The competition

Let’s be clear, Caracas ain’t no Sillicon Valley. Bangalore? Para un día de fiesta. But, though it goes largely unnoticed, we do have our own humble little ecosystem of start-up accelerators and local government-backed initiatives that have already produced some good results in making life in crisis-struck Venezuela at least somewhat more manageable.

You don’t need much to start a tech company these days, just a convincing business idea that gets you initial funding and a team of good developers: programmer salaries are the main expense at any startup. Some companies have figured out a dead easy way to cut these costs, though: have your development team in Venezuela, where the currency depreciates in the time that it takes you to read this article, and pay them less and less as time goes by.

My friend Tamara, a computer engineer from Universidad Simón Bolívar, started working for a startup in Caracas in January 2013. “Back then,” she says, “I was earning 8,000 bolívares a month, a comfortable $400 at the time.”

But the country’s crazy inflation rate ate away at those numbers mercilessly. Her company would approve only pitiful wage increases, and like every Venezuelan working for a salary, she found herself getting used to becoming a little bit poorer every month. In May 2015 she was making the equivalent of $60 a month, despite two years of added experience.

She decided she’d had enough when she found out her company had outsourced the user interface to two designers from India who had each charged $1,250 a month (and designers typically earn a bit less than developers!). She discovered the company had external investors that poured dollars in, so the development costs for the company were getting cheaper as the price of the bolívar against the dollar sank.

“This business model is unfortunately common”, she continued. “There are Venezuelan companies with a bolívar-based capital that only deal with local clients. I can understand they’re not able to pay people more. But it’s outrageous that startups with external funding actually expect to pay their employees less as time goes by”.

Tamara cites the example of a friend who’s a machine learning engineer. In Silicon Valley, companies pay around $12,000 a month to these highly qualified professionals, but this Venezuelan was making 45,000 bolívares, or $180, in March 2015, an increase he got after months of negotiations.

His company was backed by two well-known startup accelerator programs from the U.S., but still decided that paying low, bolívares-denominated salaries to the programmers was the way to go forward. It’s a shame, because with no incentives to stay, engineers will most likely just use these jobs as training grounds to land a better life in California or elsewhere. Only very recently, after realizing they were kicking out the best and brightest, did this company start offering bonuses and consultancy fees in dollars to the more experienced members of the team.

Other companies are smarter about it. They focus on long term, conscious of the need to retain their most valuable people. “Right now, when we hire a software engineer in Venezuela, we hire him so that when he leaves the country (we know he most likely will), he keeps working with us remotely”, says my friend Carlos, who lives in Barcelona and works at a  consulting firm of Venezuelan developers now spread across Latin America and Europe.

The company tries to keep salaries competitive by using the Colombian market as a reference and paying in dollars. “Bolívares have become a minor perk of the job, a way for the employee to have liquidity in Venezuela”, he tells me. Doing this is legally complex (there’s no straightforward way to declare income in a foreign currency to the SENIAT) and potentially dangerous, especially if the malandros closest to you find out you’re earning greenbacks. Still, being able to save some of your income makes the possibility of a salary in foreign currency very appealing.

Aware of what her skills are worth in international markets, Tamara went job hunting again. “In early 2015, it was almost impossible to find a job in Venezuela that allowed me to earn hard currency”, she says, “so I turned to freelancing”. A Colombian company offered her a tigre that paid her $500 a month as a half-time developer, still below mean Latin American rates. “I had to lower my rate to get the job, because clients from abroad factor in the political instability of the country (especially after the 2014 guarimbas), and the difficulty of communicating through voice or video because of low internet speeds”.

“I really hope more companies engage in the practice of dollarizing their payroll,” she told me as a last remark. I hesitated over that last feeling for a moment. Hundreds of well-educated people will be using their new purchasing power to get the hell out of Dodge, and that’s scary. But in the long run, companies that reconcile our professional rates with the rest of Latin America are ultimately bringing more dollars to talented Venezuelans, and helping them get the opportunities they deserve. That, I think, will result in a network of great technologists that will be better equipped to help rebuild the country in the future.

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