Why do software engineers work for just $ 100,000 while they can program their own software and applications and earn millions?

Updated on : December 8, 2021 by Johnathon Parks



Why do software engineers work for just $ 100,000 while they can program their own software and applications and earn millions?

Ah, surely I am happy to answer this question. I had a close friend who went through a very similar situation where he was debating whether to stay in his position at Microsoft making 6 figures or start his own company that he had an idea for.


Here is the story of Jacob:

Jacob, my (once) very close friend, used to work at Microsoft making a lot of money, but had a great idea and a billion dollar dream. And yes, this is a truly true story. Really. Anyway, he left Microsoft to feed his idea, but things took a turn for the worse.

I will not go into much detail as I do not want to fully disclose this person (Jaco

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Ah, surely I am happy to answer this question. I had a close friend who went through a very similar situation where he was debating whether to stay in his position at Microsoft making 6 figures or start his own company that he had an idea for.


Here is the story of Jacob:

Jacob, my (once) very close friend, used to work at Microsoft making a lot of money, but had a great idea and a billion dollar dream. And yes, this is a truly true story. Really. Anyway, he left Microsoft to feed his idea, but things took a turn for the worse.

I won't go into much detail as I don't want to fully reveal this person (Jacob is not his real name either), but I will tell a true story of why many people would settle for the $ 100k.

Anyway, Jacob left Microsoft because he thought his company would take off and had a business model that sounds great (at first) and even funds from the family behind it. Everything looked good at first on paper. However, month after month with no money coming in and he told me he didn't even have $ 35k saved of his own money, he was soon ruined with bad spending habits.

A year after leaving his job, he had full confidence in the future of this "company" that he thought would take off and make him millions. The only problem was that everything looked good with his company from the outside, but from the inside, people could tell that he was only for the money, that he had no real passion and that he did not have the best plan for the future despite the business model. . it looked (possibly) promising.

So what happened next?

His family surrendered to him several months after this. He didn't make any progress, didn't come up with great ideas for climbing or anything. Oh and guess what, he literally had no money. His family wasn't going to help him at all, either.

Jacob thought like many people, since there are thousands of people who made millions by starting their company, what can I not? He took action, but then learned the truth that it is much more difficult than it sounds. If you don't have a promising business model, future plans and scenarios, etc., you won't be successful. He made no effort. No effort = no success.

He was about to be homeless!

After all this, his family lost faith and they were fighting, which meant he was fighting too. It was so damaged it got worse. He got involved in drugs and soon after was even homeless. He had a great future ahead of him only to be ruined.

What are you doing today? I do not know. I lost contact with him. He's probably homeless in another city. This story hardly ever happens to people, and there is much more to this, but it would take literally 5 years to tell it all. Most people settle for $ 100k because they don't have a great idea and / or they know the possible and probable consequences that can happen if you quit and start your own company, and you don't want to go broke, which is likely.

Sure, you can get rich, but you can lose everything. Jacob went one step further and basically lost his life for this. Don't be like him. If you have a great idea, take action, but know the consequences and be prepared. Don't be like Jacob. Start your company, I totally agree, but have a valid plan behind you. Not just a dream. Have a dream and plan. Dreaming is fine, but be realistic too.

Good luck, and this is the story that explains why most people want to settle for $ 100,000, because they don't want to face Jacob's crisis.

,

It took me 6-7 months and I burned $ 25k to support myself between jobs to trade cryptocurrencies and write my own cryptocurrency platform. I traded profitably, but much less than I expected, and ended up with my assets frozen (incorrectly marked as money laundering) due to my frequent trading. I lost $ 8,000 and quit.

I also worked at a startup for $ 125k / yr that ran out of money and still has some clients but hasn't been able to sell. In fact, we received an offer from Sega Games, but we declined it because it was too low. So I'm sitting with a bunch of worthless stocks. Yes, maybe the company will sell some day (w

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It took me 6-7 months and I burned $ 25k to support myself between jobs to trade cryptocurrencies and write my own cryptocurrency platform. I traded profitably, but much less than I expected, and ended up with my assets frozen (incorrectly marked as money laundering) due to my frequent trading. I lost $ 8,000 and quit.

I also worked at a startup for $ 125k / yr that ran out of money and still has some clients but hasn't been able to sell. In fact, we received an offer from Sega Games, but we declined it because it was too low. So I'm sitting with a bunch of worthless stocks. Yes, maybe the company will sell one day (we were hoping that when 5G launches we will have another chance). But he could have been working for a company and making more money.

These are risky career moves that I took in my twenties because that's the time in life to do them. The way I see it, I've had my chance. I gave God or any other ample opportunity to get rich if I wanted to. But I can't keep doing this for the rest of my life. By the time I'm 30, I want $ 200,000 in the bank and a girlfriend. So I made my choice ... to sell myself to a large company.

Another cost of doing these risky jobs is that they are unimpressive to future employers. Before doing this, I had 2.5 years of experience in a large company. The interviewers cared more about that experience than about my startup stuff.

So now I work in another big company. It sure isn't Google, but it has many wonderful advantages. Good salary, insurance, snacks and a gym. Yes, I don't have the excitement that I once had, when I was working on my favorite projects, but this is all part of growing up. Why do people work in these firms that pay more than 100k? Maturity. Money. Security. Family upbringing.

Actually, if I ever land a senior architect position that makes $ 400,000 a year, I will probably do it for 4-5 years and do new ventures again. I imagine that after having a paid condo or house, if I'm not burdened with my wife and kids, I'll be back in the fun.

Think "software engineer" for a moment. Non-marketer. No seller. Uncountable. Not financier. Neither researcher, lawyer, regulator nor human resources. No manager.

There is a huge skills gap between being able to build an app and knowing what is actually needed, how to figure out what is needed, usability, manufacturing, selling, and managing money. The arrogance of a creative professional, an MBA or a PhD, who believes that his is the only skill needed, and all those other jobs are simple, automatic, non-creative or contract drones, is often unparalleled, that pride is

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Think "software engineer" for a moment. Non-marketer. No seller. Uncountable. Not financier. Neither researcher, lawyer, regulator nor human resources. No manager.

There is a huge skills gap between being able to build an app and knowing what is actually needed, how to figure out what is needed, usability, manufacturing, selling, and managing money. The arrogance of a creative professional, an MBA or Ph.D., who believes that his is the only skill needed, and all those other jobs are simple, automatic, non-creative or drones for contract, is often unparalleled, than pride. It is the road to failure and no income. .

Beyond that pragmatic reason, the basis of the question, it is vain to think that everyone, or even anyone, in science, engineering or design * wants * to finance, manage and operate a business. These are generally people who want to spend a lot of money, they are not necessarily interested in making a lot of money. The overwhelming number of engineers I'd like to work with are engineers because they like to build new things.

Because bird in hand is better than flying in the bush.

I don't mean pie in the sky "develop your own app and make millions with it." That happens, but to think that it is something close to the common is a fallacious thought. Is rare.

What is more common for software developers who don't want to work for a big company for $ 100k / year is that they become contract software developers. They become consultants. They set their own hours, work for many clients instead of having a boss, and therefore can work as many or as few hours as they want.

The problem with the consulting / hiring path is that you are

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Because bird in hand is better than flying in the bush.

I don't mean pie in the sky "develop your own app and make millions with it." That happens, but to think that it is something close to the common is a fallacious thought. Is rare.

What is more common for software developers who don't want to work for a big company for $ 100k / year is that they become contract software developers. They become consultants. They set their own hours, work for many clients instead of having a boss, and therefore can work as many or as few hours as they want.

The problem with the consulting / hiring route is that you are no longer just coding. You can't survive on the reputation of being a <language / framework / product> wizard and just getting people to come to you to get their opinion on something. You need another piece for your skill stack.

Whereas for a company software engineer, your stack might look like this:

As a consultant, your skill stack will look more like this:

And only at the bottom is your technical skill set.

Your greatest skill when working for yourself is not creating apps; the most important skill you have is to convince people to pay you to do something.

And that's a much rarer skill than you might think.

If you can pull it off, there may be more than two birds on that bush that you can snag. If you're good enough at hooking birds, you can even pay other people to do the actual work while you manage / supervise / guide them, greatly increasing the number of birds you can process. Multiply by ten or by one hundred. Give other 5 people birds in their hands while you manage to get 10 birds (and thus keep 5 for yourself). Catch a hundred birds from a field, get help with individual bushes from 7 other people who get 10 each, and distribute the work of processing them among 5 people each (so you keep 30 for yourself, your bush helpers get 5 each and poultry processors get one each).

So software developers are perfectly happy to sit back and mark work items for $ 100k / year instead of having to do the business of getting 10 people to pay you $ 100k each.

And that mythical millionaire who launched his own amazing app? Good luck. . . and an even rarer skill set of getting 10,000 people to pay you $ 100 each. It's not just about creating an amazing app. More people can do that than you think. The hard part is getting people to pay you for it.

The simplistic answer, to a simplistic question, is that simply being a great engineer is not enough to build a great business, or even a great application.

People need the help and support of others. At least the lucky ones do.

Taking a more general look, I have done both. They both have pros and cons.

Business Pros:

  • Sense of achievement: of building a successful business
  • Community - As an employer, you provide additional value to the community and gain a deeper appreciation for your value and for others who do the same.
  • Mentoring: Helping Your Employees Develop and Thrive Is Spiritual
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The simplistic answer, to a simplistic question, is that simply being a great engineer is not enough to build a great business, or even a great application.

People need the help and support of others. At least the lucky ones do.

Taking a more general look, I have done both. They both have pros and cons.

Business Pros:

  • Sense of achievement: of building a successful business
  • Community - As an employer, you provide additional value to the community and gain a deeper appreciation for your value and for others who do the same.
  • Mentoring: Helping your employees develop and prosper is spiritually rewarding. You become emotionally involved in their success.
  • Wealth - Owning a successful business can offer greater freedom and financial opportunities.

Trade cons:

  • Isolation - Others who have not yet seen or appreciated the aspects listed in the pros above. It can be perceived simply as a 'fat cat', or demanding, or not having enough time for everyone. You need a thick skin.
  • Responsibility for; the welfare of your employees, taxes, compliance and other legal obligations. It can get out of control easily and very quickly if you take your eye off the ball even for a moment.
  • Objective: anything that is perceived as wealth becomes objective, because; legal action, scams, theft, unreliable practices of the competition, etc. It is a long list.
  • Penalties: Business and compliance regulations become increasingly complex at an ever-increasing rate. Simple mistakes can lead to severe penalties.
  • Management - Less time to do the work you loved, more time to deal with the realities of business.
  • Stress: either from the desire to succeed or from the risks of failure, all of the above produces stress and it is necessary to create an effective coping strategy.
  • Heartbreak - Having to let people go, which happens for many reasons, can be heartbreaking.
  • Poverty: many / most businesses fail.

Employee benefits:

  • Wide range of interesting opportunities and projects to get involved in.
  • Financial and temporary support for ongoing professional development.
  • Opportunities to focus on the job you love.
  • Get involved more directly with amazing and talented teams
  • Paid Vacation and Medical Care!

Employee Cons:

  • Office Policies
  • Intimidation / Peer pressure / Distorted sense of entitlement / Lack of responsibility for the well-being of the company
  • Restrictions on personal growth, possibly feeling trapped in the wrong job
  • Risks of changes in corporate management or in market conditions (layoffs, layoffs, consolidation of duties / mandatory role changes, etc.)
  • Lack of reward / ownership / motivation for time invested.

I'm starting to consider freelance work again, and if that happens, the things I would most look forward to would be to focus on my true passion, software development, and share that journey with the amazing and talented teams that make it possible. .

What is the guarantee that I would make millions writing my own software and applications?

Do you know what my day job offers? A means of paying the bills so that I can take the risk of building something and not necessarily have to worry about failure.

I have an app in the final stages of debugging and tuning that I plan to bring to market this summer. I have spent almost 18 months laying the groundwork for this. Onboarding, reviewing my concept with an intellectual property attorney, conducting market research, developing a marketing and sales strategy, and putting all business aspects into operation.

I have done all this no

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What is the guarantee that I would make millions writing my own software and applications?

Do you know what my day job offers? A means of paying the bills so that I can take the risk of building something and not necessarily have to worry about failure.

I have an app in the final stages of debugging and tuning that I plan to bring to market this summer. I have spent almost 18 months laying the groundwork for this. Onboarding, reviewing my concept with an intellectual property attorney, conducting market research, developing a marketing and sales strategy, and putting all business aspects into operation.

I have done all of this to avoid making millions as there is no guarantee that I will be successful in making money from this company. My only intention was to protect my personal property in case it was ruined. I'm not ready to throw away the life I've spent 20 years building on an idea that may not go anywhere. They can sue me. You may not develop enough interest. My application occupies a unique niche and there is nothing like it, but a unique niche is no guarantee of success.

If I am lucky and someone wants to buy the rights and the approach I have taken to power their business, I will take the money and run. Someone offering me a million or two dollars for my running application would be my definition of success.

Then I could walk away and turn around and try again and never have to worry about paying the bills again and not have to work through the process. I have some ideas that I want to pursue and some are marketable. Failure is much more acceptable when you don't need to worry about paying your bills. An advantage that I have over many startups is that I can make the idea and execute it on my own until that point. Making an MVP is so much easier when you know how!

But I'm too risk-averse to waste my current career success on an idea. Even an idea executed. Many executed ideas fail. Most startups fail. Is there a reason why I have to quit my job to start a startup? Can't I do both? That way I have my income and my application. Anything else is sauce.

Not many software engineers can create viable products that can be sold. Actually, it is very difficult to create solid software that works. I've spent a lot of time working on tests to make sure I have a solid product that works well. Writing quality code is an art form and doing it cheaply and meeting business objectives is challenging. Many engineers do well under supervision and guidance, but they separate themselves by being responsible for themselves.

In the meantime, I work on my idea and my services are available to others… for a price. My skills have value and the only person I give them to for free is myself. Anyone else has to pay.

If you think you have that million dollar idea, great and more powerful for you. But don't think that writing an app and publishing it automatically means wealth and success. More than 90% of ideas fail. Having that $ 100K / year day job to support you in your endeavor is better than gambling everything you have on a 10% chance of success. Put in those terms, it should be clear why most of us work for others.

I recently had a conversation with one of the best software engineers I know (he makes way over $ 100,000, but certainly not millions, not even 1 million).

I've always had this joke where I tell you to hurry up and start your own company, and to hire me to make your morning coffee.

This time he answered me seriously. He basically said: I'm fine * writing software if you tell me what to write; If you don't tell me what to write, I'll write you a bunch of cool parts, but not how to put them together **. I'm just a technologist ...

Then he summed it up for me by saying that he n

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I recently had a conversation with one of the best software engineers I know (he makes way over $ 100,000, but certainly not millions, not even 1 million).

I've always had this joke where I tell you to hurry up and start your own company, and to hire me to make your morning coffee.

This time he answered me seriously. He basically said: I'm fine * writing software if you tell me what to write; If you don't tell me what to write, I'll write you a bunch of cool parts, but not how to put them together **. I'm just a technologist ...

He then summed it up for me by saying that he needed a good project manager to be able to put something together, which could generate millions.

* People I've known as good software engineers almost universally feel that humanity as a whole sucks abysmally when it comes to writing software. So at best, they'll just refer to themselves as "ok" ...

** a little clarification here. This makes it look like you are saying that it is just a code monkey. I need to clarify that this is really "how to put them together to make money", which involves knowing when and how to write various parts of your code base. Which parts should be flexible for the future. Which parts need to be quick and messy to make the schedule. Which parts should be bulletproof, concurrent, thread-safe, scalable, etc. Which parts to write now, which parts to write later, etc.

Simple and true story. I tried that.

In 1986 my now ex wife and I founded Compiler Resources, Inc. We created an app. Yacc ++ and each copy sold brought us an essentially pure profit of $ 1000 per copy and we were selling about one per week, with occasional sales of multiple copies or "site licenses" ranging from $ 5k to $ 25k. We even sold a corporate license for $ 100k, pure profit. About 1 in 10 customers purchased maintenance follow-up for $ 500 per year.

So, in an average year, the software generated a profit of $ 75 thousand. But that was for 2 people or $ 37.5k per person before taxes. So, we also did contract programming like consum

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Simple and true story. I tried that.

In 1986 my now ex wife and I founded Compiler Resources, Inc. We created an app. Yacc ++ and each copy sold brought us an essentially pure profit of $ 1000 per copy and we were selling about one per week, with occasional sales of multiple copies or "site licenses" ranging from $ 5k to $ 25k. We even sold a corporate license for $ 100k, pure profit. About 1 in 10 customers purchased maintenance follow-up for $ 500 per year.

So, in an average year, the software generated a profit of $ 75 thousand. But that was for 2 people or $ 37.5k per person before taxes. So, we also did contract programming as consultants. That brought us close to $ 150,000 per year per person, again before taxes. We would have sold at least 4 times more copies than we did to make it worthwhile to focus on the software full time and not refer to it. And we were doing well.

But it should come as no surprise that after 15 years, my wife wanted to go back to the easier and better paying job of working full time for the company she was hiring for. I received a similar offer a few years later and it was a no-brainer to accept it.

Not dealing with attorneys who wanted minor adjustments to our license. No buyers / accountants wanting discounted prices. There are no calls to customer service when our thousand-page manual doesn't cover the exact customer question. Nothing of that.

So yeah, we make a million dollars, but we make more as software engineers. And we were successful. Yes, some people earn more, much more, but many earn less. We were successful enough and had angel investors come to us to buy our company and grow it. That would have been a lot more work.

For the same reason that all the moms in the world cook for free when they can make millions selling their own recipes.

Because it's so much harder to even earn a fraction of $ 100k on your own!

For all the years that I worked in the software field and interacted with all levels of software engineers, there were only a few, less than 5%, who actually considered good enough and passionate enough to write their own software for software. commercial quality. And of them, none had marketing skills (including me). And no sales skills. His marketing idea was basically to post online and say a few things about

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For the same reason that all the moms in the world cook for free when they can make millions selling their own recipes.

Because it's so much harder to even earn a fraction of $ 100k on your own!

For all the years that I worked in the software field and interacted with all levels of software engineers, there were only a few, less than 5%, who actually considered good enough and passionate enough to write their own software for software. commercial quality. And of them, none had marketing skills (including me). And no sales skills. His marketing idea was basically to post online and say a few things about the product. You would be lucky to earn a few thousand dollars a year! Even discounting the lack of sales and marketing skills, there are no channels (no established customers) that you can go to and launch yourself into for market and sales. Oh even before that the app idea is not that great at all.

Okay, it's time to reprogram my app to make millions ...

For the same reason that pilots work for airlines and do not manage their own.

Just as a pilot can't afford Boeings and Airbus (no matter how fabulously paid he is), software engineers can't afford anything either, even if they make $ 100k or $ 200k a year.

What could it be ? Every software engineer has a good laptop, Internet connectivity, and programming skills. So shouldn't they be coding "killer" apps and making millions?

The reason this doesn't happen often is because, just like airlines have planes, software companies also have some expensive things that are beyond the reach of an ordinary.

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For the same reason that pilots work for airlines and do not manage their own.

Just as a pilot can't afford Boeings and Airbus (no matter how fabulously paid he is), software engineers can't afford anything either, even if they make $ 100k or $ 200k a year.

What could it be ? Every software engineer has a good laptop, Internet connectivity, and programming skills. So shouldn't they be coding "killer" apps and making millions?

The reason this doesn't happen often is because, just like airlines have airplanes, software companies also have some expensive things that are beyond the reach of a common software developer.

Are:

  1. Customer contacts. Most IT service companies have deep ties to Fortune 500 clients, such as oil and gas companies, major banks, and even Google and Facebook. An individual programmer can never hope to build such complex connections and relationships, spanning years and decades.
  2. Massive infrastructure and labor (which requires a lot of money): While it is true that an individual programmer can create an application and host it on AWS, the extension requires much more cloud infrastructure and programming manpower. Both cost a lot and may not always be available.

Now, for the sake of brevity, let's say our individual programmer's software or app goes viral and starts earning big. You have to attract investors and professional managers to steer the ship. Once again, you risk diluting your stake and becoming superfluous.

Most investors basically buy the founder and then practically walk him off or, better yet, kick him out. Then it is your contacts within the investment community and your own management experts and your own board positions that run the company.

Also, very few founders actually make a lot of money after being shown the door. The founders of Flipkart, Uber, and WeWork are examples. Others, like the founders of Housing and ShopClues, are kicked out (often on harsh or humiliating terms) with only a few million dollars in profit, while their companies are valued far more.

The moral of the story is that individuals cannot fight powerful venture capital firms that have both connections and money. Both things feed each other.

He works for $ 100,000, as a software engineer for a large company. They give you health insurance, a 401 (k), all the snacks you could want, massages, trips. You think this company is skimping on you, so you go. You are now making $ 0 every year. application for 6 months. You have $ 0, so you cannot spend on any other resource than yourself. What company did you work for? They have $ 1 billion in cash, ready to put engineers on payroll to solve their problems and expand their p ...

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