Comments on Six Kids and a Full Time Job: Hiring Software Engineers in Israel is Now More Ex...

Michael, you comment that software engineers need ...

2008-04-16T09:05:00.000+03:00

Michael, you comment that software engineers need to take more equity over cash - you're right - however, the problem is, as the VC you get to spread your risk over all the companies in your portfolio, the engineer does not. He puts all his eggs into one basket, works till his fingers tingle, and then it can all go nowhere. While his buddy down the hall, who's just as talented and working just as hard, is in the right place at the right time and his stock certs are worth more than just toilet paper.

Alas, I'm a solutions guy, so here's an idea; when you hire engineers and want them to take some more stock in lieu of cash, spread it out across your portfolio of companies. You can even give them more, because you know as well as I do that it's just not gonna be a home run across the board (if it is, you all make so many shekels, who cares).

Once you hit the next home run, word gets out, and you'll have guys knocking on the door asking if they can join the party.

(If you decide to follow my advice, I know a great software engineer in Israel).

An interesting analysis that I see as a QA Manager...

2008-04-02T20:25:00.000+03:00

An interesting analysis that I see as a QA Manager looking for work; many more companies are opting for outsourcing/ offshoring of QA in a bid to save their investment dollars even at the cost of their quality.

I surprised a prospective employer yesterday who told me about this by suggesting he pay me in dollars.

Are you seeing this trend with QA outsourcing too and do you think it is a good thing? My experience with some of the outsourcers leaves me a little concerned.

All the best,
Jonathan

Nu, Michael contact Nefesh B'nefesh to start targe...

2008-03-24T11:46:00.000+02:00

Nu, Michael contact Nefesh B'nefesh to start targeting engineers (they already have a program targeting doctors).
Even better, tell NBN to offer a retraining program so all olim (including the lawyers) can become engineers.

Eran -This is not a post about efficiency and you ...

2008-03-24T11:38:00.000+02:00

Eran -
This is not a post about efficiency and you make be right on that. But we have other drawbacks such as being farther from the market. Therefore, on balance an under supply of engineering talent could have an adverse effect on the development of israeli tech.

On the topic, i met a fellow internet buddy last week who told me he could hire hundreds of Flash designers and programmers if he can find them. He spent much of the last year trying to set something up in Romania because he can't find the talent in Israel. That is nuts.

Saul -I wonder then why there are so many lawyers ...

2008-03-24T11:36:00.000+02:00

Saul -
I wonder then why there are so many lawyers then! we need good old Jewish doctors and engineers here.

More on the ecosystem from Globes:Israelis would r...

2008-03-19T20:34:00.000+02:00

More on the ecosystem from Globes:

Israelis would rather be entrepreneurs than lawyers

Noa Parag 19 Mar 08 16:51

A survey by Geocartography Knowledge for start-up 1500.co.il found that 45% of Israelis want to be partners in a start-up compared with 8% who want to be partners in a law firm and 11.4% who want to be a partner in an accounting firm. The survey also found that half of the respondents would continue their regular daily lives after selling their start-ups.

The dream of being a partner in a start-up is especially prevalent among younger Israelis. 51% of respondents aged 18-34 cited this wish, compared with 36% of respondents aged over 55.

One of the problems in Israel is the low salary pa...

2008-03-19T16:47:00.000+02:00

One of the problems in Israel is the low salary paid to anyone who is starting out. Here in Israel an architect I know (with a degree from HEbrew U or Bezalel - I don't remember which) is getting 25 shekels an hour.

The same is true with engineers - they get paid much less to start out. Doctors as well - during the years of residency they get about 12 shekels an hour (when the salary is worked out hourly). Israeli firms are going to have to start paying more to young workers - no one can get by on the pennies that are thrown the way of young workers.

Maybe Israeli VCs can help improve the ecosystem b...

2008-03-19T10:33:00.000+02:00

Maybe Israeli VCs can help improve the ecosystem by helping to launch an initiative to target aliyah by US engineers.
Here you go:
http://www.nbn.org.il/nbn/contact.htm

Michael - very interesting post. BTW - US companie...

2008-03-19T10:07:00.000+02:00

Michael - very interesting post. BTW - US companies have additional costs over the $120-130K base salary you quoted, e.g. healthcare (probably $5-10K), 401K plan employer matching ($5-10K), bonus plan, and various other benefits (commuter benefits, free food in some cases). Plus rent is higher, at least in Silicon Valley.

Israel certainly should not attempt to compete on price. Our main advantage today, over, say India, is having the second best entrepreneurial ecosystem to support startups (Silicon Valley being in first place), and lots of talented and entrepreneurial engineers, more and more of whom also have significant and relevant experience in succesful companies.

Michael,Math can lie. It's true that now an Israel...

2008-03-18T16:40:00.000+02:00

Michael,
Math can lie. It's true that now an Israeli engineer costs more than one in the USA, but somehow the bottom line for Israeli companies is always is always smaller.
I've seen it over and over again, Israeli companies get more done with less people. I don't know exactly what is the reason for that, but almost everyone I ever talked to about it agrees that it's true.

-eran

engineers have been highly paid in Israel for near...

2008-03-16T10:44:00.000+02:00

engineers have been highly paid in Israel for nearly 2 decades. This begs the question why law school applications have increased, private law colleges have boomed, while there is still a shortage of engineers? perhaps engineering is not all its cracked up to be.
There is no logical reason why the government should invest in retraining programs for engineers any more than the government should invest in worker training for textile factories. Let the free market do its work.
You're basically arguing for forcing more people into a profession for the explicit reason of lowering salaries in that profession. Maybe, just maybe, young people as well as people retraining see that - and that's why they are not interested. I mean who wants to sit in front of a computer screen all day, typing code for some mean, nasty cheap selfish company owner only to get kicked out after 18 months in favor of a new graduate who can be paid cheaper wages due to the sudden increase in supply of engineers?
Every start-up will eventually have to hire a lawyer - even if only to negotiate with the VC.
There may be too many lawyers - and lawyers in training - but there's lots of work for them out there IMHO.

an old classmate

Anonymous -I wish i knew who you were so I could a...

2008-03-16T08:41:00.000+02:00

Anonymous -
I wish i knew who you were so I could address you more personally.

1. Offer more money is a great idea except that it is already one of the highest paid professions but we have a current problem that can only be solved with incentives for retraining and education IMHO. Also, Start ups cannot offer much more money or they will not make it. we need people to buy into equity.

2. I am not sure what premium you are referring to in context of Israel. Please elaborate. As to Silicone Valley. I think that is where they make breast implants and we clearly have a premium here over that :)

3. The way VCs work is we call our money on need so there is no way to hedge it since it is not ours and the timing is not deterministic.

4. You may be right. Your pushing comment is consistent with my thinking about my own kids :)

Saul - Good comments. Creating the bigger outcomes...

2008-03-16T08:37:00.000+02:00

Saul - Good comments. Creating the bigger outcomes is a mix of VCs having more patience, companies getting better at Marketing and entrepreneurs wanting to go for the brass ring. We need more determination on all sides to get there and not sell early. It also may include the media ceasing to describe every $70M exit as an "exit anak"

To your second point, If we depend only on price arbitrage we are in big trouble because there are many other less expensive places than Israel to develop technology. So I hope and Pray (local call here) that you are incorrect on that one.

the internet/software vc's want more sfotware engi...

2008-03-16T02:11:00.000+02:00

the internet/software vc's want more sfotware engineers, the bio-tech want more doctors and scientists, the chip companies want mechanical engineers....

offer more money and you'll get more software engineers. otherwise, feel free to compete with the rest of the vc's trying to persuade students (indircely) to select a course of study that suits their market focus.

can one really compare ohio, Silicone V and israeli engineers purely along compensation lines? from my experience, israeli's deservingly receive a premium due to the high quality output.

lastly, why aren't you hedging away your foreign currency exposure? shouldn't you demand fiscal prudence from yourselves in fund management, as much as you would from your portfolio companies?

lastly, the moment you start "pushing" students in the engineering direction, is the moment you see a decrease in math and science enrollment. the u.s. already tried this. it backfired.

So it is more expensive to hire engineering here t...

2008-03-16T01:01:00.000+02:00

So it is more expensive to hire engineering here than in Silicon Valley. You seem to acknowledge that this situation will not continue unless we get bigger outcomes from Israeli start up companies. How do you suggest creating those bigger outcomes?
I worry that Israel’s hi tech industry does depend on the price arbitrage for engineers (which you don’t really dismiss). On the other hand, I look at the price anomaly as a reality check on the exchange rate. But who knows, maybe that is just my galut mentality.