INTRO: Facebook, Apple, Amazon, Netflix, and Google.
These 5 companies have a reputation for paying some of the most exorbitant salaries and offering
the best perks in the world atleast to tech workers. Google for example has a median salary of
$295,000 per year while Facebook comes in at $292,000 per year. And that’s just the median.
If you have any sort of seniority within these companies, you’ll be making closer to $500,000
per year if not more. 20 years ago, these types of salaries were only offered to C suite executives,
but these tech companies have made them more common than ever. Aside from these
insane pay packages, many tech companies also have generous work from home policies
and unlimited vacation time. Considering these extraordinary perks, working at these companies
is the top career goal for many, and getting a job at one of these companies is extremely difficult.
At Google, for instance, the chances of scoring a job for the average applicant
is just 0.2%. Hearing this, you would think that the people who make it to the other side
would be extremely loyal and stick around for decades. But, this is actually not the case.
In fact, these companies not only rank at the top of the salary lists, but also at the top of the
turnover lists. The average tenure of employees at these companies is usually no more than 2 years.
Now, it should be noted that this study measures tenure and not turnover, so it is a bit skewed.
These companies are always hiring new employees and growing their workforces,
so naturally, the average tenure is going to skew towards 0. With that being said though, it’s no
secret that these companies have high turnover. If you know people within these companies, you know
that most of them jump around every few years, and this is the same case with most of their coworkers
as well. Not to mention the thousands of YouTube videos and reddit posts about quitting FAANG.
So, why in the world do the best places to work also have the highest turnover?
FINANCIAL FREEDOM:
One of the top reasons many FAANG engineers aren’t enticed to stay at their jobs is because
the salary isn’t that big of a deal for them. This isn’t to say that they’re ungrateful for the
opportunities that they have or that they don’t care about money. When they entered the industry,
they probably very much cared about the high compensation and cool perks. However, by the time
they’re ten years into the industry, most of them simply achieve financial freedom. Now, they don’t
become centimillionaires or billionaires, but they almost always become multi-millionaires if not
deca-millionaires. But, wait a minute, even if you’re getting paid $300,000 per year, this only
comes out to $3 million within 10 years. And by the time you deal with California’s taxes and
living expenses, you’d be lucky to be left with a million dollars. So, how do these guys manage
to save up over $5 million+ or $10 million+? Well, the answer lies in stock compensation. Even entry
level software engineers at Facebook earn $42,000 worth of stock compensation every single year.
You just have to get promoted once for this number to nearly double to $81,000 per year.
By the time you get to your 2nd or 3rd promotion, you’re stock compensation itself is worth six
figures if not multiple six figures. Also, it’s not like this money is being invested into a 401K
or the S&P 500, this money is literally being invested into the fastest growing companies
in the world. Over the past 10 years, Facebook grew 21X, Amazon grew 21X, Apple grew 13X,
Netflix grew 90X, and Google grew 10X. Now, let’s say you ended up at the slowest grower which is
Google in 2012, and that you decide to stick around for 10 years. Maybe, you start at level 3
and make it level 5. This would mean that you’re average stock compensation during this time period
would be $83,000 per year. Even if we estimate conservatively and call it $70,000 per year. Now,
let’s also say that you’re a financial idiot and that you live paycheck to paycheck, you don’t
contribute to your 401K, and you have no savings. As long as you don’t sell your stock compensation,
you would enjoy an annual growth rate of 27.8%, and you’d be left with $2.6 million
by the end of 10 years, and that’s the worst case scenario. If you were to do the same thing
at Netflix which was the fastest growing of the bunch, you’d enjoy an annual growth rate of 61%
which would leave you with $13.3 million. If you jumped around every couple of years like
most of these guys do, you probably would’ve ended somewhere in between those two numbers,
likely $5 to $10 million and that’s just the stock compensation. If you also take advantage
of these companies’ 401K plans and invest in the S&P 500 yourself, you can easily boast a
net worth of over $10 million by the time you’re in your mid 30s. When you’re in such a position,
earning more money gives you basically 0 tangible value. People who are still pursuing wealth after
this point are simply playing the money game and seeing how high they can get.
But, in terms of daily life, earning more money gives them no additional value and they can
retire at any time, so it’s no wonder why FAANG salaries are not enough to retain these employees.
MONEY DRIVEN:
As you can see, the vast majority of FAANG employees become financially free at a very young
age, so they’re not driven to stay at a company just for the salary. But, even if they were driven
by the salary, it would still be in their best interest to not stay at the same company. Here’s
the thing, when you stay at the same company, at best, you’ll earn a 3-5% raise every year. If you
switch companies strategically, however, you can squeeze in a 10-20% raise every couple of years.
And when you do this for a prolonged period of time, the person who constantly switched jobs
ends up earning a lot more than the loyal employee. According to Forbes, employees who
stay at companies for longer than 2 years are paid 50% less on average. Now, this isn’t to say that
you should switch every 24 months because that’ll likely become a red flag very quickly. But, it is
in your best interest to switch periodically as in every 5 to 7 years and this is especially true in
the FAANG world. While it’s extremely difficult to get into FAANG, once you’re in and have a couple
of years under your belt, it’s comically easy to switch between these companies. Here’s the thing,
the reason acceptance rates at FAANG companies are so low is not because these companies don’t need
more talent. These companies are always desperate for more talent, and the reason acceptance rates
are so low is because it’s extremely difficult to find employees that are at the caliber that
they’re looking for. But, if you’ve already passed the screening process of one of their competitors,
they can be pretty confident that you’ll be a good hire. FAANG companies are infamous for pouching
employees from competitors. In fact, they’re almost always embroiled in a bunch of lawsuits
regarding stealing employees and intellectual property and things along those lines.
So, as top tier FAANG talent, you can use this rivalry amongst these companies to maximize your
own compensation. Something else to note is that switching to other FAANG companies in not their
only option. In many cases, they go onto found their own companies. And given that they these
guys have intelligence, experience, and networks, the odds are very much stacked in their favor.
This is why companies like Xiaomi, Pinterest, Shift Technologies, Upstart, and YouTube were all
founded by ex silicon valley employees. Imagine if Eric Yuan stayed at Cisco instead of founding Zoom
or if Reid Hoffman stayed at PayPal instead of founding LinkedIn. More times than not, these guys
have their eyes on targets that are much larger than just $10 to $15 million. Oftentimes, they’re
looking for hundreds of millions if not billions, so they’re not gonna stick around at Google just
so they can get a few hundred thousand dollars and free food. And given that FAANG recruits
the absolute best talent in the world, it’s not surprising that many of their employees have such
ambitions. For most of them, it’s just a matter of time until they outgrow their roles at FAANG.
BURNOUT: While larger goals and financial freedom
often play a factor in FAANG employees jumping ship, these are not the only reasons. Oftentimes,
it just comes down to employees burning out and either wanting to take it slow or get a fresh
start. We commonly hear about how great it is to work at these companies, but a lot of that
is simply because that’s how these companies want us to perceive them. All of these companies are
master marketers when it comes to selling their products, and it’s no different when it comes to
recruiting. They want us to think that their jobs are the absolute best when it reality, their jobs
are actually super stressful. But, wait a minute, don’t FAANG companies have extremely generous
vacation policies and paid time off and things like that? Well yes, they do, but here’s the
cool thing. These companies don’t have to be the bad guys to cultivate an extremely competitive and
stressful working environment. They don’t need to implement cutthroat managers and directors or hang
scary deadlines over your head. When you place thousands of the smartest and most competitive
individuals together, it’s only natural that they’re gonna try to outdo each other.
You don’t need to scare them or threaten them to work hard and not take vacations. These guys are
naturally not going to take vacations because they want to shine. They want that next promotion, they
want that higher status, they want to boost their egos. They all have their own selfish reasons for
working hard and they’re all high motivated which works out perfectly for these companies.
The companies can be the good guys offering great salaries and awesome perks while the employees
end up working 60 hours per week or more by themselves. Many of these guys thrive under these
working conditions and they end up as a VP at a FAANG company or a C suite executive at a startup,
but many also burn themselves out and end up scaling back or switching companies. This is
why most employees at Apple report struggling with burnout and why almost half of Apple and Amazon
employees don’t have a close friend at work. This is also why only about half of employees
at most FAANG companies are actually happy at their jobs. The only exception to this rule
is Netflix, and the reasons they have such happy employees is because they lean into a contractor
model that turns over employees even faster. So, most of their employees never even get past the
honeymoon phase. Personally, I’ve seen this play out in real life. In high school, I had a computer
science teacher from FAANG and a coach that was from the NFL. While both of these guys were from
completely different industries, I think their reasoning for taking such a massive paycut were
identical. They were simply burnt out from always having to perform at their peak ability. Now,
I should also mention that the computer science teacher has since returned to FAANG, so clearly,
these guys can never truly suppress their inner urge to constantly progress in their careers. But,
at the same time, they’re never truly satisfied at any one of these jobs. They’re constantly in
this limbo state where they’re hopping jobs every few years perpetually trying to find inner peace.
THE TRUTH ABOUT FAANG:
In the end, while FAANG companies love trying to convince us that they’re the best places to work,
it’s simply not true. Job satisfaction is usually not derived from high salaries are fancy perks.
Virtually all the jobs with the highest satisfaction have something to do with
helping others whether that be providing educational services or therapy. And at FAANG,
all you’re usually doing is making the biggest companies in the world even bigger. There’s also
the whole ethical and moral dilemma as well. Google and Facebook are notorious for privacy
concerns, and as an engineer at these companies, you’re directly supporting that. Now, none of
this is to say that you shouldn’t pursue a job at FAANG. FAANG is an outstanding place to build your
career and achieve financial freedom. But, what FAANG isn’t is a place to achieve long term zen.
And that’s why turnover at FAANG is so high. Would you leave a job at FAANG? Comment that down below.
Also, drop a like if you wish you had a FAANG salary.
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