a lot of career options to me and everyone who helped build Snowflake into what it is today.’ 6. Steep compensation dropsBig Tech compensation packages usually have three components:
The more senior a position, the more of the compensation is in equity. Tech salary information site Levels.fyi maps how Microsoft’s positions offer considerably more equity, and how principal-and-above engineers usually make more in equity per year than in salary:
Rising stock prices make it hard to hire away from public companiesEquity is converted from a dollar amount to the number of stocks on issue date. This means that if the stock value increases later, so does the grant value. If the stock goes down, so does the grant value, and total compensation with it. This connection is why it’s close to impossible for a company to tempt NVIDIA employees to leave the chip maker, if they joined in the past four years and are still vesting out their initial grants: NVIDIA stock is worth 10x today than 4 years ago. So, let’s take an engineer who joined in October 2020 with a compensation package of $250K per year:
Four years later, this engineer’s 2024 total compensation is around $1.15M, thanks to stock appreciation:
Falling stock price: big incentive to leaveStock prices don’t only go up, they also go down; and when they do the equity value of comp packages drops significantly. We previously covered how low stock prices lead more people to leave listed tech companies in May 2022. From The Pulse:
Back when these stock drops happened, my suggestion was this:
Over time, Big Tech stock has done much better than many recently IPO’d tech scaleups. The biggest stock drop happened at Meta, at the end of 2022. In just 6 months, the company’s stock price dropped from $330 to $88 – a 70% drop! Everyone who joined before 2022 saw their stock grants lose 50-70% of value on paper. Recovery was uncertain:
That year was probably one of the best times ever to hire away from Meta, due to its reduced stock price dragging down overall compensation. From early 2023, Meta’s stock rapidly recovered; employees’ issued with stock in 2022-2023 have seen its value multiple. From a total compensation point of view, it’s again hard to hire away from Meta:
We covered equity refresh targets per level in the US in Inside Meta’s engineering culture. Four-year cliffAn event that frequently reduces compensation is the four-year vesting cliff, when the initial equity grant runs out at Big Tech. At senior engineer-and-above, and engineering-manager-and-above positions, these initial grants can be significant. It’s not uncommon for more equity to vest per year during the first four years of the initial grant vesting, than total compensation. The problem is that when this initial grant runs out, the compensation drops because the company does not “top up” with a similarly generous grant. This can mean a 10-40% drop in total compensation – pretty demoralizing! As a manager, I dealt with the problem of engineers hitting 4 years’ tenure, and their annual earnings dropping 25-30%. The same happened to my own compensation package: in year 5 at Uber, I would have made about 30% less than in years 1-4, due to the initial equity grant running out, and lower annual refreshers. In the case of Uber, the stock price stayed relatively flat, and the drop in pay was the difference between revised compensation bands, and the equity which joiners had managed to negotiate. Some Big Tech companies make the “cliff” less steep. Speaking with an engineering leader at Meta, they told me the annual refreshers offered at L6-and-above levels (staff engineer equivalent and above) are usually large enough to ensure no major compensation drop. However, there are also companies like Amazon where only top performers receive top-up equity. This means that after four years, those without equity awards see a major compensation drop, as the compensation then only comprises salary, as Amazon doesn’t do cash bonuses. When this happens, it’s a signal that Amazon doesn’t particularly want to retain someone. It’s common for engineers to start applying externally when their equity is set to run out. When a company’s stock price keeps increasing, the 4-year cliff becomes more painful. In Big Tech there are compensation targets for every engineering level. People earning above this target get very little or no equity refreshers, as they are already above target. Going back to the example of NVIDIA, and the imaginary software engineer on $250K/year in 2020 ($150K salary, plus $100K/year stock), who’s on track to make $1.15M in 2024, thanks to NVIDIA’s stock price increase. That software engineer could see their compensation drop from $1.15M in 2024, to $150K in 2025, assuming no further equity refreshers. Even with an equity refresher of $400K over 4 years, their compensation will still drop from $1.15M in 2024 to $250K in 2025! As a tech worker, it’s easy enough to rationalize that current compensation is outsized compared to other sectors; but you don’t need to be psychic to understand that a pay cut is demotivating; people are doing the same job as before for less money. Assuming our engineer managed to save most of their gains from the incredible stock run, they might have a few million dollars in savings. This creates room for taking a risk, such as:
7. Raw FeedbackThe engineering leader who left Snowflake for becoming “too Big Tech” interviewed with several startups, and is in touch with peers still working in Big Tech. They share some unfiltered observations about people considering leaving big companies Golden handcuffs'Golden handcuffs' are a big thing at companies like Snowflake. I know plenty of people who are still riding out significant equity grants from the last few years that increased several times in value. ‘Salaries have stagnated across the industry, though. Back at Snowflake, we hired some people who were overpaid, compared to the current market. I know this because I hired some of them! We offered above the market because in 2021-2022 we were desperate to fill positions, like everyone else! ‘This is the problem with golden handcuffs: when you are lucky enough to have them, it’s hard to find anywhere offering more because you’re already above the market bands! So the only way to avoid a compensation cut is to stay. Hiring slowdown‘I have seen a slowdown in hiring across the tech industry, mostly at bigger companies. It also impacted people at the “lower end” of experience and domain expertise. If you are a very experienced engineer or engineering leader, or have some specific skills/knowledge that is in demand, the market is good in 2024! ‘Non-listed companies are still hiring more than public ones. I’ve talked with a decent number of strongly-growing companies and most want to hire experienced people.’ This observation tallies with one from the deep dive in August, Surprise uptick in engineering recruitment ‘I’m an example of the demand for experienced people. I have not been actively looking for jobs – but out of curiosity, I made myself open to inbounds from recruiters on LinkedIn. In two months, I had interviews with engineering VPs for series C and D companies. I am actually going to NYC next week for a half-day onsite as the final step for one role with a series D. I haven't actually actively applied to any jobs while doing so! Bifurcated market‘The current job market seems to be divided into two parts:
Risk takers favored:‘There are two types of people when it comes to taking risks:
‘In the current environment, big and stable companies are not hiring so much. So the people getting jobs are willing to take risks with less predictable companies, and jump into some chaotic situations. Tech industry becoming ‘tiered’‘An article by The Pragmatic Engineer covers the ‘tiering’ of the tech industry, which I experienced at first hand. ‘At my job before Snowflake, I was around “mid tier” at a financial software company. I would have been stuck in this “tier”, but got lucky in that Snowflake was desperate to hire tons of people in 2019. Joining Snowflake immediately catapulted me into a much higher compensated group. Beforehand, I did not appreciate how massive the gap is between mid and top-tier companies! But I’m torn about this gap. On one hand, I really appreciate the compensation and career options. On the other hand, it irritates me how insular, incestuous, and hypocritical this is. ‘The upper tier literally feels like an old European aristocracy – and I’m saying this as someone who lives in the US! People help out their buddies, and are extremely suspicious of anyone not in their ‘club.’ It’s eye-opening to see how many people jump from company to company, taking their buddies with them. They all make lots of money, while keeping it exclusive and making sure it stays that way.’ TakeawaysThank you to everyone who contributed to this look into why successful tech workers quit the most successful tech employers. When I joined Uber in 2016, it felt like the best-possible place I could have onboarded to. Back then, Uber had very positive media coverage, was called the most valuable startup in the world, and was the quickest to scale up in history. And yet, when I joined on the first 1:1 with my manager, the question I got from this was: “So, what are you planning to do professionally after Uber?” It was day one at the world’s most valuable startup; why was my manager asking about what I’ll do after this job? They later explained this question was because he’d been in the industry long enough to know that 99% of people don’t retire at their current company, and he wanted to be a supportive manager for future career goals. So if someone told him they might try to do a startup one day: he would try to get them involved in projects where they can do more zero-to-one building. If someone said they would like to get to a VP of engineering role at a scaleup later, he’d try to help them grow into a people manager. Everyone eventually leaves even the fastest-growing scaleups, or the most coveted Big Tech. A smaller group departs into retirement, more commonly at companies like Microsoft and Amazon, where some engineers spend decades. But most people leave for other companies. I hope the half dozen accounts from tech professionals who left Big Tech provide a sense of why people decide the most prestigious workplaces in tech are not for them. Working at Big Tech can make leaving it much easier. This is counterintuitive because Big Tech pays so well, and the biggest reason against leaving is the compensation cut – at least in the short-term. However, the high pay allows people to save up a nest egg much faster, which provides the financial freedom to do something more risky like joining a startup and betting that the equity package will grow in value, or just taking a pay cut to join a company with more interesting work, or which they are passionate about. Some people never stop growing professionally. A common theme in these accounts is feeling stagnant; most people felt they weren’t growing or being challenged. Some left because of frustration about doing more administrative busywork and less building. Working at Big Tech is often a final goal, but a job in this elite group of workplaces can also be a stepping stone for pursuing new ambitions. I hope these accounts shed some light on the decision-making process and serve as a reminder that engineering careers are also about the journey, not just the destination. You’re on the free list for The Pragmatic Engineer. For the full experience, become a paying subscriber. Many readers expense this newsletter within their company’s training/learning/development budget. This post is public, so feel free to share and forward it. If you enjoyed this post, you might enjoy my book, The Software Engineer's Guidebook. Here is what Tanya Reilly, senior principal engineer and author of The Staff Engineer's Path said about it:
|
Why techies leave Big Tech
Subscribe to:
Post Comments (Atom)
When Bad People Make Good Art
I offer six guidelines on cancel culture ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏...
No comments:
Post a Comment