DEV Community: Daniel Jarjoura

Why software engineers should become CEOs

Daniel Jarjoura — Thu, 03 Sep 2020 09:39:39 +0000

This essay was originally published on TLT21

I recently read a somehow controversial article on why CEOs are failing software engineers. In the article, software management theorist Gene Bond argues that since business-educated CEOs only learn about financial and business management, they can't understand the creative management necessary to discover and realise new works of value.

New value is a function of failure, not success; and, much of software engineering is about discovering new value. So, in effect, nearly everything [they] are taught as a business major or leader is seemingly incompatible with software engineering

But what if CEOs were former software engineers? Would they still fail the software engineers they lead? Data seems to show otherwise when you know that eight of the ten most valuable technology companies have CEOs who also are engineers. Jeff Bezos, the richest man in the world, was exposed to tech and coding at a young age. Bill Gates, the second richest, fell in love with programming at 13 years old, and Mark Zuckerberg, famously kept coding Facebook while being CEO for years. Still, the majority of software engineers think they can only become CTO and have little interest in business.

Top-performing CEOs have engineering degrees
Every year since 2014, the Harvard Business Review has published an annual ranking of the best-performing CEOs in the world and, for the past three years, there have been more CEOs with engineering degrees than MBAs, including this year's number one, NVIDIA CEO Jensen Huang. One likely explanation for this trend is the increase of technology CEOs on the list, as the industry has seen exponential growth in recent years. But maybe there's something else.

First of all, software engineers know how to set up the right environment for fellow developers because, well, they've been there. They know what developers look for in a job. It's not surprising that twelve out of the twenty tech CEOs most favoured by their employees have an engineering background or coded at some point in their careers. As Stack Overflow and Trello founder Joel Sposkly puts it: "building the company where the best software developers in the world would want to work [leads] to profits as naturally as chocolate leads to chubbiness or cartoon sex in video games leads to gangland-style shooting sprees". After all, he did build two multi-million companies that considerably impacted the software ecosystem.

I also believe that having a software engineering mindset, even if self-taught, allows CEOs to manage their companies very differently than financially focused peers.

Approaching business processes like programming tasks
While Microsoft valuation hardly moved during Steve Ballmer's fourteen years tenure as CEO, it grew over 200 % since Satya Nadella took over in 2014. The difference? Steve Ballmer was a sales-oriented business school drop-out, while Nadella is a former software engineer turned executive.

So what does Nadella, and other engineers-turned-CEOs have in common? Well, suppose we take aside the ability to understand technology and have a long-term vision about it. In that case, I believe one of their key attributes is the ability to approach business processes like programming tasks.

Do you know what programmatic marketing, growth hacking and the lean startup have in common? They're all business methodologies that were created by engineers. They leverage logic and processes instead of intuition; they're data-driven and promote iterative experimentation. And, when you go beyond the buzzwords and watch the results, they're behind the wild success of tech companies like Dropbox and Slack (whose CEOs are, by the way, former developers).

Another trait of software engineers is their inclination to automate recurring and tedious tasks. As Bill Gates is known to say, "I always choose a lazy person to do a hard job, because a lazy person will find an easy way to do it." And software engineers are known to be lazy. So, as CEOs, they're more likely to look for scalable solutions through automation, rather than merely hiring more human beings. Some CEOs take this thinking to another level like GitLab CEO Sid Sijbrandij, who started the company's famous handbook because he didn't want to repeat himself for every batch of new hires.

What's even more interesting is when software engineers become CEOs of non-software companies. In this case, they run their firm like a software company, making software the cornerstone of their strategy, like Elon Musk with Tesla. One key component of electric automaker Tesla's success, as spotted by Nathan Furr and Jeff Dyer, is that "it introduced a new hardware and software architecture. For example, a Tesla has more software than the average vehicle and it is integrated around a single central software architecture. Although most gas-powered cars have software too, they typically have less software and operate on a different architecture making it more challenging to imitate Tesla's ability to update software and optimise vehicle performance."

Last but not least, they understand like Jeff Bezos that "failure and invention are inseparable twins." In his famous letters to shareholders, Bezos often shares that what makes Amazon successful is their ability to accept the failed experiments necessary to get to invention.

Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten [...] In business, every once in a while, when you step up to the plate, you can score 1,000 runs

Why so few software engineers want to become CEOs
So if software engineers can become excellent CEOs, even in non-tech businesses, why so few of them make it to the top? According to a 2019 Forbes study, still, 64% of F100 CEOs had a business-related undergraduate degree. I don't think it's just about software engineers' dislike for business. I believe it's also about how few of them consider the CEO position as a career choice. They're always told that if they're interested in management, the highest possible job is CTO. When hiring software engineers for a startup job, they first think they should be CTO.

Of course, not everyone wants to start a startup, the surest way to become CEO. But with more and more tech CEOs promoted from within after technology management roles, it's a choice to consider.

Passion economy opportunities for software engineers

Daniel Jarjoura — Wed, 02 Sep 2020 15:17:14 +0000

This essay was initially published on TLT21

Back in May 2018, I was experiencing one of the worst moments of my life. My business was not profitable, with debts piling up. Some of my employees hadn’t been paid for months. I had no salary myself while I could have been making over 100K€ working for someone else. We did have customers and decent revenue, but it was not enough to pay for expenses dimensioned for an exponential growth that never came. I should have quit and taken the first job around, but couldn’t resolve to work for someone else, mainly because I was able to acquire customers and generate revenue. So I did something crazy.

I let everyone in my team go and decided to keep running the business on my own until it became profitable. Around this time, I stumbled upon a statistic that completely changed my mind on one-person businesses. According to Elaine Pofeldt, the author of The million-dollar one-person business, the number of ultra-lean, one-person businesses that are reaching and exceeding $1 million in revenue has been steadily growing over the past years. In 2015, 35 584 “nonemployer” firms brought in $1 to $2,5 million in annual revenue!

So while I was struggling to make a profit with a whole team, individuals were making hundreds of thousands, even millions, on their own. Two years and a few iterations later, I am now a fully functioning one-person business, making a more than decent income working from home, and a part of what is now called the Passion Economy.

The passion economy
Coined in late 2019 by former A16Z partner Li Jin, the Passion Economy is a new term used to describe individuals taking advantage of digital platforms to make money off their unique skills. Like Ben Thompson, the editor of technology strategy newsletter Stratecherry, who will be making an estimated $3 million in profits this year. Or like former high school teacher Rob Percival, who brings home $150,000 per month teaching web development online. And they’re not isolated examples. According to a study from Recreate of nine digital platforms, 17 million Americans earned nearly $7 billion in income from their independent creations in 2017, and this number is growing at nearly 20% per year. And this is not counting many other platforms, including e-learning platforms like Udemy.

Individuals have been trying to make money online for more than a decade (remember the “how to make money blogging” wave?). Why is now the moment for one-person digital businesses? I believe this is thanks to the following three trends.

People (and businesses) spend more online

Over the past decade, money spent online has been growing steadily. On top of e-commerce (which now accounts for 13.2% of total retail sales in Western Europe), consumers have also picked up the habit of buying much more services online, like music, movies, online courses, ebooks… What’s even more interesting is that they are also more and more trusting individuals over brands for online services. In the media space, while radio revenue has been stalling for years, new individuals (or small groups like Chapo Trap House) are now making millions of dollars in listeners’ donations.

Corporations are also more trusting individuals, with the use of freelancers increasing and taking root in medium-sized to large enterprises. According to data from freelancing platform Upwork, 53 per cent of hiring managers agree that companies are embracing more freelancers as compared to three years ago, and 64 per cent of freelancers found their customers online.

New monetisation opportunities for creators
Once upon a time on the Internet, the only way for individuals to make money was through advertising. It was (and still is) hard. To make $1,000 on YouTube, you need millions of views. To get an influencer marketing deal on Instagram, you need hundreds of thousands of followers. But fortunately for creators, new platforms are now allowing them to get paid directly by their fans through subscriptions or product sales rather than relying on ads or brand deals.

Platforms like Patreon or Buy Me a Coffee, allow creators to receive donations from fans or set up memberships plans. At the time of writing, there are now over 170,000 creators on Patreon earning around twenty million dollars monthly.

New digital platforms that highlight individuality
Unlike marketplaces who own the relationship with the customers and offer little room for creators to differentiate themselves, new digital platforms, according to Li Jin, “give providers greater ability to build customer relationships, increased support in growing their businesses.” Like using the indie-focused e-commerce platform Shopify that allows merchants to set up their online store and interact directly with customers, instead of selling on the standardised, mass-produced monolith Amazon.

These new digital platforms are accessible to everyone, they view individuality as a feature, not a bug, focus on digital products and virtual services (like newsletters, podcasts, online courses…), and provide holistic tools to grow and operate a business.

For example, Podia allows anyone to start a personalised online teaching business, taking care of video hosting, learning management and even offering multiple monetisation options like subscriptions and digital downloads, for $39 per month.

Opportunities for software engineers
If you’ve read this post so far, you’re probably wondering what’s in it for you. If you have a software engineering background, you might not be willing to start a comedy podcast or an independent online store (though this is how Shopify CEO Tobias Lütke got started). There are indeed multiple opportunities for software engineers to grasp in the new Passion Economy.

First of all, and most obviously, there are tools to make for creators. In her Unbundling Work from Employment essay, Li Jin identifies opportunities to build both vertical-specific platforms (like newsletter platform Substack) and horizontal platforms (like Gumroad). Venture Capital firm A16Z is currently quite bullish on Passion Economy platforms (they backed Substack and Run The World among others), and other firms will likely follow. Building SaaS platforms is also appropriate for bootstrapping.

There are also many opportunities for software engineers to become full-time creators while leveraging their popularity as developers, but the following three seem to be the most interesting:

1- Online Education: 34 of the 50 best selling topics on Udemy are technical topics (like Python, Web Development or Data Science). With the never-ending demand for developers and the need for older engineers to update their skills, the market for online technical education is growing at a fast pace. Teaching is an incredibly rewarding activity and allows you to maintain your technical level. It’s even easier to move into teaching when you already have a community that follows you, like React developer Kent C. Dodds who left his job to become a full-time educator.

2- Open-source software: did you know that just three developers have authored 73 per cent of Bootstrap commits?? In Working in Public, Nadia Erghbal points out how open source has skewed from a collaborative to a solo endeavour, with an increasing number of popular projects maintained by one or a handful of developers:

Open-source developers have more in common with solo creators on Twitter, Instagram, YouTube or Twitch, all of whom must find ways to manage their interactions with a broad and fast-growing audience

That’s why more and more open source maintainers, like Sindre Sorhus and Evan You, are turning to Passion Economy platforms to monetise their activity. According to his Patreon page, Evan You is making $15,485 per month to maintain front-end framework Vue.js.

3- Live coding: If I tell you Twitch, you will probably answer with something related to gaming streaming and eSports. But there are now many other streaming channels on Twitch, including programming. Jeffrey T. Fritz, a Program Manager for Microsoft, has 17,720 followers on Twitch and many more who join for is live coding sessions. Open Source authors Feross Aboukhadijeh and Kent C. Dodds (again) also have Twitch channels. While this trend is nascent, some programmers are taking the full-time streamer route, counting on fans donations, subscriptions and brand deals to make a leaving.