FAANG is dead. Better options in 2023 for developers (compensation focus)
FAANG companies (Facebook/Meta, Apple, Amazon, Netflix, Google) use to be the best option for talented developers but many companies have caught up to FAANG in terms of several dimensions. Such as:
- compensation and benefits
- work life balance and time off
- Company growth potential and Personal growth potential
- Culture
There are also emerging options such Solopreneurship, indie hacking and creator careers that can provide better opportunities on all the above dimensions. So the FAANG narrative is now dated and developers should think more broadly about their options for their career. This article will deep dive into compensation. Over the next week I’ll post deep dives on the remaining dimensions.
Compensation
Below is the current compensation information for a senior software engineer (as of February 2023) for the FAANG companies:
The average total compensation for the FAANG companies are $363K.
There are some differences worth noting. Such as Netflix doesn’t pay out bonus or stock. Their philosophy is different than the standard model. Most companies will give cash and stock bonus based on personal and company performance. If you get an outstanding performance rating you get a bigger bonus (stock + cash) . If you get an average or poor performance rating you get a smaller bonus or no bonus. Netflix will pay top of market base salary, but no stock or cash bonus. Netflix expects its employees to get an outstanding performance rating every cycle. If you don’t, to use their words “you get a generous severance package”. This is why their base is so high.
As times change, so has the benefits other companies offer. Here is the compensation information for other top paying tech companies (again all these are for senior software engineer level):
The average total compensation is $404K, $40K more than FAANG. There are other high paying industries outside of tech, such as finance that are worth considering. Below is the compensation information for some of the top paying companies in that industry.
The average total compensation is $419.6K, $56.6K more than FAANG. As with Netflix, the trading firms (Citadel and Two Sigma) follow a non standard compensation model. They give higher base salary and large cash bonus but no equity. This model is the case for many proprietary trading firms and hedge funds.
We can also break up the compensation into base, stock and cash. Netflix obviously has the highest base salary. Pinterest and Plaid have the highest stock bonus, but it is worth noting that Pinterest is publicly traded so employees can sell the stock whenever it is available to them (most companies follow a vesting schedule). Plaid is still private as of this writing so employees can only “cash out” when there is a liquidity event. Most of the time that means they get bought by a larger company or go public via an initial public offering (IPO). Citadel and Two Sigma have the highest cash bonus, which offsets their lack of stock bonus. The bonus at the many of the trading and hedge funds can vary more than other companies from year to year depending on individual and team performance.
In general all the types of compensation for non FAANG top tech and finance are on par with the FAANG companies. So in terms of compensation FAANG is no longer the obvious choice. Even though the above analysis is only considering senior software engineering roles, I would not be surprised if the same holds true for other roles and levels.
The above compensation information are also averages across geographies and since most FAANG companies are based on higher cost of living locations like the San Francisco area, these salaries may be higher than those offered to someone working in lower cost of living city. This is an important consideration if you are applying to a remote position. Some of these companies will base your salary on location. Other won’t and these policies change frequently so its best to check the company career website to see whether they do. If a company you want to pursue does, you can search for jobs and put your state of residence as Colorado. Colorado passed a law requiring companies to share salary bands and numbers with job seekers. So platforms like LinkedIn and other job sites will display the salary bands and info if it sees your residence is Colorado. If the geographic based salary information is not displayed you can get an idea of the difference by contrasting the above tables with the salaries for Colorado, which tends to be a lower cost of living area.
Lastly there are options like solopreneurship or starting your own company that can be even more lucrative. While there is not a way I am aware of to verify the legitimacy of the claims of some of these solopreneurs here are some noteworthy examples. Justin Welsh claims to have made $3 million in 3 years with his one person business. You can learn about that journey on the indie hackers podcast episode #267. Currently (March 2023) the indie hacker website lets you search highest earning solo and bootstrapped projects on their site. Its a great way to see the earning potential of side hustles that turn into viable businesses. Although most of these numbers are self reported with no formal auditing like you get with a public company. So take these with a bit of skepticism. That said some folks do seem like they are honestly sharing with the intent to help others. Indie Hackers also provides Stripe verified revenue, which may give more confidence, but I am not aware of any legal obligation they have to report accurate information. So do your own research before making any career decisions based on that data. It can also be helpful to read these founder’s stories as many of them started with 9–5 jobs and left to build their own products and companies.
If you are interested in the remaining dimensions I’ll be posting more in the coming week, so check back or give me a follow to automatically get updates.
