Whether Your Paycheck Is Safe Has Little to Do With Your Skills

Every month when my salary lands, my phone buzzes once. I've been getting that text for almost ten years, and I've only ever looked at one thing in it: the amount.

On October 9, I stuffed twenty-odd pieces about money into my bookmarks in one go. Going back through them afterward, the thing that stopped me was a very old idea: money is an IOU.

My first reaction was to think about another line in that salary text: the payer. That's the company's account. But where does the company's money come from? I tried to trace it upward in my head, and by the third layer I couldn't go any further.

People who work in tech love one line more than any other: "If your skills are solid, you'll never starve." But if you can't even say where your own money comes from, what exactly do solid skills guarantee?

Let me spell out "money is an IOU" first.

The hundred yuan in your hand means society owes you a hundred yuan's worth of goods and services. When you spend it on groceries, you've handed that IOU over to the stall owner. Flip it around: earning money means taking an IOU from someone else. They have to have it first, and they have to be willing to hand it over.

Apply that to a salary and it gets concrete. Your company transfers money to you every month because it has IOUs on its books and is willing to pass some of them to you. What's on its books came from customers paying, investors putting money in, or borrowing.

So "is my salary stable?" really translates into a different question: are the books of whoever pays you healthy, and where does their money come from?

In that question, your skills are only a small piece. Skills decide whether you get picked and how much you get; whether the money is still there, and whether it gets cut off, is decided upstream.

Money passes through several hands on its way from the source to you. And every company's chain is a different length.

Some are short. Customers pay every month, the company takes a cut to pay salaries, and as long as the customers stay, the money stays.

Some are long. A startup that isn't profitable yet is, in essence, paying you with investors' money, and investors pay up because they believe it'll be worth more later. One layer further up, even whether a big company dares to hire or give raises is tied to how much the capital markets think it's worth.

You don't see this chain day to day. Not until one of the links loosens.

There's a fund that bundles the share prices of Chinese internet companies listed overseas, ticker KWEB. From its high on February 17, 2021 to its low on October 24, 2022, it lost more than 80%. Right in the middle of that, in Q2 2022, Tencent's headcount dropped by about 5,500 in a single quarter, and it froze hiring for the first time in a decade.

Plenty of the engineers who got cut were good at what they did. Their code didn't get worse overnight.

What changed were the books a few layers upstream. Valuations shrink, investors pull back, the company first cuts the businesses that look like they can wait, and people go out the door with those businesses. At no point in that process is anyone checking how well you write code.

Same skills, different source of money, and the outcome can be wildly different.

Here's a made-up example. Two side gigs are on the table. One is a small shop on the corner that's been open for years and wants a simple bookkeeping tool, offering 3,000 yuan. The other is a startup that just raised money, promising 20,000 plus a bit of equity.

On the numbers alone, the second one wins easily. But trace each one up a layer. The shop's money comes from customers walking in every day; as long as the shop stays open, that 3,000 is real. The startup's 20,000 comes from its last round. If the next round doesn't happen, a final payment that keeps slipping and equity that turns into wastepaper are just the natural result, and none of it has anything to do with how good your work was.

If it were my pick, I'd ask one question first: is their own business actually running, and does money come in every month? That question tells you more than the quote does.

The steadiest money usually isn't with the richest people, nor with the people shortest on cash. It's with people whose own business is turning over and who have a real problem they can't avoid solving. They have the budget, and they have a reason they can't skip spending it.

Back to that salary text. I still only get to the third layer. Above that are books I can't see.

The payer on your text message: where does its money come from? How many layers up can you go?