How a kid from San Francisco ended up starting a school in India
My start up failed and I had no money to pay rent. Three weeks later, having sold almost everything I owned, I boarded a plane to Bangkok with a one way ticket and a carry on backpack.
My financial situation didn’t worry me. I only had a couple hundred dollars in my bank account but I had my laptop and I was a good software engineer.
Good software engineers in the US can make $150 per hour freelancing, even while working remotely from beaches in Thailand.
Nine months later
I was finishing up some work in a co-working space in Delhi, India when I ran into a local kid named Ayush. We started chatting and instantly hit it off. We both were start up kids and self taught programmers.
We started talking about my travels and he asked me, “How can you afford this?”. I told him about the freelancing market in the US and he responded:
$150 per hour?!? I can hire an engineer in India with a computer science degree for $150 per month!
At first I was dubious, there is no way a good engineer will work for $150 per month. However, Ayush insisted. We decided to do a test project.
Our first project
It turns out Ayush exaggerated a little, the first engineer we hired wanted closer to $1,000 per month…
That is $12,000 per year, less than one tenth the salary of an entry level Silicon Valley engineer!
The problem was, our first engineer wasn’t that good.
He knew how to code. He had a CS degree and 2 years of work experience but his code was sloppy.
Each time he’d submit new code for review, I’d have to reject it, provide feedback and push him to do better.
After 3 months of rejection, hundreds of code reviews and late nights in front of his computer, his code started to look as good as if I wrote it myself.
As Ayush and I continued to build our Indian dev shop, we saw the same thing over and over:
We’d hire an engineer for less than $12,000 per year. They’d start out writing code on par with what you would expect from a $12,000 per year engineer.
However, after 3 months with us, they would be shipping top notch work, the code quality that you would expect from a $120,000 per year engineer in Silicon Valley.
One year of projects later
Ayush and I quickly realized how good our engineers were. They were fluent in English, had computer science degrees and worked harder than most of my friends in Silicon Valley.
If they had US visas, they would easily get jobs at US tech companies. We couldn’t get them visas but we could match them with US tech companies where they could work as full time remote contractors.
Clients loved it. It was just like hiring a remote employee in-house, only cheaper, faster and easier. We soon had more companies signed up than we had engineers trained to offer.
Business was booming.
There was just one problem, Ayush and I hated the fact that our business was built on artificially keeping our employee’s salaries low.
It felt wrong that our engineers were working on projects alongside engineers in the US, making less than 10% as much money for the same work.
We wondered if there could be a better way. What if instead of keeping each employee on payroll, we simply trained them and connected them to US companies?
We could then have every engineer sign an income share agreement where they pay a much smaller percentage of their future salary, instead of expecting them to be able to pay for Silicon Valley quality training up front.
We talked to our clients and they loved the idea of taking each Pesto engineer through their own technical interview and hiring process. However, they didn’t want to have to deal with the tax, legal or logistical complexity of hiring an overseas employee.
This is when we knew we were on to something BIG. We could easily automate the paperwork and invoicing to help US companies draft standard contracts and pay salaries in USD. This would make the hiring process as easy as paying for agency work. We could then provide a reserved desk in our offices so companies wouldn’t have to set up an office in India. Complexity solved.
The only question that remained was how big could this get?
Currently there are over half a million open software engineering jobs in the US alone. That number is predicted to be over 1.4 million by 2020.
There are 5 million software engineers in India. Their average salaries are between $6,600 (entry level) and $11,400 (senior level) per year.
We have proven that if we find the hardest working software engineers in India and invest in them with world class, intensive training, they can be effective remote team members in US companies, earning more money than they ever thought possible.
Being able to give up to a 20x increase in economic opportunity to millions of people is pretty cool.
Moving forward with Pesto, we decided we are going to give up the massive margins on our consulting business and focus on our training program full time.
We have developed an India specific curriculum that not only teaches software development but focuses on bridging cultural gaps and being an effective remote employee.
We run our training program over night, allowing us to bring in expert engineers via live stream from Silicon Valley and to prepare students for the timezone adjustments that may be necessary to collaborate remotely with their future US based teammates.
We’ve only just announced our new educational offering and have already received an enormous amount of excitement in India.
Most people can’t believe that the only real thing standing between them and a 20x increase in economic potential is a short, albeit grueling, period of education and an introduction to someone working on the other side of the world.
I’ve always been a fan of the idea of equality of opportunity. If you work hard enough, you can become anyone you want to be.
I worked hard to become a good software engineer.
But did I work harder than my co-founder Ayush who dumped everything he had into his previous start up only to end up homeless, living out of the co-working space where I met him? Probably not.
Yet when each of our start ups failed, I ended up on the beaches in Thailand worry free and he ended up homeless.
Equal opportunity in the global economy does not exist. Most people don’t even get a chance. Their potential is permanently capped just because of where they were born.
At Pesto we are creating a world where access to education and remote work gives everyone equal access to opportunity, regardless of where they were born.
We are starting with India’s 5 million software engineers.
We are currently looking for hiring partners for our next batch of students. If you are interested in taking a first look at our engineers, shoot me an email at firstname.lastname@example.org.
If you know anyone who is hiring engineers, I’d appreciate if you shared our story with them.