Knowing Who You Work For

For the past 30 years of my career, regardless of the role or my responsibilities at the time, I was always a coder. Focused on solving the problem in front of me, focused on turning requirements into useful software. Beyond the obvious “every job was different because every job was different” understanding, there are certain patterns, that in retrospect give me a better understanding of what some of those differences really were.

As a software engineer working in the industry, what does your company produce? What is the one thing, that core thing, that defines who the company is? Take Apple for example. If I were asked that question about Apple I would say, “Consumer Lifestyle”. That’s “who” Apple is, that is what they sell and every decision within the business ultimately focuses on that identity. It changes over time, of course. The Apple of the 1970’s was a “Computer” company. The company is the product and the product is the company; both separately identifiable and inseparable.

Knowing the answer to that question, knowing the right answer to that question is one of the biggest drivers of your career. Unfortunately, knowing isn’t enough, not if you want to actually drive what you do instead of react. To drive what you do you have to understand the answer as well. The first key in understanding this is knowing on which side of a very basic equation your job falls on.

PROFIT = REVENUE – EXPENSE

This equation is what all businesses are driven by. Regardless of modern accounting practices, this basic equation is inescapable in a capitalistic system.

So if a business wants to increase profit there are only two ways to do this. They can increase revenue or decrease expenses. This is where knowing which side of the equation you are on is important. This is pretty broad advice and applicable across a number of jobs, e.g. Accounts Payable Dept. would be an expense and Accounts Receivable Dept. would be revenue.

Back to Apple; in the “Computer” Apple, hardware was revenue and software was an expense (and yes, I recognize Apple did sell software, but the identity was hardware). Contrast that with Microsoft at the time, “Software”, where software would be revenue.?

I do think Microsoft is still a software company, yes they sell X-Box, Surfaces, Azure, etc. but all I believe all of those things are there to sell more software. Again, back to Apple of today, Apple hardware and software is there to sell a lifestyle. That’s why you hear people say things like “we’re an Apple household” or the unfortunate “I drank the kool-aid”. The product is a lifestyle and that’s what the company is, a lifestyle.

I’m sure there are as many valid answers different from these as there are bots on LinkedIn but the exact answer isn’t my point here, my point is that it’s something you should think really carefully and critically about.?

In my own career, both directly and indirectly experienced, I found a few common labels. Remember, you could use any or in some cases all of these labels and apply to them to company. What matters is what the most important label is, what is the top priority, because that is where the focus of the business is.

Software –If you write software for a living and your job is writing the product, you are the company. What you do is revenue. I will speculate that these companies are generally smaller and privately held.

Hours – I would put most consultants into this category. The product is the client invoices. That is what consultancy companies produce, that is the revenue. Everything else is an expense. You’ve also likely been told to “bill 40, but work 60”. You are an expense. If you happen to work at a company where it’s “work 60, bill 60” congratulations.

Seats – The product of this company is repeatable, predictable, license revenue. When the company is public look for a hard link between quarterly reporting and license counts. I speculate here that the amount of software written for license management, billing, metering, productivity metering, etc. within the company is as big as or bigger than the software that end customers use. You are an expense.

Advertising – The product of the company is ads. These companies are essentially what television was. Free entertainment paid for by consumers purchasing the goods and services being advertised. What’s interesting in these cases is that the entertainers end up being high paid and then sought out for additional opportunities. In the world of software I’m not sure who the entertainers are though I suspect it depends on the particular industry. Regardless, unless you are a lucky entertainer, you’re an expense.

Legacy – The product of the company is expected cash flow from ongoing licenses or support. For example, the COBOL systems many companies still depend on. This software is still around because it does a thing really well and there is not a less expensive (including implementation) alternative. The systems won’t grow (or very will very slowly) or be sold but do need to be maintained. You are an expense.

Industry – The product of the company is something non-software, non-high tech related, for example you work at a beverage retailer. The software you write is important to the company but only if it either increases sales of the product or decreases production costs. I’ll speculate that the software division is small and that you work on/maintain a very specific application. Chances are you also deal with consultants. You are an expense.

Flip – The company is the product. That’s it. The company has been purchased for some amount with the expectation that in some short timeframe, the company can then be sold for hopefully a much larger amount (you’ll hear terms like 10x, unicorn, etc.). Decisions are finance based. I call it a flip because it’s like a house flip, you buy a house, fix it up, then resell it. What you put into the house depends on what you expect to get out of it, regardless though, every decision is based on the question, can I sell the house for more if I spend money to improve it in this way. From my limited understanding, pools don’t add value to a house, no matter how enjoyable they might be, so in a flip, the flipper will not likely add a pool. You are an expense.

I may sound like I’m negative on some of these and that anything but the case. Instead, I think if we, as software engineers, better understand the overall business in which we work we can make better career decisions and better navigate areas of business where our education may be lacking.