The Scoop #23: Re-levelling at Netflix

The end of Netflix’s 25-year policy of one level for all software engineers. Also, pay rises across Shopify and Oracle, and more.

The Scoop is a bonus series, covering insights, patterns and trends I observe and hear about within Big Tech and at high-growth startups. Have a scoop to share? Send me a message! I treat all such messages as anonymous.

The Scoop sometimes delivers first-hand, original, reportage. I’m adding an ‘Exclusive’ label to news which features original reporting direct from my sources, as distinct from analysis, opinion and reaction to events. Of course, I also analyze what’s happening in the tech industry, citing other media sources and quoting them as I dive into trends I observe. These sections do not carry the ‘Exclusive’ mark.

In this issue, we cover:

1. Netflix’s historic introduction of levels for all of software engineering. Four months after starting this process, Netflix has rolled out levels for software engineers. What are these levels, and how do people feel about the change? I share the thoughts of tech employees at the company whom I talked with. Exclusive. Non-subscribers can read this article here.

2. Large pay raises – but still some discontent at Shopify. The company announced inflation-beating pay adjustments, with software engineers getting some of the highest raises. Still, people are grumbling and upset about some draconian policies. What is happening at the company formerly known for its transparent culture? Exclusive.

3. Friction on compensation at Microsoft. The company is giving more generous stock awards to its graduates, than it does to industry hires. This is causing friction among L61-62 team members, whose total compensation can be less than new L59-60 engineers make. Exclusive.

4. Shopify’s updated governance structure. In April, most small investors and several Shopify employees voted against changes to ‘lock in’ the current Shopify CEO ‘for life.’ Yet this change still passed approval. A summary of what happened and a comment from a current Shopify employee on why they opposed it.

5. Business back to normal at Oracle. The layoffs that were never announced to start nor to end seem to be over, according to software engineers I talked to, and raises were communicated. I checked in with current employees on how things are going at the company. Exclusive.

1. Netflix’s historic introduction of levels for software engineering

In April of this year, I covered how Netflix intended to introduce levels for software engineers in The Scoop #9:

“Netflix is considering the following leveling system:
- Engineer 1
- Engineer 2
- Senior
- Staff
- Principal

The details of the system are still being worked out, and a proposal has been circulated within engineering. The proposal, understandably, has resulted in lots of questions, especially around whether existing engineers will be getting Staff or Principal titles. The original proposal made it seem that everyone would stay Senior, and with promotions, they could get to the next levels.”

Why would the company introduce levels, if it got on just fine without them for the past 25 years, growing to close to 2,000 software engineers with all of them senior software engineers? I suggested there are problems with the system:

“The first cracks in the “one level across all of engineering” started to show about a year ago, when Netflix formalized the hiring of new grads in 2021. These engineers were not senior engineers by any means and were given the title of Software Engineer.

A problem Netflix faced was defining the career path for these new grads. A possible approach could have been to have a Software Engineer level and a Senior Software Engineer one. The problem with this approach is it can take a long time for new grads to grow into the senior role. Instead of waiting years, many are more likely to leave.

For Netflix to retain new grads, it would have been sensible for them to create a “mid-level” career position, which most companies call Software Engineer 2. This is a position most engineers realistically reach in about 2 years. In a further 2-3 years, they then grow into the Senior role.

Another challenge Netflix had with its leveling was consistently attracting above-senior talent. As everyone is a Senior Software Engineer, Netflix typically receives less interest from staff-and-above engineers in Big Tech. This is not to say it cannot hire from this group and it has done so. Thanks to paying top-of-the-market compensation, they have poached staff engineers from the rest of Big Tech.

Still, lacking a formal “Staff” level or similar, many Staff+ engineers in Big Tech tend to assume Netflix either doesn’t need or doesn’t reward Staff-and-above people. This is somewhat different to Meta, where everyone has the Software Engineer external title, but internally, Meta has granular levels, from E3 all the way up to E10. I’ll be covering Meta’s engineering culture in more detail in two weeks’ time.”

Netflix has since clarified to engineers why it made these changes to levels. In an internal document, leadership shared: