The software engineering industry in 2024: what changed in 2 years, why, and what is next

Summary

The speaker, known for 'The Pragmatic Engineer' newsletter, discusses significant shifts in the tech industry, particularly the impact of rising interest rates on job markets, VC funding, and IPOs. They compare current changes to past cycles, highlighting how smaller teams are achieving rapid growth, similar to Instagram's early days. The talk emphasizes adapting to a new reality with fewer job opportunities, slower career growth, and a push towards more practical engineering practices, while suggesting that AI tools can augment developers' productivity rather than replace them.

Takeaways

• 📰 The tech industry is experiencing significant changes, including shifts in the job market, VC funding, IPOs, and strategies within big tech companies.
• 🚀 Small teams are now able to move faster and build solutions more quickly than in the past, as seen with companies like Blue Sky and historical comparisons to Instagram's growth.
• 🔍 Feedback loops in software engineering are lengthening, with teams becoming less accountable for mistakes and more focused on passing issues to others.
• 📉 The job market has cooled down from the highs of 2021, with increased competition and a tougher environment for both new graduates and experienced engineers.
• 💹 Venture capital funding has seen a significant downturn, with 2024 levels returning to those of 2018, impacting the amount of money available to startups.
• 📈 The Federal Reserve's interest rate hikes to combat inflation have had a ripple effect on tech, influencing investment strategies and the viability of unprofitable companies.
• 🛑 Large tech companies, even those with record profits, are implementing layoffs, indicating a strategic shift rather than a necessity due to financial troubles.
• 💼 There is a trend towards more full-stack development, with engineers expected to handle multiple aspects of product development, from backend to frontend.
• 🔄 The industry may be returning to monolithic architectures, as the organizational benefits of microservices become less relevant for companies not rapidly scaling.
• 🛠️ There is a push towards 'boring technology' that solves business problems efficiently, reflecting a shift in focus towards stability and reliability over cutting-edge innovation.
• 🤖 AI and large language models are becoming increasingly important, with a significant portion of VC investment flowing into AI, suggesting a new technological revolution in the making.

Q & A

Who is the speaker known for writing and what topics does the newsletter cover?

The speaker is known for writing 'The Pragmatic Engineer', a newsletter that delves into big tech and startups. It discusses various topics including interviews with people working in these companies.

What is the significance of the book 'The Software Engineer's Guidebook' by the speaker?

The book 'The Software Engineer's Guidebook' is significant as it is another work by the speaker that provides guidance and insights into the field of software engineering, although the specific content is not detailed in the script.

What are the key companies the speaker has worked for in their career?

The speaker has worked for notable tech companies including Uber, Skype (during its time under Microsoft), Xbox One project, and JP Morgan, where they served as a software engineer and engineering manager.

What is the example given to illustrate how small teams are moving faster in the tech industry?

The example given is Blue Sky, a Twitter competitor, which was founded in 2022 and managed to reach 5.5 million users within a year with a small team of 12 developers, showcasing the rapid development and growth possible with small teams.

How does the speaker compare the growth of Blue Sky to a historical example?

The speaker compares the growth of Blue Sky to Instagram, which also experienced rapid growth with a small team, reaching millions of users within the first couple of years of its existence.

What is the observation made by Kent Beck about the current state of software engineering?

Kent Beck observes that feedback loops are getting longer, indicating a trend where teams are less inclined to take responsibility for mistakes and prefer to pass on problems to others.

What are the key areas of change discussed in the tech industry?

The key areas of change discussed are the job market, VC funding, IPOs, and shifts within big tech companies, including unexpected layoffs even among profitable companies.

What was the impact of the Federal Reserve's interest rate hike on the tech industry?

The Federal Reserve's interest rate hike, the largest in 28 years, has led to a decrease in VC funding, fewer IPOs, and a tougher job market, as the cost of capital increased and investors sought less risky investments with guaranteed returns.

Why did the speaker mention the smartphone and cloud computing revolutions in the context of low-interest rates?

The speaker mentioned these revolutions to highlight that the low-interest rate period coincided with significant technological advancements, which provided more reasons to invest in startups and led to the creation of many successful companies.

What is the new reality for software engineers as discussed in the script?

The new reality for software engineers includes tougher job markets with fewer available positions, increased competition, slower career growth, and the need to adapt to more efficient and sometimes less exciting technological choices.

What advice does the speaker give to software engineers in response to the changing tech industry?

The speaker advises software engineers to become more business or product-minded, to understand their company's business model, to build relationships with product managers, and to aim for career security rather than job security.

What is the speaker's perspective on AI and its impact on software engineers?

The speaker believes that AI, specifically large language models, will not replace developers but will serve as tools to make them more productive. They encourage engineers to make these tools their allies and to improve their workflows with them.

Outlines

00:00

📰 Tech Industry Changes and Small Teams' Impact

The speaker, known for writing the Pragmatic Engineer newsletter and a software engineer's guidebook, discusses recent changes in the tech industry, particularly the rapid development and growth of small teams. Using Blue Sky, a Twitter competitor, as an example, the speaker illustrates how small teams are achieving significant user growth with minimal staff, drawing parallels to Instagram's early growth. The talk sets the stage for a discussion on the new type of change in the tech industry, suggesting a return to patterns observed in the past.

05:00

📉 The Shifting Landscape of the Tech Industry

This paragraph delves into the significant shifts in the tech industry, including changes in the job market, VC funding, IPOs, and movements within big tech companies. The job market, once booming, has seen a stark turn with unexpected layoffs even among profitable companies. Venture capital funding has receded to 2018 levels, and IPOs have dramatically decreased. The speaker also highlights the puzzling layoffs at big tech companies like Meta and Google, despite record profits, suggesting underlying economic factors at play.

10:01

🏦 The Federal Reserve's Actions and Their Impact on Tech

The speaker explores the Federal Reserve's interest rate hikes as a potential cause for the changes in the tech industry. The significant increase in interest rates was intended to combat high inflation, but it also affected the tech industry by making traditional investments more attractive, thereby reducing the flow of venture capital into startups. The speaker provides a historical context for interest rates and suggests that the tech industry's reliance on low-interest rates has made it vulnerable to financial policy changes.

15:02

📱 The Smartphone and Cloud Computing Revolutions

The speaker connects the low-interest rate period with two significant technological revolutions: the rise of smartphones and cloud computing. Companies like Spotify, WhatsApp, Instagram, Uber, and Snapchat owe their existence to the smartphone revolution, while cloud computing has enabled businesses like Netflix and Airbnb to grow rapidly. The speaker argues that these revolutions have provided ample reasons for investing in tech startups, but the current high-interest rate environment may slow this trend.

20:03

🛠 The New Reality for Software Engineers

The speaker outlines the new reality for software engineers, characterized by fewer job postings, increased competition, and a tougher job market. Companies are reporting fewer people quitting, leading to less backfilling and hiring. The speaker predicts slower career growth due to less demand for senior positions and suggests that software engineers should expect a more challenging environment for career advancement.

25:04

🛠️ The Evolution of Software Engineering Practices

The speaker discusses the evolution of software engineering practices in response to economic pressures and technological shifts. There is a push towards more 'boring' technologies that are proven and efficient, a resurgence of monolithic architectures over microservices, and an increase in full-stack development. Additionally, there is a shift left in developer responsibilities, including security and project management tasks, and a move away from reinventing the wheel towards adopting existing solutions.

30:04

🔄 Reflections on Past Tech Busts and the Future

The speaker reflects on the similarities between the current tech climate and past busts, such as the dot-com bubble, drawing on personal accounts and experiences. There is a sense of déjà vu in the industry's response to economic pressures, with a return to fixed specifications, upfront design, and longer feedback loops. The speaker suggests that the industry may be entering a period of consolidation and efficiency, with a focus on profitability and practicality.

35:04

🤖 AI's Role in the Tech Industry and Career Security

In the final paragraph, the speaker addresses the impact of AI and large language models on the tech industry, suggesting that while AI will not replace developers, it will make them more productive. The speaker advises embracing these tools and using them to improve workflows. They also emphasize the importance of career security over job security, encouraging continuous learning and engagement with challenging projects, and concludes with optimism about the tech industry's future.

Keywords

💡Pragmatic Engineer

The 'Pragmatic Engineer' is a newsletter that delves into significant technology and startup topics. It is authored by the speaker, G, who is known for his insights into the tech industry. The newsletter is a core part of the speaker's contributions to the field, providing a platform for discussing the themes and changes within the tech sector, such as the impact of interest rates on startup funding.

💡Software Engineer's Guidebook

The 'Software Engineer's Guidebook' is a book written by the speaker, which likely offers guidance and insights into the profession of software engineering. While the script does not detail its content, it serves as an example of the speaker's authority on tech-related subjects and possibly as a resource that influenced the perspectives shared in the video.

💡Tech Industry

The 'Tech Industry' is the overarching theme of the video, referring to the sector that encompasses companies and organizations involved in the development, production, or sales of technological products and services. The script discusses various changes within this industry, such as shifts in the job market, VC funding, and the impact of interest rates on tech startups.

💡Interest Rates

Interest rates are a critical financial instrument discussed in the script, which have a profound impact on the tech industry, particularly on startup funding and investment decisions. The speaker explains how low interest rates have historically fueled investment in tech startups, and how a rise in rates can affect this dynamic, leading to a shift in the industry's growth patterns.

💡Venture Capital (VC) Funding

Venture Capital (VC) funding is a key source of finance for startups and is discussed in the context of how it has been influenced by changes in interest rates. The script suggests that the increase in interest rates has led to a decrease in VC funding, as investors find safer and more profitable options in traditional banking systems.

💡IPOs

IPOs, or Initial Public Offerings, are a significant event in the financial life cycle of a company, allowing it to raise capital by selling shares to the public. The script notes a decline in the number of tech company IPOs, which is indicative of a broader economic trend and has implications for the liquidity and growth of these companies.

💡Job Market

The 'Job Market' in the tech industry is a central topic in the script, with the speaker discussing the shift from a hot job market in 2021 to unexpected layoffs in 2022 and beyond. This change reflects broader economic conditions and has direct implications for professionals in the tech sector.

💡Blue Sky

Blue Sky is mentioned as a Twitter competitor and serves as an example of a small team moving quickly in the tech industry. The company's rapid growth with a small development team is used to illustrate the changing dynamics of team size and productivity in the tech world.

💡Instagram

Instagram is cited as a historical example of a startup that grew rapidly to millions of users with a small development team, similar to the pattern seen with Blue Sky. The comparison highlights that while the tech industry is evolving, some patterns of growth and development remain consistent.

💡Kent Beck

Kent Beck, one of the founders of the Agile Manifesto and a prominent figure in software development, is referenced in the script. His insights on the cyclical nature of changes in software engineering practices, such as feedback loops, provide a perspective on the historical context of the industry's evolution.

💡Full Stack

The term 'Full Stack' is used in the script to describe a software development approach where developers can work across multiple parts of an application, from front end to back end. This approach is becoming more popular due to its efficiency and the ability of certain technologies, like TypeScript, to facilitate such cross-functionality.

💡Monoliths

Monoliths refer to a software architecture where all the application's functions are contained in a single, deployable unit. The script suggests that monoliths are making a comeback in the tech industry, possibly due to the efficiency and simplicity they offer, especially in the context of smaller or stable teams.

💡Shift Left

Shift Left is a concept that refers to the practice of moving certain responsibilities, such as quality assurance and security, earlier in the software development lifecycle. The script indicates that developers are increasingly taking on these responsibilities, which can lead to more efficient workflows and a focus on preventative measures.

💡AI Revolution

The 'AI Revolution' is a term used to describe the current wave of technological advancements centered around artificial intelligence and large language models. The script suggests that this revolution is happening in a high-interest rate environment, which contrasts with the low-interest rate conditions that accompanied previous tech booms.

💡Career Security

Career security is the idea of focusing on maintaining one's relevance and employability over time, rather than relying on the stability of a single job. The script emphasizes the importance of career security in the current tech landscape, where job security is less predictable due to economic fluctuations and industry changes.

Highlights

Introduction of the speaker, G, known for writing 'The Pragmatic Engineer' newsletter and 'The Software Engineer's Guidebook'.

Discussion on the rapid change in the tech industry, especially the shift in small teams building faster solutions.

Case study of Blue Sky, a Twitter competitor, showcasing how a small team achieved significant user growth quickly.

Comparison of Blue Sky's growth to Instagram's early days, drawing parallels between the two in terms of development speed and user acquisition.

Insights from Kent Beck on the cyclical nature of software engineering, particularly the lengthening of feedback loops.

Analysis of the job market in 2021 being the hottest in tech history, followed by unexpected layoffs in 2022.

Observation that layoffs were not limited to non-profitable companies, as even profitable companies like Meta and Amazon initiated layoffs.

Venture Capital funding saw a significant drop post-2021, impacting the amount of money available to startups.

IPO numbers dropped drastically in 2023, affecting exit opportunities for employees and investors.

Big Tech companies, despite record profits, continued to lay off employees, indicating a change in the industry's approach to growth and cost management.

The Federal Reserve's interest rate hikes and their impact on inflation and the economy, and how they indirectly affect the tech industry.

The connection between low-interest rates and the startup boom, suggesting that the tech industry's growth was partly a bet on interest rates.

The smartphone and cloud computing revolutions coincided with the low-interest rate period, enabling numerous startups and tech advancements.

Current AI revolution happening in a high-interest rate environment, which may affect its pace and nature compared to past tech revolutions.

Shift in software engineering practices towards more efficient and 'boring' technologies due to financial constraints.

Prediction of monoliths making a comeback due to the need for efficiency and less organizational complexity in startups.

Emphasis on full-stack development to reduce team size and increase the speed of product development.

The role of TypeScript in enabling full-stack development and its adoption in various startups for cross-platform compatibility.

Shift of developer responsibilities to include more project management and security tasks, indicating a change in the software engineering role.

Advice for software engineers to become more business-minded and focus on career security rather than job security in the changing tech landscape.

Final thoughts on the tech industry's future, emphasizing the importance of adapting to change and viewing it as an opportunity rather than a threat.

Transcripts

so good morning everyone finally sorted

the screens it's great to be here I'm G

thank you for the introduction Jose and

I am most well known right now for

writing the pragmatic engineer which is

the newsletter that does dive into big

Tech and startups and I do talk with

people working at these companies and I

also wrote the book the software

Engineers guide book and before I

started this newsletter I I worked at

tech companies so I worked at Uber sky

scner Skype I like to say Skype but it

was actually Microsoft uh at the time I

I got to work on the Xbox one which came

out a bit more than 10 years ago now and

and at JP Morgan and I was a software

engineer for about 10 years engineering

manager for another five and I kicked

off uh this newsletter where where I'm

now writing about the stuff that I've

been

doing but today we're going to talk

about

change and we're going to talk about

we've seen a lot of change lately in the

tech industry more than usual but we're

going to talk about a specific type of

change change that feels like it's a

very new type of change but it's

something that we actually might have

seen before at least people who have

been in the tech industry for a long

enough time and let me give you one

example to start with so these days

we're starting to see small teams move

faster build solutions kind of faster

than they would have nor normally done

in the past and this kind of makes sense

right like we have better tools we have

better knowhow more seniority an example

is Blue Sky a Twitter competitor it's

it's nice that we we mentioned Twitter

you know like a lot lot of people I

think heard about me the first time when

Twitter was in turmoil and I managed to

talk with people who are working there I

no longer know anyone who's working

there by the way even though I know a

lot of people but blue sky is one of the

The Challengers to Twitter these days

and what they did is they started in

2022 so almost two years ago that's when

the company was founded they had one CEO

J uh and two developers uh they started

to develop a mobile app 6 months later

with two developers only one developer

was developing an iOS and an Android app

they did a soft launch one year ago in 6

months they got to million users and

last month they were at 5.5 million

users and they have 12

developers and this is kind of

impressive in the sense

how what a small team launches this kind

of uh this kind of application usually

most companies have way more Developers

for for similar scale but we've seen

this before haven't we this is not

entirely new I mean here's an example

from 2010 from a different startup they

started mobile development they got to

million users in the first year then to

5 million 10 million then 30 million and

in 2 years they were at 13 developers

and of course I'm talking about

Instagram which which is one of these

well-known stories and if we we compare

the two together it's a very similar

timeline in terms of when I just look at

the number of developers and I mean

Instagram got some more users but both

of these companies built an IOS app an

Android app and and a website and

obviously the backend services and

enough scale to handle those millions of

users in the same time period but the

interesting thing is it should have been

a lot easier in 2022 I mean in 2010

building native house was really harded

yeah so I guess we kind of have seen

this

before so what what else is familiar

from from earlier times and I I reach

out to uh a friend Kent Beck he's

the one of the Azure Manifesto Founders

um he's been very involved in tdd in the

2000s he's just published a book

recently called tidy first and he works

at a company called mechanical Orchard

where they help companies migrate their

cobal code using AI onto modern code

which is which is really cool so anyway

ask Kent Hey Kent like you've been

around in the industry for like working

in the software industry for 40 years

you've seen a lot have you seen some

changes in software engineering where

you feel they've happened before and

Kent is like oh yeah I I've seen plenty

here here's one feedback loops are

getting longer and I was like what do

you mean what kind of feedback loops

like deploying to production like

responding to to like bug requests or

something he's like no every imaginable

feedback loop what I mean is and this is

him saying it if if as a team we made a

mistake we don't really want to know

about it about it let it be someone

else's problem it's not our teams I was

like oh really that's what you're seeing

he's like yeah there's a lot of excuses

for it but it all seems like BS to me

and he tells me like this was like this

in the 2000s as well he's like I don't

know why but it's just going back to

where it used to be I was like huh

that's interesting so seems we we're

seeing a couple things that did happen

before but today we'll start by talking

about what is happening right now

then we'll talk about the new reality of

of things and then we we'll we'll go

back to like where did we see this

before and

why so let's start with what is going on

what is going on in tech industry and we

we've seen change I'll I'll talk about a

few different areas the job market VC

funding IPOs and big Tech so on the job

market in 2021

it was looking back it was the hottest

Tech job market ever like probably in

all of Tech History where if if you

wanted to get a job that was the time to

to get a raise to get a better

opportunity and to give an example of

how crazy this was here's a CTO at a

scale in Germany back in the end of 2021

telling me this that our interview

process is short but we're still seeing

people drop out because they have

multiple offers we've lost a person that

went to Twitter to work remotely this

was when Twitter announced remote work

forever

before it was reversed a few years

later and the competition has

intensified with silicon valid companies

allowing remote work and every single

company this was a well-funded scale of

they raised I think tens of millions of

of Euros or dollars they were struggling

to hire and big Tech was struggling to

retain and everyone was struggling to

hire and it was so good to be on the job

market it it was it was really good to

shop around and uh we we we've seen

reports of this in just in in February

2022 the New York Times Al reported on

tech companies facing this hiring

crisis but then out of almost nowhere in

just two months later we started to see

some really unexpected layoffs seemingly

out of nowhere first fast the oneclick

checkout startup that raised $100

million a year ago they just went

bankrupt pretty much overnight bolt one

click checkout did layoffs Clara buy now

pay later they also let go I think 5 or

10% of Staff instant delivery apps fex

cyber security they all start to do like

5 or 10% layoffs and it didn't really

stop in in the fall of

2022 there were just more startups and

scals letting go I think stripe let go

more than 10% uh we had lift we we we

had a lot of startups but there was one

thing that kind of connected all of

these all of these companies were making

a loss so I mean we could kind of put it

together we're like well okay I guess

it's not great to have layoffs but these

companies are making a loss clearly not

able to raise money I mean you know that

kind of makes sense right like you know

and the the thinking back then was like

well maybe just beware if you're not

working at a company that makes profit

like working at a profitable company

should be fine and then a month later

this happens meta extremely profitable

company they're posting close to record

profits and they let 10% of Staff go

133% 11,000 employees and a few months

later every single other profitable

company publicly trade of Amazon mic

Google they do the

same so so and when we look at the the

the actual layoffs by number on this

website called layoffs.fyi there was a

huge spike in 2023 so something was

happening there and it wasn't just

non-profitable companies but it wasn't

just a job market VC funding up to 2021

it it was just going up it was going

this is every year from 2011 to 2021 it

was going up up up and a huge jump in

2021 and after

2021 there was just a draw downwards

this is data from pitchbook who who

gather who are one of the best sources

for for this

information and in 2000 in right now

last quarter in 2024 we are at 2018

levels so it's kind of like we're seeing

less Venture Capital less money going

being able to go to

startups and it's it's it's not just the

job market and Venture Capital but IPOs

companies going public like this is

companies going public is a big exit

opportunity for people who work there if

you have shares they're going to worth

be worth something and it's also a good

big one for investors the more companies

go public the more money they have to

reinvest again in 2021 huge spiking

companies going public this these are

the the blue ones are the public listing

again from from pitchbook and in 2023

this number dropped incredibly and and

we only we saw Zero Tech IPOs in 2022

and only three in 2020 23 and now we're

seeing a couple more but again it just

really went up and down and finally for

for big Tech some of the largest tech

companies this is where it gets really

puzzling they big Tech did large layoff

in

2023 where where they let go a large

amount of people and we could justify

that saying that was the pandemic they

over hired and they had to let people go

but now just this January and February

in this year they all posted record

profits they were all doing very well

financially and they still went around

and did more cuts and Google

specifically is a really good one to

look at because it it just highlights

the seemingly doesn't make sense so

Google was founded in

1998 and I i' I've marked the layoffs

with Reds whenever they had Mass layoffs

in 2008 they with the financial crisis

Google got worried and they let go of 2%

of of of their staff about 300 people uh

they had one layoff in 2013 where they

bought motor and they let a lot of

Motorola people go but not Google

employees or the ones that were at

Google and then nothing for 15 years

there was no layup so if you looked at

if in 2022 you looked at Google it it

was the safest place to work they had

one Mass layoff which was a very small

one in the financial crisis but nothing

else and then in 2023 they let go a 6%

of staff and in 2024 they're now seem to

be doing layoffs again and this is just

very strange because Google has been the

been awarded many times the best place

to work in TCH why were they doing this

it's it's it's pretty puzzling so to sum

it up what we're seeing is less VC

funding fewer IPOs big Tech having

record profits and still laying off and

the job market just getting

tougher so why why is this all

happening something clearly changed

around 2022 and 2023 and yes the the

pandemic was easing the lockdowns were

were ending that is clearly one part but

as I look through the data as as I talk

with people as I talk with CTO and

Founders on why they're doing this thing

it was something

else I I I found this article as as I

kind of revers researching in the middle

of 2022 the fed the Federal Reserve

which is like the central back of Bank

of the US if you will by by a small

stretch they they did an interest rat

that was the largest in 28 years and you

know this is finance news we're we're

we're Tech conference we're software

industry why am I talking about interest

rates are we really going to talk about

interest rates right now yes we're

really going to talk about interest

rates right now so it's going to be

important for us to understand why

interest rates are import are are

affecting Tech in the end in the start

we need to understand what why interest

rates impact inflation because the FED

did a a raise in order to combat the

high inflation in the US back then it

was about 8% in the US and and they

wanted to bring it down

so why would raising interest rates help

reduce inflation well I I took this

quote from uh the BBC who talks about

the UK Central Bank fighting inflation

which applies to the US to Hungary with

with with with M to to EU with the

European Central Bank so this is from

from the ABB quote the bank of England

so and any Central Bank really moves

rates up and down to control inflation

in the country and inflation means the

increase of prices as we know over time

when inflation is high the bank may

decide to raise rates as well but why

would raising rates do anything with

inflation well when you raise rates so

when the Central Bank raises rates

everything goes up the the price of

taking out of mortgage goes up so fewer

people are going to buy houses the price

of credit goes up so interest on your

credit card goes up so you might think

about doing it as well and if you leave

your money in the bank before you got

nothing or like

0.25% now you might get three or four or

5% so you're probably going to leave it

there to accumulate and spend less so

demand in the economy will go down

people will spend less and when people

spend less prices will not go up as much

because it's it's silly to raise prices

at that time because no one's going to

buy it and then the bank monitors this

whether they hold rates or whether they

raise it and it's a balance to to raise

prices against risk of damaging the

economy so with with this Finance I

guess less than out of the way this is

this is important to see because there

is a big question why rates are so high

globally so let's go back to rates so

this is what it was like in the US the

the the rates it was

0.25% and it went to 5% in less than a

year this was a pretty big change but

let's zoom out let's zoom out 15 years

what what were the rates like in in the

US and it was from 2009 it was almost

zero all the way to like 2022 there

there was a small raise you can see in

steps it went up to like 2% in 2017 and

then it dropped down again because Co

started and they wanted the the bank

again wanted to simulate the economy but

let's zoom out even more let's zoom out

50 years or as long as we can as long as

we have data in the US this is all the

data we have from

1955 all the way to here so like I guess

you know modern American interest rate

history and something really interesting

happens when we look at the only times

there were low interest rates which

means 1% or below in 1958 it was 2

months

in 2003 after the Doom bus it was 2

months and then we had this 9 years

straight from 2008 and then another two

years so like for 15 years we've had

very low interest rates and this has

never happened before ever the rates

have only been for a few months and now

we were here for 15

years and it's not just the us if we

look at Canada if we look at the EU if

we look at the the UK it's all the same

the rates went down globally

everywhere so okay but why still why

should we care like we're in Tech we're

we're not in finance I mean this I'm

sure you enjoyed this this interesting

observation but now let's get to like

how it affects

Tech interest rates in startups are

actually connected and this is not me

saying it this is Matt LaVine uh

Bloomberg analyst who writes the money

stuff uh daily news that are in in

Bloomberg and this is a quote from him

he's saying startups are a low interest

rate phenomenon when interest rates are

low everywhere a dollar in 20 years is

as good as a dollar today so and this

this means that if you have a dollar and

you put it in the bank in 20 years with

the zero indust rate you will have a

dollar in the

bank and so Starbuck's business model is

I will lose money for a decade building

artificial intelligence and then make a

lot of money in a far future in 10 or 20

years that sounds pretty good because

what else are you going to do you're

going to just put your money in the bank

and you're not going to get an interest

interest instead you put it in a startup

and you're not going to see anything for

10 or 20 years and you might see a

bigger turn or you might lose it all you

do this with 100 startups you know

you're a big fund you invest $100

million and over 10 years you're not

going to see anything and then you might

turn that 100 million to 150 or 200 or

250 million and that sounds pretty good

because the alternative is make no

interest so matth line continues if some

charismatic Tech founder have come to

you in 2021 I'm going to revolu

Revolution the world via AI Robo taxis

flying taxis flake taxes or

blockchain it might have been unnatural

to reply nah What If the Fed rais is

raised by

0.25% and because Tech was supposed to

be an industry with this radical vision

of the future of humanity and not a bet

on interest rates turns out it was a bet

on interest rates all

along and this when I read this I I read

this I think maybe 6 months ago at first

I was like no no way no way

it can be but but it actually is so what

happens when the rates go up like like

like they have they go from 0 to 5% well

what this means for VC funding you're

just going to see less VC funding

because VC is funded by Pension funds

heed individuals and all of them are

like huh I could just put up my money

into the bank for 5% if I have $100

million and there's a 5% interest rate

every year I make $5 million in 10 years

I make $150 million in 10 years by doing

nothing I I turned that 100 million into

150 million with zero risk or virtually

zero risk so VCS are going to have a

hard time convincing them to give us

some dardos where in 10 years you're not

going to see anything and when every

year you're going to receive a return

there's going to be fewer IPS initially

because a lot of tech compan if you're

Tech IPOs could because a lot of the

tech companies are loss making and no

one wants to give money to loss making

companies in a in a a high interest rate

world there's big Tech will have to

generate more profits than before cuz

everyone cares about more profits more

profits cuz you can get more profits

just by putting your money in the bank

and then the job market will just be

tougher because of all this but it's

it's not just interest rates something

else also happened in 20072 2008 in 2007

this came out the iPhone it's pretty

interesting because that's also when the

low interest ratees started almost at

the same time I think maybe maybe a year

after but in 2008 Android came out and

then it wasn't just smartphones which we

know revolutionize everything but in

cloud computing a AWS launched in 2006

as your Google Cloud 2008 and the timing

is pretty darn incredible I I just

mapped it out together the smartphone

key events and the cloud key events they

almost all happened right as interest

rates went to zero so not only did we

have a low interest rate period where

more Venture Capital will flow into

startups we actually had more reason to

invest in startups because suddenly the

smartphone Revolution birthed so so many

huge companies today Spotify was founded

in 2006 but they really took off with

the iPhone and an Android WhatsApp

Instagram Uber snap they all exist

because of smartphones if it wasn't for

this Smartphone Revolution who knows if

they would be around and there's

thousands of more and Cloud Computing

Made a lot of startups just a lot easier

or more profitable Netflix so these are

all large AWS customers Netflix Airbnb

stripe twitch without cloud computing

they would have had to build their own

data centers it would have been slower

more expensive they would have not been

able to grow as fast and again thousands

of more companies were

enabled but it's been 15 years and I

think it's fair to say that the

smartphone cloud computing Revolution

kind of maybe ran its course because now

15 years later building a mobile app or

a cloud it's it's just not a huge

Advantage I mean it is but it's what

everyone does so to recap why all these

changes happening now it's it's

because mostly of the low interest rates

but it's added interest it was really

interesting that when low interest day

started we had two massive technology

revolutions kick off now these days

we're seeing the AI Revolution kickoff

so I I I I marked the Chad GPT launch in

November 2022 we see AI is really hot

and this could be a very interesting and

promising Revolution but it's now

happening in a high interest rate

environment not a low interest rate

one

so this is what's happening but what is

a new reality and I'll talk about what

it means for software engineers and for

engineering practices for software

Engineers it's just tougher to get a job

there are just fewer jobs postes so

these graphs start from 2020 and they

end in

2024 their job listing a hacker news on

indeed in the US UK and Germany you can

see that the job number of J job posting

peaked in 2021 2022 and they're now kind

of back to where they were in 2019 2020

so there are fewer jobs out there to

apply to then just two years ago for

example and there are more applicants

for jobs so this is I talk with the

startup a scaleup in the US called

Supply Pike they're based in Arizona I

think there are around 50 or 100 people

uh they require people to work hybrid so

you need to either move to Arizona to

the to the the sorry there aranas uh you

need to move there or or be willing to

move there so you know it's not a full

remote company but for one posting for

every One open headcount they get 192

intern applications for software

engineering 164 software and 37 senior

engineer and their CTO shared some

observations with me this January they

said that intership applications doubled

since last year software engineering

applications tripled since last year

more big Tech applicants from Facebook

Google Etc senior Engineers are no

longer kind of shopping around

interviewing and then choosing the best

one they're just taking the the first

one and they're saying that from their

perspective compensation after returning

back to normal which is always gives

pleasure to hiring manager it just means

that it's more it's it's harder to

negotiate a higher compensation

package we also see fewer developers

quitting so this this January uh with

with the help of of of a of of of

Dominic Jack Weston who's who's part of

founder keeper CPO Forum he asked around

how are you seeing basically people

quitting at your company 50% of EU

Founders said no change but another 50%

said they see a lot fewer people

quitting and with fear developers

quitting there's just less hiring

because you need to you know back fill

fewer people another thing that we

should expect as software Engineers is

just slower career growth and this is

just because when there's less hiring

either because of back filling or compan

is not growing as much there's just less

need for for more more Senior Elite

positions you don't really need if you

have a team of

10 and you have a pretty good

distribution of seniority you will not

need that many more tech leads or staff

Engineers from budget perspective we

never recognize this because until now

those teams were growing this year was

10 next year 15 20 there was always room

to get promoted but there might not be a

business reason so there's going to be

fewer

promotions and here's the thing a few

companies I think are kind of preparing

for this new reality of fewer promotions

and Shopify is a good example I I'll

just talk you through I I I wrote this

article just a few months ago asking is

Shopify responding to higher interest

rates by Chang changing their promotion

process which sounds pretty cheeky but

it's actually a legit question here's

what Shopify did before they had levels

from C1 to like C10 C6 was senior

engineer I think C7 maybe staff engineer

and you know you get promoted from C

from C4 C5 C6 it's it's just a leveling

framework that was the way the only way

to get promote it they changed this they

introduced a Mastery score from one to

50 from zero to 50 on each levels for

like C6 C7 and now they're saying

there's two ways to advance your career

you can either uplevel in your Mastery

so go from 30 points on on C7 to like 40

points because you're getting better at

your craft and going higher by the way

it means a pay rise it it does mean

bonus it it means all those things or

you can change your scope go from C7

team lead to C8 I think a discipline

lead but then your Mastery drops and and

they're emphasizing that's now a

different job like and you know you

should think about do you want to do

that different job now what this is

really preparing for I talked with I

also thought about it and and my

thinking was that I think they're kind

of watering down the old meaning of

promotions because they're probably

expecting to see a lot for your

promotions and I I talk with the manager

at the company who actually agreed with

this but at the same time I think what

Shopify is doing is brilliant because I

mean it's it's not great to work at a

company and you know like until now you

saw promotions every one or two or every

like two or three years and now it's

going to be you know four or five years

with no promotion but the Shopify people

are are going to advance every 6 months

their Mastery will increase they will

get small bonuses they'll get that

recognition so I think it's really smart

from what they're doing and I think more

companies will will follow or companies

that that look ahead and they see that

are going to be be hiring L they should

follow so Shopify I think will keep

their their Engineers happier this way

so this is the new reality for software

engine it's tougher to get a job and

promotions are harder and the career

growth is

slower what does this mean for this

these change mean for software

engineering

practices clearly when we're we're

looking at

a at a time where there's less money

more constraints more focus on

efficiency we should be choosing more

boring technology that get gets the job

done right and I I made this comic to

illustrate this point where you can

choose either to you know choose the

technology to solve the business problem

it's proven and and good and it's

working you know may that be Java or p

HP

or

jQuery or you can just choose the really

really cool technology right you could

do Rust you could do nextjs you could do

kubernetes although I'm I'm no longer

sure where that goes and I I just wanted

to make this funny point that this

Choice should be obvious that you should

press the business button but the more I

looked at this

photo the more I felt

I don't really want to press the I

actually want to I really want to press

the the new technology because that's

how we learn that's what's fun the new

technologies are usually there for a

reason they usually have better

performance they they work around the

limitations of of of the other stuff and

they're the future so I mean I I want to

say that we're going to see more people

pressing this left button just to solve

the business problem but I think most

engers will just say let's let's just

choose both let's let's press both at

the same time we'll use this new

technology in order to solve your

business problems

and you know this will still mean we'll

we'll try to justify how to use a really

cool new Tex but we'll also s we will be

mindful of solving the business problem

but the truth is we will have a lot more

pressure of software Engineers coming

from non uh especially from from the

non-technical people the business

leadership to choose the boring

technology because that will be their

preference it might not be our

preference but it will be theirs and

just to show the how different this used

to be just a few years ago what

technology choices during the zero

interace periods look like I'm going to

single out monzo here with a with a

slack message that their founder and CEO

sent to the team and and they actually

put it on a conference it's not not some

internal confence and this was in 2015

so in the middle of zero interace period

he went step one go step two

microservices step three who knows step

four

profit and this was actually shared on a

microservices conference in I think

2016 as the explanation of why monzo

shows microservices because after Uber I

think they have the most microservices

out there one of the most they have

thousands of microservices with 500

Engineers so it's like a couple

microservices per engineer they got it

to work for themselves but I mean if

this really was a reasoning that's that

raises some questions but I am glad by

the way that they shared this because a

lot of this was not just them a lot of

companies St like this right with CTO

even the CEOs really got bought into

this because what this meant don't

forget this kind of made some sense back

then it was really hard to hire software

Engineers even if you had the funding

you you struggled you needed to give

them something else like cool technology

so I think what this really said is we

don't we know this way we're going to

hire software engineers and they want to

conferences to talk about it and to hire

more software engineers and and they

succeeded but seriously uh one thing

that's going to change looking forward I

I've been talking to a lot of startups I

think monoliths are making their way

back yet

again it's it's just starting to become

trendy to start with a monolith and then

stick with the monolith I mean there's

one company that's been doing this for a

long time Shopify you turn into module

or monolith obviously but there is there

is some sense in this in the sense that

when you know you're going to hire a lot

of people for the next two or three

years you're going to double your team

every time microservices solves an

organizational problem if that's not

going to happen you don't really have an

organizational problem to solve so

monolith should be good enough but I

suspect that in a few years we'll be

going back but for now monoliths are

might just be the the new microservices

who knows

full stack is in full swing we've been

hearing full stack a lot but I'm hearing

it way more everywhere and and here's a

simple explanation why here's a typical

small team that that's building iOS

Android web and backend two backend

Engineers one web engineer one iOS and

one Android how does this look like when

you change your text tack a little bit

to something like react native or or

flutter or or or something else well you

can just actually have like I guess

three types of engine all who are full

stack one with a backend Focus one with

a web plusus backend one with a mobile

Focus I know I know there's KS on this

but you can produce a similar output you

can produce those iOS Android and web

applications and they'll functionality

wise they'll be similar and now you'll

have a smaller team less communication

from a manager perspective that's a

lower budget and one thing that's

helping this transition so if we compare

it to it's pretty obvious it's it's a

different number of people and again

smaller do move faster right but

typescript is is helping make this

transition I'm seeing so many startups

that have been started the past few

years who talk about how typescript

makes all of this possible Blue Sky the

company we talked about one of their I

guess Secrets was they use typescript

almost all the way the back end is in

typescript the front end in in

typescript the mobile apps are in

typescript it's using react native and

Expo and so all of their Engineers can

modify any part of it well I mean you

still need to know the domain but all of

their 12 Engineers modify the the back

end the mobile and the web this is

pretty incredible and it's not just it's

not just a blue sky a linear um the

popular product management solution

founded by Thomas arkman a former

colleague of mine at Uber he told me

this in in October I get remind me daily

how awesome it is to have just one

language types for the entire SE from

back end to front end it's safe to say

that our Tech sa is serving us well and

this is I'm not I'm not I don't want to

single out typescript but like having a

technology where your engineers can

contribute to the the whole sack is is a

good

one what one more thing that's changing

is developer responsibilities are

shifting left you're going to probably

hear shift left a lot on on on

conferences in the coming years and what

this mean is

before a few years ago or even a decade

ago we had developers write code and I

guess we had QA tested and we had Ops

deployed to production obviously this

has already changed at a lot of

companies where developers do all of

this thing so they write test and and

they they deploy it you might have some

platform teams that help with this but

we're now also starting to see more

things shifting left on developers

security some Sr tasks uh and and from

from the other side as well there's a

little bit of of project management so

like I don't think Developer jobs are at

any risk of you know like there's this

question of will AI replace software

Engineers which is see seems like a very

POS one test but I don't think that's

happening what is happening as a

software engineer we're going to be

doing a lot more of this work and there

will still be some specializ roles in

company security Engineers exist but

there will be fewer of these specialized

roles per 50 or 100 software

engineers and finally I think we're just

going to less Reinventing the wheel

we're going to see companies instead of

building your own platform solution that

we've seen so many companies do like

there there's this there's this there's

this like Open Secret pretty

much that in the tech industry every

single large company reinvents react

native

internally and we I've seen it we we've

done it at Uber it was kind of built

because you know react native wouldn't

scale or do or whatever we wanted to do

and then it was built for a couple years

rolled out internally quietly retire but

it happens everywhere and I think this

Reinventing will just stop will see a

lot more buying softwares or adapting

open source Solutions so this is the

think the new reality for software

engineer practices more push for barding

technology monoliths becoming more

popular full stack becoming more popular

more shift left and L Reinventing the

wheel I mean and all of these are kind

of I guess practical or sensible so like

they don't seem too drastic I think the

only one you know we could get into

argument is like monoliths versus

microservices but but outside of

that not not that much and so for the

last part have we not seen some of this

before all this change and there is a

bit of a Deja with a do com bust I

talked with people who were working

during the Doom bus during 2001 so there

was a huge investment Splurge from like

1998 to like 2000 into all these

companies like web van which promised a

5-minute grocery delivery and I guess

you know they went bankrupt but like 20

years later we have instacart which

promises maybe a 30 minute or hour St

delivery but and and then there was a

big big big bust especially in Silicon

Valley people lost their job and it was

really really hard to get jobs and

here's quotes from two people who were

in The that time so here's quote from

someone who graduated in 201 saying I

was laid off by the time I graduated my

most of my friends startups failed and

we were all desperately looking for work

this she's a computer science major in

the US we were competing with

experienced Engineers who were also laid

off and Who start S every day we heard a

big startup collapse it was really

depressing and she said we accepted

anything part-time unpaid internship

just under the premise to build a

resumes and she pivoted from software

engineering to Consulting as a website

developer and then into a technical pm

and this is niia Henry she's now

director rangering at at Spotify in New

York and she told me that I think for

like five or six years she worked at

these like non-technical roles as a

software engineer cuz that was the only

way she could get that job and she she

went back into software engineering

later on and here's one learning from

the Doom but from someone who graduated

there uh Google s um and and this this

person said that the his learning was 20

years later always be on the revenue

side of whatever company you work for

make sure sure that they sell software

and don't use software to sell for

something else I mean this is this is a

way to say that if you work in a profit

Center your jobs jobs are are more safe

during u a time where there's a focus on

efficiency and going back to kenbeck I I

asked kenbeck what similarity he sees in

the 2000s where he already was working

for 20 years and now and he listed a

couple of things he's saying very

interesting things fixed specification

and upfront design are back and

iterating conly are just happening less

he's seeing that there's more handoffs

between like developers handing off to

QA or someone else it's a bit more like

oh we did our job we did it perfectly

it's you know like it's not our problem

now we don't want to be responsible

apparently he's saying seeing more

documentation people just document more

again potentially to like say you know

we've done our jobs perfectly like you

know don't don't don't bug us with this

and let's frequent deployments to prod

and just longer feedback loops and we

were kind of talking about why this is

happen happening and my theory is that

there might be this thing like when

you're working in an environment where

it's kind of stressful and you're kind

of fearing for your job and your manager

not really but you know you know you

could be let go any time if the company

does does well you want to do a great

job you want to show that you're you're

busy you're doing the best job so you're

you know you're going to document it

you'll hand it over and just's a bit of

less incentive to take risk to like you

know take that bug that is not your

stuff that you might not be able to fix

even though the customers want it to fix

because if you fail it might make you

look bad I'm not sure but it it seems

Ken Beck said that after do humas the

same thing happened like things slowed

down it went more into silos and it took

a while for it to ease up so this I just

want want to share because it's so

interesting and and this is what I think

I I I think there's a push to kind of

become focused or utiliz or or or to

make sure you look busy and then there's

just no time for like I guess slack to

do what when you're not as busy you

actually have time to step in and do all

these

things but what is different in 2024

versus in in 200 a few things are

differently in in 2000 the internet was

growing rapidly today Ai and and large

language models are growing rapidly and

here's the investment the percentage of

investment in all venture capital going

into AI uh by the middle of 2023 $1 in4

so 25% of all of VC investment went into

AI so clearly you know this is whatever

the internet was it looks like the a

like in terms of investment looks like

it's AI so it's different but in 2000

the tech industry was much much smaller

let me show you the seven largest

publicly traded tech companies in in

2003 uh uh and on on this list the ones

that are boldest so like Google was

number four Microsoft and and apple

number six and seven the others were

non- te companies and in 2024 the top

four are tech companies and actually

five out of the seven are tech companies

and they're they're way larger by the

way if we compare the Microsoft size

back then even in just a dollars they

tech industry has become massive it's

everywhere and I think the only question

is how much larger will it become it's

still growing but at some point that

growth will

slow

so as as as

takeaways what happened in the 2000s

after a big boom and then and then bust

it's probably going to happen now to

some extent we will probably have we're

already seeing the more doers for

planners when companies are are cutting

are doing layoffs and software

engineering engineering managers are

often targeted a lot more because teams

are being flattened I I know some

startups that let go a lot of their

middle management or director of

engineering but they they didn't touch

software Engineers because they know

what they're the doers and so for for

engineering managers becoming Hands-On

and a lot of engine managers moving back

to Tech lead positions to be you know

more doers and planners be seen less as

an overhead We Know by the way there's a

reason for the overhead but in in this

scenario a lot of companies are kind of

ignoring it there's a lot of doing more

more with less

and and uh and

and a lot of full stack uh push and just

using boring technology so getting a job

is more of effort so you just need to

plan for it and here's some advice your

network is becoming a lot more important

whether you have it or not if you have

it it's good to rely on if not it's good

to try to build it referrals are more

important applying early is becoming

important because there's so many

applications coming in that sometimes

only the the first I don't know 50 or so

are being looked at investing unpaid

time in interviews like take homes it's

going to be just the norm uh and it's

becoming a bit of a numbers game you

need to apply to a lot of players

placees a he

back one big change I think one one

thing that will help greatly is becoming

more I guess business or product minded

which which means just understand the

business model of your company how are

they making money or or are they even

making money or can they can they be

become profitable at some point build a

relationship with your product manager

who should be really good at

understanding it and figuring out how

you know we can transform that and then

you know just just talk with people

outside of engineering customer support

research come up with ideas on how you

can help the company the software

Engineers who can help company make more

money or spend less money are really

really valuable and I think you most

companies are going to be looking for

for those kind of people I wrote an

article about this called the product

mining software engineer just Google

this and I I share a couple of more

advice there

insights and my final takeaway is just

in this environment I think you we

should all aim for career security not

job security and this is a quote from

someone thank you for the clap and and

and there this is for from here's a

quote from someone who on under one of

my posts commented uh her name is alen

May she said it's always we're preparing

for the possib job Cuts I was part this

CH saying part of layoffs in 2001 and

two where there were four rounds one for

quarter and it took our organization

from 180 people to 35 people and from

that experience from laid off she well

also laid off I learned that there's no

such thing as job security I can either

promise it as a manager cuz now she's a

manager or expect it as an employee what

I can do what all of us can do is have a

career security keep learning keep

working on challenging projects at your

company and keep working with great

people and this is the most you can do

and she said that after she she got let

go she did find different positions

again hopefully this will not happen

with most of us but it's good to keep in

mind for this time so what

happened what happened in 200 like to

happen now getting a job is more

difficult becoming product minded is a

good strategy and aiming for career

security as well

and to close with I just want to mention

the elephant in the room and by the

elephant in the room obviously I mean AI

I mean I like to I'm I'm liking this

term less and less artificial

intelligence because it suggests that

this int I just like to say what it is

it's large language models that's what

we under

Ai and I don't think that AI will

replace developers there there's this

question going around it's really

popular it gets it gets trending on

social media but I do see that it makes

developers using tools more productive

it makes me more productive when when I

get a co-pilot or I use Chad GPT for

some of my brainstorming some of my my

patterning picking up technologies that

I I'm not as familiar with it really

makes a big difference so my suggestion

just make these tools your ally

understand how how they work there's a

you you can uh Google an article from

Steven wol from called how does chat GPT

work in in a few pages he he explains

this really well it's a very simple

underlying technology using a lot of

data try other tools co-pilot Codi any

other thing that you can get your hands

on just get your own opinion on it

improve your own workflows because there

it's just an assistant it's it's just

like uh your ID autocomplete is an

assistant these tools will be an

assistant and with these tools you

probably can pick up new Frameworks

faster I certainly do and just avoid the

hype so like see it for yourself see

what works there's way too much hype out

there most from people who who don't

write code with these tools and don't

know where it's helpful and where it's

not make them your

Ally and finally as as closing don't

forget like there's a lot of change

right now but this change even though

for for many of us who have not been

working professionally in 2000 it's not

happening before it has happened in

Industry before and work and even though

it feels like there's some downward

spiral actually what's happening is

we're going back to what it was like

before in 2018 or 2019 or even the 2000s

and you know the tech world was pretty

awesome even then so I believe the tech

world will continue to be a great in

interesting industry to work in and even

though it's it's way less predictable

but this is what makes it part of the

fun and part of the challenge so thank

you for your time

[Applause]