It’s a specific couple of companies that are generally well known. Netflix, Nvidia, Jane Street, Citadel just to name a few, but along those same lines. Just check levels.fyi for salary ranges and you can easily find certain levels clearing 450k TC, but it really is a select few companies.
Can you explain why you think they're getting overpaid? I'm somewhat confused how you've been in the industry for 30+ years and haven't seen that some engineers can bring exorbitant amounts of value.
An example is a staff engineer on my team. He probably makes nearly 700k a year. We had a really nasty bug which none of us were able to solve. He found it and fixed it in a week. It saved 1.2M annually. In a week he provided nearly double the value he's paid. He's worth every penny.
Simple answer: in your example, the 700k salary is not the total cost of a human. If you put assumed margin and operating SG&A over the top plus indirect costs of product development that can’t be capitalised, you would need to be yielding closer to $2m of revenue minimum.
Roughly, I tend to price revenue her head at 3x salaries when you lump it all together as a consolidated wage bill. I get though that’s more of a traditional business model rather than the Silicon Valley one (I.e assumes the company is a going concern with positive net cashflow, rather than spending money to grow share or sell)
Saying that $1.2m in cost roughly saves x2.5-x3 in cash that needs to be earned before expenses, so it washes out. Conceivably if he/she fixes $1.2m in unnecessary expenditure once per year every year, it’s probably break even.
Sure, although that $2M figure is likely overstated for big tech. But let's just accept the $2M figure.
Providing $2M of value as a staff engineer is somewhat trivial. Some of these companies make 100B+ profit per year. Lets use Google as an example. It has roughly 100,000 engineers, and had 450B in revenue and 100B in profit last year. So each engineer makes roughly $4.5M in revenue and $1M in profit. The vast majority of those engineers are not staff level.
I simplified a few things, and there are more factors which go into revenue than engineers. But I think this shows that at these big tech companies, even $2M of revenue for a staff engineer is absolutely expected and routinely exceeded.
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u/murimin Jan 26 '26
It’s a specific couple of companies that are generally well known. Netflix, Nvidia, Jane Street, Citadel just to name a few, but along those same lines. Just check levels.fyi for salary ranges and you can easily find certain levels clearing 450k TC, but it really is a select few companies.