Interesting. A company like ThoughtWorks doesn't seem to fit the typical private equity playbook. Assuming that most of the employees, for example, are assigned to consulting gigs at customer sites...you can't just start laying people off. What would drastic cost cutting look like at ThoughtWorks?
Edit: Or maybe there are a lot of people "on the bench" or middle management is overstaffed?
The cuttings will continue to happen (there has been a lot of layoffs) on the operational team, with downsizing and cost-cutting. Fewer travels, less expensive hotels, and luxurious meals. Also, the 'social justice' projects are already halted.
ouuuuuuch.
I'd interviewed there and had to pull out of their (lengthy) process, but this was one of their selling points that was mentioned by the recruiter and interviewers.
Carlos I'm really surprised to see you propagating fiction under your actual name. This shit straight up didn't happen, there are still social justice projects actively going on.
Howdy; I remember seeing something about them being halted indefinitely, and they seemed to be halted when I was on my way out. I don't think it's bullshit based on what I saw but I could be wrong; do you have counterclaims to prove otherwise?
There are some moments when I accidentally speak too soon; this was one of them. I was incorrect re: "TW was hurting for money and couldn't afford it anymore."
I didn't have all of my facts straight when I posted this and should have thought more carefully before I did so.
Apologies to anyone I might have offended by posting this. If you'd like to talk more directly about this, feel free to email me at any time. My email address is in my profile.
The customer pays them. And the customer pays the markup on them. And it should generate positive net revenue unless something is done wrong, and I doubt that Thoughtworks is doing it wrong.
The longer I'm in this bizz, the more I've come to believe that consulting services, be it Tata, Infosys, Microsoft, IBM, all the way down to boutique mom and pop shops, is the most efficient means to extract wealth from large companies. No products, just putting butts in seats. One of the richest guys local to my location sold a "network security" consultancy some years ago, for example.
It's not just IT, these body shops take their cut from just about every industry. Building, cleaning, plumbing, most industries have these parasites between the consumer and the worker these days.
Take these comments with a grain of salt. If anyone is going through a PE buyout and is nervous about expectations, feel free to reach out to me...I work with a lot of PE firms on tech deal and know the drill.
Someone who puts that kind of money down to buy a company is going to want to have a say in how it's run.
The second rule of buyouts is that everything will change in the second fiscal year. They won't tell you NOT to do something, they just won't give you any budget for it.
The first rule of buyouts is that the promises always come from someone who isn't in a position to back them up (like the old owner, or your boss's boss, who only have a single seat on the board between them).
Having been through multiple acquisitions of small companies by (much) larger ones... they ALWAYS say this. The person saying it might even believe it themselves.
But in a year's time that person will have moved on to the next acquisition and you will be reporting to a regular manager in the parent org who doesn't understand - and wouldn't care even if they did - why you are "special", why you should be treated differently or have more latitude or more perks or a different office than the regular staff. Then the change will happen overnight.
Professional services isn't a complex business model. The likely outcome now is what it has always been:
- Do you bill? Cool. You're good
- Do you sell? Cool. You're good
If you do neither of those things, you've likely been under pressure anyway, as the business model of PS companies is to minimize operations and reduce the ratio between ops and professional services on an ongoing basis.
New owners will not likely change that dynamic. Based on what is known, the new owners are buying for growth, which means you cut costs that should be cut and use the savings to fund initiatives that lead to growth, such as expanded offerings that allow you to reach new customers and grow the company faster.
You know as a programmer myself for the last 15 years I can see how the market has changed and everything is becoming part of the global economy which means the rates are a lot lower which means Ukraine and India are playing a bigger and bigger role I could see private Equity trying to lower costs by outsourcing.
I think there's a fundamental flaw in the idea that you can just pay for cheaper labor- as Steve Jobs has said before the difference in a good programmer and an outstanding programmer can be 50 to 1 or 100 to 1 you can't capture that by trying to cut your cost from $100 an hour to $20 an hour.
Software inherently is one of the most scalable business models in the world the cost of manufacturing is almost zero all of the cost is in the design they should be able to make money. The mindset of being a consulting firm has to be changed.
Thoughtworks isn't cheap though. They sell the idea that outsourcing your work to them is outsourcing to an elite team. They do have teams in Brazil, China, etc, that are cheaper than their US based devs. But, those teams have rates much higher to end clients than a typical outsourcing shop.
That's what has me curious here. A PE firm usually buys when they think they see cost cutting opportunity. That may be hard to do with TW, since they pitch and price themselves as "premium".
I have met plenty of very skilled Thoughtworkers. However the consulting model doesn't reward doing things right. It rewards things like selling the "A team", then swapping them out as you sell the next big client. And shortcuts that enable payment milestones, etc. They have zero incentive for what code does, how maintainable it is, etc, after they leave.
TW can deliver well, but you have to manage them closely.
From my experience in the last year-and-a-half I would say that the Consulting model is changing to one where the developer team is an outsourced arm from the business yet it's an invaluable part of the business. For example there's a company called clear measure who I believe are looking at driving the bottom line and creating a long-term relationship where growth in the client results in higher profits for the Consulting company through either raising their rates or some other agreement. I know personally as an independent contractor my Approach is to look at how I can affect driving business growth and not so much understanding what the client is asking for as a programming task
> looking at driving the bottom line and creating a long-term relationship
That's always been the case for large-scale consultancy: land a gig and keep it forever, or as long as it will last. It's the small ones who have an incentive to leave quickly, because they don't have the manpower to keep shackled to a single assignment for too long; but the big ones are body-shops, they have a virtually-infinite supply of fresh graduates to place - they will pull all the stops to keep the gig running as long possible.
Not really. The TW devs are mostly guaranteed to be competent without interviews. They also already know how to work together, have a shared idea of tools, methodology, lingo, etc. The "manage closely" part is around watching for people swapouts, architecture shortcuts, etc. That's managing their managers/architects vs the entire team.
Well I wonder who the PE team is because perhaps they see value that exists intrinsically in quality programmers that know how to design software both quickly and at a high quality level and engineer it in a way that it can be built-in iterations and refined into a maintainable system.
For example someone like Joel Spolsky could probably find a way to drive profits from the TW team and so maybe its a programmer that knows business behind the PE money.
A PE firm usually buys when they think they see cost cutting opportunity.
The PE firm buys things in which it sees opportunity. Often-times, the opportunity is to cut: the management team's adventurist streak in markets; weak products; bloated staff.
Other times, they might recognize that a company needs capital to get bigger faster in order to address an expanding market. In this case, I think the thesis might be: cloud deployments and migrations are exploding; ThoughtWorks has the thought leaders; "roll up" other consulting firms into ThoughtWorks; dominate the market. A friend's consulting firm was just bought for this exact reason. Something very similar happened to Pivotal.
My point about Pivotal was not about the investor; it was about the similar investment thesis.
the rabid cost cutting is pretty typical.
True, if the thesis is around bloat, mal-investment, adventurism, etc. If the theory is something like "tech talent roll-up in the face of an industry-wide cloud migration", then cabid cost-cutting would be disastrous (modulo all of the SG&A position eliminating)...
Cost cutting / financial engineering / tax reductions / resource optimisation. It won't be a fun place to work in the next 3-5 years. That raise you think you'll be getting? Don't think so.
Very similar thing is happening with 'digital agencies' being bought by larger advertising agencies and big international consultancies, like Accenture.
This. I work with PE firms every day and this is essentially how they operate.
Consulting has notoriously low multiples and so if you couple a consulting business with a "computing/services" business you increase the multiple over night.
I expect this page to expand drastically over the years:
That's exactly what happened to Pivotal. Boutique consulting shop turned into a consulting/services behemoth by strategic investments and business flow.
Behemoth might be a little strong. I don't know how many of the employees are consulting/services vs product, but the total is 2300. They are also somewhat niche in their consulting. They won't do gigs that use stacks that compete with PCF for example, and have a very fixed model (your employees sit with them at the Pivotal shop)
The original Pivotal Labs was founded in 1989. Rob Mee sold to EMC in 2012.
A little later (circa 2013), EMC and VMWare took a number of teams and assets (notably Labs, Cloud Foundry, Greenplum, Gemfire and Spring) and spun them out into a new company, which was called Pivotal.
Pivotal is basically three divisions: Labs, Cloud R&D, Data.
Pivotal Labs is the consulting wing, there is a lot of cultural and conceptual overlap with ThoughtWorks. The Labs division is the most recognisably direct descendant of the original company Rob Mee founded. Its offerings and work have broadened over time.
Cloud R&D is responsible for Cloud Foundry (including our commercial distribution PivotalCF), KuBo, Spring, Pivotal Tracker and I always forget something or someone.
Data is responsible for Greenplum and Gemfire and a number of related technologies (eg HAWQ).
It's a complicated history, because nearly every part of Pivotal has a history that predates Pivotal.
Many companies or brands have a reputation for quality built up by decades of producing a high quality product. Then the company hits hard times and the brand name or the whole company is bought by a PE firm. The firm tries to capture the purchase price and some profit by producing cheap, low quality goods under the "premium" brand name. Huge margins until people realize they have been duped. Not cool. See: Craftsman, Kodak, Polaroid, etc.
> I think there's a fundamental flaw in the idea that you can just pay for cheaper labor- as Steve Jobs has said before the difference in a good programmer and an outstanding programmer can be 50 to 1 or 100 to 1 you can't capture that by trying to cut your cost from $100 an hour to $20 an hour.
Perhaps you left something out, but the argument that high quality programmers have to be expensive might be interpreted as assuming that high quality programmers only exist within high-salary countries like the USA. I assume you didn't mean it that way.
> 1) High end developers get paid a lot. Even in India and Russia.
> 2) As a rule of thumb consulting companies charge out at 3x wages.
This is backwards.
1) Consulting companies charge what they can get, which depends on what markets they've managed to penetrate, reputation, contract flow, etc as some markets are far better lubricated than others.
2) High end developers get paid a function of company budget and supply of talent, so in locations where budgets are more constrained, salaries will also be constrained. Your implication that "paid a lot" is a constant or near-constant is questionable.
There are lots of different datasets on this, no doubt none of them high enough quality, but they all indicate huge discrepancies, both on average and when stratified.
Is it possible to make a 100:20 saving as the parent comment questioned? I don't know. Perhaps not. On the other hand US average programmer salary is over 4x the average programmer salary in China, so under the right circumstances it's not as ludicrous as perhaps presented.
I guess my point is that your premise that "high-end" developer salaries are near-constant around the globe is likely only true if you constrain yourseld to developers who are employed at agencies that compete globally against companies like Thoughtworks and have employed there long enough to have established seniority (remember experience is not synonymous with quality). That's quite a tight definition of "high end" in my opinion.
> That's quite a tight definition of "high end" in my opinion.
High end always has to be in context. The current context is wage competition against US developers.
The open source dev working for free isn't in this market even if they are the best developer in the world.
My friends in India working for Microsoft and the ones working remote for $30/hr are in the same market.
> Consulting companies charge what they can get
3x is a rule of thumb. Charge much less than 3x and you aren't making money unless you have a much lower than average cost structure.
> On the other hand US average programmer salary is over 4x the average programmer salary in China, so under the right circumstances it's not as ludicrous as perhaps presented.
You are comparing apples and oranges.
Remember average in the US is average after a couple of decades of outsourcing.
Pretty much the only things I know about ThoughtWorks I got from Zed Shaw's Rails rant, which put them in a sharply negative light as a body shop of mostly-useless people. Was that an accurate characterization or is there more to them?
What they really are is subjective. But, they have grown fairly large (4500 employees, 14 countries) and still maintained an image of being in a quality tier above a body shop.
They are typically brought in to do marquee type projects, so you can imagine animosity from developers at their clients...they didn't get to do said project, because their boss hired it out.
It could be that their quality isn't great, but even if it is, they would still see criticism from that crowd.
I worked as a Rails developer at ThoughtWorks for three years, from 2008 to 2011, on three different projects, including the one they called "the largest Rails project in the world" at the time. [1] I didn't see any of the toxic behavior Zed recounts. Rather, I got to work with some of the best developers -- and smartest people -- I've ever met, and had a lot of fun while leveling up my career.
I never worked with them, but their CI product seems solid, and a few of its concepts seem to have predated the more popular competition by a few years: https://www.gocd.org/
bullshit. continuous integration came out of netscape, which was open sourced by mozilla in the late '90s.
i worked for a company in the mid '00s that had some thoughtworks people come in. they were spouting all sorts of nonsense about design patterns and this and that.
i asked "how come nobody in open source speaks like this?" "oh, well you know the scope and scale of the projects and the quality of the code in the open source world doesn't compare to that which is locked up inside of companies..."
I worked for ThoughtWorks in Chicago for 6-ish six years (2000-2007). I started the Selenium project there in 2004. At the time, I was a Python and JavaScript developer living in a sea of Ruby, Java, and .Net fanatics.
Hi, Obie! :-) If I hadn't discovered Python first, I probably would have been a Ruby fanatic, too. But yeah, I mostly do JavaScript now.
Ironically, I've a got a theory (I did confirm parts of this with Martin years ago, though), that it's all Martin's fault. Before Martin was into Ruby, for a brief period of time, he was a Python fan. But by the time we wrote Patterns of Enterprise Application Architecture, he was full-on into Ruby. Then DHH came along and wanted to implement one of the first patterns listed (Active Record). DHH wanted to to step away from PHP and write his new code in whatever Martin's favorite language was. And the rest is history. But within a small window of time, DHH's project might have been called Python on Rails. So, it's all Martin's fault that you (or DHH or half of ThoughtWorks) never became a Python fanatic. :-)
What did ThoughtWorks do with their profits before they were bought? If it was privately owned, does that mean the profits were dividended to the founder? Or were they all re-invested in the company to fund expansion?
TW employee ~200 here (now ex). The vast majority of the profit was invested in expansion. You can't grow from the low hundreds of employees in year 2000 to almost 5,000 in 2017 without many tens of millions of dollars reinvested in expansion.
At least back in the early 2000s when I worked there, the expectation set by Roy was that once the legal issues versus Schroder, et al [1] were settled, that Thoughtworks would someday become a public trust. It would be very surprising to learn that the company was now being sold for the profit of an individual.
There is a mention of that in the post: "Another issue encouraging a sale has been the difficulty of creating a post-Roy ownership structure for ThoughtWorks. Roy has often talked about setting up some kind of trust to own ThoughtWorks and maintain its values into the future. But setting up such a trust implies a change of ownership, and a change of ownership involves taxes."
According to the article, the issue is not that much tax avoidance as actually paying the tax. A sale would trigger a taxable event and taxes need to be paid from the cash assets. Consulting companies don't have much in cash lying around usually, so that might be an event that could threaten the companies livelihood. Now if you sell to an investor, you receive cash from which you can pay the taxes, but if you "sell" to a trust fund, you don't.
Ex-TWer and current TW shareholder here. US securities law does not allow a company to be private over a certain number of shareholders. The owner couldn't legally offer to sell the company to all 4000-some employees, even if they all lived in the US. (They don't live in the US, which makes it much more complicated).
There are other restrictions: you cannot sell shares of a privately held company unless the prospective buyer makes over 250k per year or has a net worth of $1 million.
All of the above are SEC rules. There are numerous other hurdles.
My short story with TW. Seven years ago, after several interviews, I was invited to move and work to TW office in Porto Alegre (Brazil) I asked 2,5k USD month, and they refused. It was a good salary at that time, I could live comfortably and travel to my home once a month. I was not willing to accept less.
I continue liking this company, but now I have my own small business so I haven't applied anymore.
The point of being a middleman is to keep that fat margin. Also the usual "we did not come to you country for cheap labor, we came to have access to a new talent pool" lie.
... His death would trigger a tax event that we could not pay from our own resources, forcing a fire sale.
Despite several years of effort, we haven't found a way that would preserve the company in its current form.
This further encouraged him to sell when there is no tax bill hanging over our head.
Presumably the PE value prop is that they charge over the odds for their consultancy while paying their employees under market rate. If they can maintain a public image of technical excellence and social responsibility for a couple more years while the equity firm milks the profits, Apax get their multiplier. At the end of that they can sell off what's left and doubles all round.
I was always saying that if I was younger, I wish company like ThoughtWorks got me under it's wing, send me off to their Bootcamp/University, indoctrinated me into right ways of doing things.
>>> Funds advised by Apax Partners (“Apax Funds”) have today announced a definitive agreement to acquire ThoughtWorks, Inc.
What does that mean? It's not literally Apax buying the company, but "Funds advised by Apax"... does that mean it's just the money that owns it, or child companies, or some sort of fancy tax/legal structure?
Private equity manages funds, on behalf of LPs. Just the same as most VC funds. It's the same thing. Apax doesn't own the company, the fund does. Apax gets fees for the deployed capital and carry if the investment, upon exit, goes beyond a given return threshold.
Well, I've heard of Martin Fowler, but not Roy Singham.
Let's face it, the company (and probably all companies) has really been built by all it's people, not just a single founder/owner.
So who's now getting what of the $600 mil?
A cursory search on Roy turns up various phrases like "software socialist" etc, but honestly it would be hard to justify that, or claim success in the "social responsibility" part of the company's famous "3 pillars" values, if they're not even giving their own people a fair stake.
If he dreamt up such a company as TW then proceeded to build it with his own resources, without any outside funding, why shouldn't he be able to capture most of the value he created by keeping the profits from the sale?
Of course they did a big part of the work, and for that they got the compensation they negotiated, be it salary, equity or other benefits. At any point, they could have said "Hey, I don't like that this single person disproportionally benefits from the work we all do", and leave the company to do something else. (This is generally a hard statement to make, but I think for a company where such a big part of the employees are software engineers, I think it is reasonable to assume that they have a few options to shape their live into a direction they want.)
Apparently, in the end, Roy decided to act against his publicized beliefs, which just serves as a reminder, that words don't mean s#!t when it comes to business.
Oh come on, individual salaries compete against other people offering their services (and ultimately against the choice to starve by not working for the accepted rates), and has nothing to do with the value people generate.
Of course there's nothing unusual about this, in our capitalist system (which is extremely unfair, IMHO - can you tell?), but this was supposed to be different...
The sale price pretty much represents the discrepancy between what employees (including Roy himself) should have been paid if they were getting a fair cut of the value they generated, and what they were actually paid - or at it's least a projection of that into the future.
(I am generally not a fan of capitalism in its current form, so I'm playing devil's advocate here to a large degree.)
> Oh come on, individual salaries compete against other people offering their services (and ultimately against the choice to starve by not working for the accepted rates), and has nothing to do with the value people generate.
For the special case of high-demand jobs like software engineer, I don't think this holds up. If you are out for fair compensation in a "stable" job there are plenty of startups out there that will offer you equity. The easiest way, however, to be compensated as close as possible to "the value you generate" is to freelance.
Yes, those options are not optimal and you won't end up earning 100% of the value you generate but are generally the best way we currently have to approximate it. If we now would tweak some other parameters of our overall (international) economic system, like maybe higher taxes for large corporations (or one of X other possible solutions, I'm not trying to predict the right one), we could even end up with a system where injustices like severe wealth inequalities are minimized.
> but this was supposed to be different...
Yes, it was supposed to. They tried and failed, which is something that happens. If you invest too much (not necessarily money) into something that is not proven or even likely to be viable, that's just naive.
There really isn't such a thing as "the value people generate" beyond one-person businesses. As a simplified example, a business that sells software has two components: building software and selling software. The value of building software that isn't sold is zero. The value of selling software that isn't ever built is zero. But the business of doing both has value; the sum is greater than the pieces. So how do you allocate the surplus of cooperation? I don't think there's a fundamental theory that can explain one correct way of doing this. In real life, you allocate it by negotiation. It's not right, or wrong, it just is.
Indeed, when 'equal' partners negotiate a division of the value generated by the enterprise or 'company', that's probably about as fair as you can get. That would be called a 'co-operative' I think.
But that's not remotely the same as a company owned by a single individual, hiring employees who 'negotiate' their salaries in competition with other people who need employment - especially considering countries with very low wages, no social security (ie get a job, whatever the pay, or starve), etc.
By your logic Mark Zuckerberg who became a billionaire before hiting 30 certainly doesn't deserve the bulk of his riches since there is no way he could have done by himself, all the work thousands of engineers were hired to do at Facebook.
I know you might want to say there is a fundamental difference between a privately held TW and FB which took VC money early on, but I'm fairly confident that if Zuck thought he could build FB without taking VC money, he'd have gone that route, instead he went with dual-class shares as a reasonable compromise to retaining control of his company.
yes, that is exactly what I would say, and no, I don't see much distinction between TW, Zuck, Bezzos, Page/Brin et al.
Sure in some cases people have risked money to start a business, or it's been built around a new idea or patent etc, and that should give the owners a disproportionate share of the company value/profits.
But not all of them.
The companies get built by all their people, not just owners, and the value of the company pretty much represents (albeit very indirectly) the difference between what those people have created, and what they've been paid.
Yes that is exactly my logic, and no I don't want to say there's any difference between TW and Zuckerberg - they do not deserve to own the entire company, which has been built by all it's people.
It's justified internally by the fact that Roy does not spend that money on himself, but rather on social projects. And as an employee you are made to feel bad if you suggest that you should be accumulating some of that wealth, rather than it going to more worthy people.
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[ 2.9 ms ] story [ 243 ms ] threadEdit: Or maybe there are a lot of people "on the bench" or middle management is overstaffed?
This discussion might be enlightening: https://news.ycombinator.com/item?id=12458683
When did that happen? Was it done to make the company more attractive to buyers, to protect profits, or for idealistic reasons?
I didn't have all of my facts straight when I posted this and should have thought more carefully before I did so.
Apologies to anyone I might have offended by posting this. If you'd like to talk more directly about this, feel free to email me at any time. My email address is in my profile.
Doesn't the customer typically pay all these costs for a consultant anyway?
Take these comments with a grain of salt. If anyone is going through a PE buyout and is nervous about expectations, feel free to reach out to me...I work with a lot of PE firms on tech deal and know the drill.
* What's the likely outcome for employees?
* Who was the previous owner?
* How much did it sell for?
* Are operations in specific regions likely to be shut down or sold off?
He's 63, he built a company and learned what he wanted to learn, time to live on a beach and let someone else sweat the small stuff.
The second rule of buyouts is that everything will change in the second fiscal year. They won't tell you NOT to do something, they just won't give you any budget for it.
The first rule of buyouts is that the promises always come from someone who isn't in a position to back them up (like the old owner, or your boss's boss, who only have a single seat on the board between them).
Having been through multiple acquisitions of small companies by (much) larger ones... they ALWAYS say this. The person saying it might even believe it themselves.
But in a year's time that person will have moved on to the next acquisition and you will be reporting to a regular manager in the parent org who doesn't understand - and wouldn't care even if they did - why you are "special", why you should be treated differently or have more latitude or more perks or a different office than the regular staff. Then the change will happen overnight.
- Do you bill? Cool. You're good - Do you sell? Cool. You're good
If you do neither of those things, you've likely been under pressure anyway, as the business model of PS companies is to minimize operations and reduce the ratio between ops and professional services on an ongoing basis.
New owners will not likely change that dynamic. Based on what is known, the new owners are buying for growth, which means you cut costs that should be cut and use the savings to fund initiatives that lead to growth, such as expanded offerings that allow you to reach new customers and grow the company faster.
I think there's a fundamental flaw in the idea that you can just pay for cheaper labor- as Steve Jobs has said before the difference in a good programmer and an outstanding programmer can be 50 to 1 or 100 to 1 you can't capture that by trying to cut your cost from $100 an hour to $20 an hour.
Software inherently is one of the most scalable business models in the world the cost of manufacturing is almost zero all of the cost is in the design they should be able to make money. The mindset of being a consulting firm has to be changed.
That's what has me curious here. A PE firm usually buys when they think they see cost cutting opportunity. That may be hard to do with TW, since they pitch and price themselves as "premium".
TW can deliver well, but you have to manage them closely.
That's always been the case for large-scale consultancy: land a gig and keep it forever, or as long as it will last. It's the small ones who have an incentive to leave quickly, because they don't have the manpower to keep shackled to a single assignment for too long; but the big ones are body-shops, they have a virtually-infinite supply of fresh graduates to place - they will pull all the stops to keep the gig running as long possible.
So closely you might as well just have hired a bunch of contractors and run the project yourself for a fraction of the price?
For example someone like Joel Spolsky could probably find a way to drive profits from the TW team and so maybe its a programmer that knows business behind the PE money.
https://www.joelonsoftware.com/2001/01/18/big-macs-vs-the-na...
Other times, they might recognize that a company needs capital to get bigger faster in order to address an expanding market. In this case, I think the thesis might be: cloud deployments and migrations are exploding; ThoughtWorks has the thought leaders; "roll up" other consulting firms into ThoughtWorks; dominate the market. A friend's consulting firm was just bought for this exact reason. Something very similar happened to Pivotal.
I meant firms like TPG, Blackstone, Silverlake, etc. I suppose they do sometimes stray from the model, but the rabid cost cutting is pretty typical.
Consulting has notoriously low multiples and so if you couple a consulting business with a "computing/services" business you increase the multiple over night.
I expect this page to expand drastically over the years:
https://www.thoughtworks.com/products
I agree they've been successful.
Disclosure: I work for Pivotal.
The original Pivotal Labs was founded in 1989. Rob Mee sold to EMC in 2012.
A little later (circa 2013), EMC and VMWare took a number of teams and assets (notably Labs, Cloud Foundry, Greenplum, Gemfire and Spring) and spun them out into a new company, which was called Pivotal.
Pivotal is basically three divisions: Labs, Cloud R&D, Data.
Pivotal Labs is the consulting wing, there is a lot of cultural and conceptual overlap with ThoughtWorks. The Labs division is the most recognisably direct descendant of the original company Rob Mee founded. Its offerings and work have broadened over time.
Cloud R&D is responsible for Cloud Foundry (including our commercial distribution PivotalCF), KuBo, Spring, Pivotal Tracker and I always forget something or someone.
Data is responsible for Greenplum and Gemfire and a number of related technologies (eg HAWQ).
It's a complicated history, because nearly every part of Pivotal has a history that predates Pivotal.
They have an office in Bangalore, India too. Or had until a while ago - not checked recently.
I doubt they're going to turn it into a cheap outsourcing thing.
There's lots of companies you could buy for that.
Perhaps you left something out, but the argument that high quality programmers have to be expensive might be interpreted as assuming that high quality programmers only exist within high-salary countries like the USA. I assume you didn't mean it that way.
2) As a rule of thumb consulting companies charge out at 3x wages.
It usually is more expensive to outsource to the top end than it is to do it in house even in Seattle or SF.
> 2) As a rule of thumb consulting companies charge out at 3x wages.
This is backwards.
1) Consulting companies charge what they can get, which depends on what markets they've managed to penetrate, reputation, contract flow, etc as some markets are far better lubricated than others.
2) High end developers get paid a function of company budget and supply of talent, so in locations where budgets are more constrained, salaries will also be constrained. Your implication that "paid a lot" is a constant or near-constant is questionable.
There are lots of different datasets on this, no doubt none of them high enough quality, but they all indicate huge discrepancies, both on average and when stratified.
https://www.daxx.com/article/it-salaries-software-developer-...
Is it possible to make a 100:20 saving as the parent comment questioned? I don't know. Perhaps not. On the other hand US average programmer salary is over 4x the average programmer salary in China, so under the right circumstances it's not as ludicrous as perhaps presented.
I guess my point is that your premise that "high-end" developer salaries are near-constant around the globe is likely only true if you constrain yourseld to developers who are employed at agencies that compete globally against companies like Thoughtworks and have employed there long enough to have established seniority (remember experience is not synonymous with quality). That's quite a tight definition of "high end" in my opinion.
High end always has to be in context. The current context is wage competition against US developers.
The open source dev working for free isn't in this market even if they are the best developer in the world.
My friends in India working for Microsoft and the ones working remote for $30/hr are in the same market.
> Consulting companies charge what they can get
3x is a rule of thumb. Charge much less than 3x and you aren't making money unless you have a much lower than average cost structure.
> On the other hand US average programmer salary is over 4x the average programmer salary in China, so under the right circumstances it's not as ludicrous as perhaps presented.
You are comparing apples and oranges.
Remember average in the US is average after a couple of decades of outsourcing.
They are typically brought in to do marquee type projects, so you can imagine animosity from developers at their clients...they didn't get to do said project, because their boss hired it out.
It could be that their quality isn't great, but even if it is, they would still see criticism from that crowd.
[1] https://conferences.oreilly.com/rails2009/public/schedule/de...
[1] http://davidrupp.blogspot.ie/2010/01/why-should-you-want-to-...
Never saw your blog back then but if I did I would have applied.
i worked for a company in the mid '00s that had some thoughtworks people come in. they were spouting all sorts of nonsense about design patterns and this and that.
i asked "how come nobody in open source speaks like this?" "oh, well you know the scope and scale of the projects and the quality of the code in the open source world doesn't compare to that which is locked up inside of companies..."
mhmm...
(It looks like Tinderbox predates CruiseControl by 3/4 years.)
Also, the CI Wikipedia page should probably be fixed to also include info about Mozilla's CI. https://en.wikipedia.org/wiki/Continuous_integration
Ironically, I've a got a theory (I did confirm parts of this with Martin years ago, though), that it's all Martin's fault. Before Martin was into Ruby, for a brief period of time, he was a Python fan. But by the time we wrote Patterns of Enterprise Application Architecture, he was full-on into Ruby. Then DHH came along and wanted to implement one of the first patterns listed (Active Record). DHH wanted to to step away from PHP and write his new code in whatever Martin's favorite language was. And the rest is history. But within a small window of time, DHH's project might have been called Python on Rails. So, it's all Martin's fault that you (or DHH or half of ThoughtWorks) never became a Python fanatic. :-)
* https://paulhammant.com/2015/01/06/farewell-2014-farewell-th...
[1] http://caselaw.findlaw.com/de-court-of-chancery/1138774.html
Goldman Sachs tried to end-run around this limitation with Facebook, but failed: https://www.theguardian.com/business/2011/jan/17/goldman-sac...
There are other restrictions: you cannot sell shares of a privately held company unless the prospective buyer makes over 250k per year or has a net worth of $1 million.
All of the above are SEC rules. There are numerous other hurdles.
I continue liking this company, but now I have my own small business so I haven't applied anymore.
Or am I getting cynical in my old age?
Couldn't this have been done as an ESOP?
I had to learn same things, but much harder.
What does that mean? It's not literally Apax buying the company, but "Funds advised by Apax"... does that mean it's just the money that owns it, or child companies, or some sort of fancy tax/legal structure?
My experience tells me when that phrase is uttered only a short time passes before lots changes!
Let's face it, the company (and probably all companies) has really been built by all it's people, not just a single founder/owner.
So who's now getting what of the $600 mil? A cursory search on Roy turns up various phrases like "software socialist" etc, but honestly it would be hard to justify that, or claim success in the "social responsibility" part of the company's famous "3 pillars" values, if they're not even giving their own people a fair stake.
Apparently, in the end, Roy decided to act against his publicized beliefs, which just serves as a reminder, that words don't mean s#!t when it comes to business.
Of course there's nothing unusual about this, in our capitalist system (which is extremely unfair, IMHO - can you tell?), but this was supposed to be different...
The sale price pretty much represents the discrepancy between what employees (including Roy himself) should have been paid if they were getting a fair cut of the value they generated, and what they were actually paid - or at it's least a projection of that into the future.
> Oh come on, individual salaries compete against other people offering their services (and ultimately against the choice to starve by not working for the accepted rates), and has nothing to do with the value people generate.
For the special case of high-demand jobs like software engineer, I don't think this holds up. If you are out for fair compensation in a "stable" job there are plenty of startups out there that will offer you equity. The easiest way, however, to be compensated as close as possible to "the value you generate" is to freelance.
Yes, those options are not optimal and you won't end up earning 100% of the value you generate but are generally the best way we currently have to approximate it. If we now would tweak some other parameters of our overall (international) economic system, like maybe higher taxes for large corporations (or one of X other possible solutions, I'm not trying to predict the right one), we could even end up with a system where injustices like severe wealth inequalities are minimized.
> but this was supposed to be different...
Yes, it was supposed to. They tried and failed, which is something that happens. If you invest too much (not necessarily money) into something that is not proven or even likely to be viable, that's just naive.
But that's not remotely the same as a company owned by a single individual, hiring employees who 'negotiate' their salaries in competition with other people who need employment - especially considering countries with very low wages, no social security (ie get a job, whatever the pay, or starve), etc.
I know you might want to say there is a fundamental difference between a privately held TW and FB which took VC money early on, but I'm fairly confident that if Zuck thought he could build FB without taking VC money, he'd have gone that route, instead he went with dual-class shares as a reasonable compromise to retaining control of his company.
Sure in some cases people have risked money to start a business, or it's been built around a new idea or patent etc, and that should give the owners a disproportionate share of the company value/profits.
But not all of them.
The companies get built by all their people, not just owners, and the value of the company pretty much represents (albeit very indirectly) the difference between what those people have created, and what they've been paid.
This just screams sht tax laws. Good tax laws don't wreck their major economic contributors.
The sad thing is I knew this was an American company based on that line alone.