Ciao amici,

Something fascinating is happening in tech.

And as someone who's been watching this space closely, I feel compelled to share it.

The engineering golden age - you know, the one where knowing how to code meant guaranteed wealth - is over (sort of).

But here's what fascinates me: this isn't just another tech downturn. It's something far more fundamental that’s shifting.

For the past decade, we've lived in a world where writing decent code meant a guaranteed $200k+ salary (at least in the US) and senior engineers were casually pulling in $500k packages.

Companies were literally fighting over anyone who could string together a few lines of Python.

Those days are gone.

And now, massive shifts are converging and creating what I believe is the most significant transformation in tech since the internet boom.

First, AI has very quickly become good enough to handle what once required entire teams of junior developers – GPT-4 is writing code that would have cost companies $500k in engineering salaries.

And this change is happening at speed.

A friend with a medium size agency in SE Asia (150 devs) thinks in 3-5 years his business will be completely disrupted because the sheer speed of Cursor or Claude is too high and so basic coding will become commoditized.

Second, the market is rebalancing.

262,682 tech workers lost their jobs in 2023, and as of December 12, 2024, another 150,000+ employees have been laid off across 529 tech companies this year alone.

A combination of overhiring during COVID and the impact of AI has led to engineering departments being completely restructured.

But here's the really interesting part.

Just like Europe isn't just simply declining…there is hope! (as I wrote about last week)… the tech industry isn't just dying.

In this case it’s evolving into something entirely different – something perhaps more sophisticated.

We're witnessing a split in the talent pool:

The first is populated by what I would call the "new elite" - expertise that AI can't easily replicate.

The second?

Well, it's what most "software engineers" will become - code implementers, increasingly assisted by AI tools, with steadily declining compensation.

After the invention of the calculator being good at arithmetic suddenly wasn't enough - you needed to understand the underlying mathematical principles to stand out.

But just as the calculator created entirely new fields and opportunities, this transformation is opening doors we couldn't have imagined before. AI integration specialists, complex systems architects, tech-business hybrid roles - these positions barely existed 5 years ago.

There’s also another element in the mix.

Until recently, I wanted my kids to become engineers or computer scientists.

This is possibly still the case, but I would now urge them to go deeper – with more consciousness.

These days when I am hiring, finding engineers who understand product is a must not only just a plus – culture and social knowledge as well.

Having a true computer science background is the next evolution for these roles rather than just more self-taught coders.

For the next cycle, I see this formula being the key:

Distribution > Product > Engineering

This is the new black!

The winners won't be those who code the best, they’ll be those who not only understand how to harness AI, but also have a deep understanding of product as well.

More will be asked of our engineers, and I see this as a very positive evolution!

More cohesion, more leverage and greater efficiency.

(Dismays me to say, but basically the opposite of Europe…)

This fundamental shift is both fascinating and exciting and I can’t wait to see it unfold!

Until then, I'm curious:

What changes are you seeing in your corners of the tech world?

And what are your thoughts and opinions on these evolutions?

As always, I love hearing from you all so please reply with any comments, questions and suggestions!

Ciao for now,

Ale