"Volkswagen’s troubled software division is getting new leadership. Again." -Article

[bluedonkey]

I'd work for an automotive company if they were competitive - I think they desperately need more people that know what they are doing - their unwillingness to pay appropriately is simple more indication that they have no idea what type of war they are waging - and labor cost on the OS for their ENTIRE business proposition is not where they are going to save money - it's like not paying for top mechanical engineers in the engines design department…software _IS_ that important.

The problem is that not all the top execs in the legacy automotive space have worked out that software is that important. They have not, yet, realized that it is a game changer for their industry (the same has it has been for all others it has touched).

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[daveo4EV]

The problem is that not all the top execs in the legacy automotive space have worked out that software is that important. They have not, yet, realized that it is a game changer for their industry (the same has it has been for all others it has touched).

yeah - and hence my thesis…the fact that they are not staffing appropriately and still doing what they've always done _IS_ the key metric that shows they are clueless.

 

[daveo4EV]

yeah - and hence my thesis…the fact that they are not staffing appropriately and still doing what they've always done _IS_ the key metric that shows they are clueless.

this quote from the right stuff sum's up VW's (and other's approach in this space - no pun intended)

- Liaison Man: You mean for this "space race" you don't want our best pilots?
- Recruiter: I didn't say that. We want the best pilots that we can get.

VW wants the best software engineers they can get…for what they are willing to pay and the results are evident and will continue to be evident until there is a culture change - but that may never come - which is what I'm worried about.

 

[WasserGKuehlt]

The problem with the person at the top not have a strong background in software is that they don't necessarily have the knowledge to ask the right questions of the people below them, or to tell when an estimate for the amount of work, or a proposed solution seems wrong.

Ack, that's why I said the mid-layers really need to be software people. Towards the very top it tends to be less about the technically-correct questions, and more about business aspects (costs, timeline/promises etc.)

Agreed. The other issue (and this came out in my conversation with the VW team) was that they were not willing to pay top tech salaries. With Apple and co offering 1.5x to 2x the salary + stock and other benefits (they still are even today), they were unlikely to win over top talent.

Right, that's what I meant as well (but failed to clarify). Tech is still very much skewed compensation-wise, and that creates unreasonable expectations. Margins in software will forever be "anything you can get away with, so long as it's at least 90%" (slight exaggeration), and that won't work in the real world. As tech is going through a correction, and as the auto industry is perhaps consolidating their sw investments perhaps that huge gap will be closed (or narrowed).

Honestly, with the right investment, I think they could attract the talent needed and build something every bit as good as Tesla's software (and probably better). It will take a willingness to pay at the top talent level, and to hire people who are not primarily car people, including at the top. There are plenty of software people who have a love for cars though, and given the right incentives could be persuaded I'm sure. I have plenty of ideas, but it starts with the right platform choices. Getting that wrong (and IMHO, based on my experience building cloud connected IoT systems, they have got that very wrong) will make it very hard to build a successful system.

I admit I've toyed with a similar thought - it'd be great to have a go at crossing over, and take on the challenge of helping build an automotive cloud. (I work deep in the bowels of a cloud provider; we do host quite a few car manufacturers, including their IoT services.) It's not as much the pay differential (haven't even looked), but I do expect it'd be a difficult adjustment to work with/around non-sw constraints: "it has to be this way", milestones are hard, "sw is optional/an aside - the car is the product" etc. They're not wrong, but creates tension.

 

[WasserGKuehlt]

I'd work for an automotive company if they were competitive - I think they desperately need more people that know what they are doing - their unwillingness to pay appropriately is simple more indication that they have no idea what type of war they are waging - and labor cost on the OS for their ENTIRE business proposition is not where they are going to save money - it's like not paying for top mechanical engineers in the engines design department…software _IS_ that important.

This is a bit unfair - tech has enormous margins, whereas auto mfrs - the very best of them - scrape on by with 20%. Further, tech stocks are a huge part of compensation and, aside from Tesla, not many are doing that great in that regard. P911 has shot up, but it's still early - the key is in the growth over time, and I fail to see theirs matching that of big tech companies.

Lastly, it's also the tension between sw and hw/mechanical - the skill and knowledge levels required for either are at least equal (if not a lot higher in favor of the mechanical eng) and yet the pay ratio is out of proportion - in the other direction. Now imagine these people working side by side, doing similar work.

IT pays too much, IMO, for sw to really percolate through to other industries. This layoff cycle was a bit of a correction, but I'm afraid the "good times" will return before long - and IT will suck up any sw talent paying stupid money for a relatively low level of competence. It's getting better - in terms of leveling (the 'chatgpt' wave doesn't discriminate across industries) - but until sw competence doesn't become as common as basic math, this discrepancy of income will persist.

 

[bluedonkey]

While pure software company margins might be up there around 90% sometimes, remember that the largest market cap company in the world is paying some of the highest salaries, and is primarily a hardware & services company. They actually do not sell much software outside of their hardware (other than commissions on app store sales, but that isn't their software per-se), and their OS updates on their hardware products have been free for a long time, as has their development tool suite.

Cars could be a similar platform, with their own app stores and development communities. I see some signs that legacy automotive are looking into this, but they are, in my opinion, doing things that will alienate customers rather than appeal to them (like monthly subs for heated seats). The two mobile phone platforms also see it, and both are pushing to extend their in-car software further into the car. If they're not careful, legacy auto will hand that revenue to Apple and Google.

 

[TXSchnee]

The car companies need to hire competent software architects, in addition to better software engineers. That will make a larger difference than who is managing the division. The fact is that engineers themselves (I am married to one, hardware engineer, designs chips) generally do not make great managers. Lastly, there are a lot of computer science grads that went for software engineering as it was a “sure thing” to make a lot of money quick, and not all that difficult compared to other STEM degrees. It appears the auto makers are scraping the bottom of the barrel as they aren’t willing to compensate for talent.

 

[WasserGKuehlt]

While pure software company margins might be up there around 90% sometimes, remember that the largest market cap company in the world is paying some of the highest salaries, and is primarily a hardware & services company. They actually do not sell much software outside of their hardware (other than commissions on app store sales, but that isn't their software per-se), and their OS updates on their hardware products have been free for a long time, as has their development tool suite.

A few points:
- valuation is a point-in-time measurement, influenced by just about anything from facts to fantasy; it's also only loosely related to compensation (in general, but very much related to that in tech companies)
- the next 3-4 companies by market cap are all purely or mostly software
- AAPL made more from services than from mac + ipads combined in the last quarter; they get ~3B from Goog just in 'rent' (for the right to be the default search)
- lastly, I do believe AAPL's ability to maintain this high level of income is in at least equal part due to their software - their stuff just works, which seems to elude makers of other fine hardware

Still, you can't compare the margins of the likes of Apple with that of car manufacturers - which is what we were trying to solve here , and ultimately that's where salaries come from. That's not to say auto mfrs couldn't pay more/hire better, but this is more than just an issue of stubbornness, tightness or lack of understanding.

Regarding the revenue - this is where I think all business people are clear-eyed, across any industry. Don't think that GM, for instance, went their own way (away from CarPlay) on a whim or on a dare. There is risk, I agree, in ceding control (and so the revenue) but I suspect, for the time being, they (the likes of Volvo/Polestar) are actually paid to become Goog-exclusive.

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