Heavy Debt for Design Careers









If you’re not talking about systemic oppression, what am I missing?

And the question that you dodged is what is a fair percentage of salary to revenue that will allow Cash to be satisfied with that ratio? Cash very specifically stated numbers and I’m trying to get clarity on what those numbers mean.

As someone living very comfortably, I can assure you- there is no problem.

If you aren’t interested in being part of the discussion, you don’t have to partake.

Let’s keep focused here, people.

R

It works better when you groan.

I see it relative in the context of student debt as it allows us to understand HOW that money is made in the first place. What I am seeing as a complaint throughout this thread that companies are simply not paying students well enough, I’m trying to get to the bottom of where that angst comes from.

Let’s assume I’m reading the numbers correctly, and Cash is implying that they made $165K from $750K revenue that equates to 22%. They have not answered, so I am going to make that assumption for now.

The business that Cash is/was working for paid 22% of revenue in return for Cash’s work. Not knowing what company Cash work(s/ed) for, I have no clue on the overhead this company is carrying or even what kind of company it is. If it is a product company a huge portion of that $750K revenue has to go back into purchasing inventory towards future sales. Let’s give that a round number of 40% ($300K).

We’re now up to 62% ($465K) of that revenue taken up. Marketing in a product company typically anywhere between 0%-20%. Let’s call it 10% to split the middle.

We’re now up to 72% ($540K) of revenue taken up. The computers Cash had to work on, licenses for CAD, Adobe, Keyshot…again I have no clue what they were working on…but those had to be amortized into this equation. The working capital for the product needed to be purchased. Injection molded tooling isn’t cheap. Again, no clue what kind of product we’re talking about that Cash worked on. I’m going to give this discussion 15%…which I believe is on the low side. But it works for now.

We’re now up to 87% ($652K). We’re at less than $98K “left over”. Were there other employees? That’s more taken out.

Was this over more than 1 year (my assumption is yes considering $165K/year would be a pretty darn good salary)?

Either way, the business owner is “left” with $98,000 in the above scenario. A percentage of that needs to be saved for a rainy day. The “rest” of it goes to the business owner’s salarly (maybe?). Are there partners? Who else is taking a cut? Investors?

The numbers above move about if this is a consulting/service company. But the fundamental story is the same.

And here’s my take on the heavy debt…

The heavy debt likely is NOT worth it in today’s society if your plan is to be an employee for the 50 years after graduation. You COULD move up the ladder in a corporate setting, or be the high flier at a large consultancy and take larger chunks out of that debt over the years.

But…

You went to University and got a degree that put a set of pretty cool tools in your toolbox. You need to keep the lights on, the Mac and Cheese in the cupboard, your crappy car in the driveway, and the iphone in your pocket (those aren’t sarcastic criticisms, it’s using contextual comments from this thread to make a point). So, to keep those things going, you get the job that barely scratches the surface of the debt.

In the mean time…use those tools you put in your toolbox, network your ass off, learn how to build a business plan, use those killer design skills and CREATE SOMETHING YOU’RE PROUD OF. Make it real. Win awards, bring in the revenue and profit share that with your employees if that makes you feel good at the end of the day.

I guarantee you one thing. When you’re on the other side of that coin, and you’ve made it work, and you’ve won the awards, and paid off your debt. You’re going to realize that it isn’t any easier. That $98K (or less) that is left over from the above (likely fictional) scenario above doesn’t go far. You need to hustle to the next idea and make that work also.

I have no interest in judging Cash for their scenario. I’m right behind you if we’re complaining about the politicians and $80M CEO golden parachutes. But for most of us SMB owners…your angst is lost on deaf ears.

Moderator Hat On
Not that we all don’t like a bit of sarcasm now and then, but we have discussion posting standards here-

There’s a difference in being funny and trolling and we don’t tolerate trolls. We can/will delete/ban.

/Moderator Hat

Thanks
R

Shields,

To back Richard up here, I respect the work you post on Instagram but I’m failing to see how you are moving the conversation forward. Please consider the posting guidelines or we will have to freeze your account.

MD

You say this like it’s the first time it’s been said.

How cute.

Hey looky there. People have been getting screwed long before you were an itch in yer daddy’s pants. Go figure.

Iab, I’m asking Shields and Cash to stop antagonizing you, I need to ask you to stop antagonizing them as well… those comments are not going to help.

I made the decision to take out loans (almost 100k by the end) and go to a private art/design school back in 2001 because I thought it was the best option at the time. Tuition was 16k the first year and then increased each year to about $26k during my fifth year. (I didn’t see that coming…) I have a love/hate relationship with the decision. On the plus side, I was in a highly competitive environment where I was pushed hard – which I badly needed, and the department I was in had a 90%-100% placement rate at the time – mainly because the unique skillset they offered was in high demand. The downside is that I am still paying off debt which prevents me from exploring new opportunities.

Also, back in 2001 there were not, or I didn’t know about, the abundance of online forums, tutorials, online schools, access to books that now exists today. For example, coming from a small town in the Midwest, there is no way I would have heard of publishers like Design Studio Press or Core77 apart from meeting fellow designers at school and/or using the internet like I do now. While the costs for education are now way higher, access to alternative methods of education, or the ability to supplement what your school offers, is incresing. And with the heightened awareness about the high risks of student loans, it will be interesting to see what new, lower cost options gain traction.

From NPR today – “Student Loans A Lot Like The Subprime Mortgage Debacle, Watchdog Says."

The doomsday perspective:

“Calhoun’s the president of the nonprofit Center for Responsible Lending. For decades he’s been keeping watch to protect people from reckless lending. He says that with student loans, just like with the housing crisis, there’s no consideration about whether the person getting the loan will be able to repay it.”



“Once again, it’s the mismatch between the debt and the borrower’s income, their ability to repay,” Calhoun says. This time around it’s the government making the vast majority of the loans. That’s effectively turned the Department of Education into the country’s largest consumer lender.”

The “It’s not quite that bad” perspective:

McPherson says the vast majority of people are clearly better off financially if they have a college or advanced degree, even if they do have student loans. And he says, “a lot of people borrow a small amount of money, so a third of all the people owe less than $10,000.”

Great thread.

  1. I’m often frustrated by the decision makers. When they are the entrepreneur who mortgaged their house and 401K to work 60 hours a week for two years for no pay to start the company, I respect their decisions even when I don’t agree. When it’s an employee that doesn’t seem to have a clue, it’s harder to take.

I think something Yo was getting at is that a lot of perceived decision makers actually don’t have the power that we think they do. Also, they do have responsibilities that we may or may not be aware of. I remember being in a meeting when I was at a small start up and realizing that if our new product line didn’t sell, the company might fold and the owner would maybe get his investment back, but everyone would lose their jobs. The owner ended up making millions, but they were under a lot more pressure than I was.

Also related, Jon has great points about the hidden costs that employees tend to not be aware of. When I thought of starting manufacturing business, I realized that I would need about $1 million revenue and no employees to pay myself $50k a year and cover costs. Obviously, cost of goods (50%+) is a huge chunk of that money, but it goes down fast.

  1. I think I probably said this in 2003, but ID needs more entrepreneurs. Unfortunately, management positions tend to be offered when a company is growing or is offered to someone in the owner’s network. Hard working employees are overlooked. It’s not fair, but that’s life. If you start a company though, you have 100% control. It’s not for everyone, I haven’t done it yet and perhaps never will, but I think their is a huge opportunity for IDers to create the corporate world that we want to be a part of.

  2. For any prospective students out there, treat your education like a 40+ hour a week job. Punch the clock. If you don’t think you have anything to do that day, find something. Draw, model, go observe people, go to the library and read up, call suppliers and try to get a factory tour. All of that stuff is unpaid, but costs $0 and will actually make you a better designer, build your network and portfolio.

  3. For those really curious, I recommend “BS Jobs” by David Graeber and “The Black Swan” by Nassim Taleb. BS jobs describes many of the mid-level manager positions that contribute nothing, but can be highly paid. Also, contrarily, it describes the situation by which people who actually do really important work are paid nothing or very little. Teachers and care works pop to mind.

“The Black Swan” describes many things, but the one relevant here is how there are jobs that require a lot of work for uncertain payoffs. Karim Rashid, James Dyson and Jony Ive are all wealthy designers, but for each one there is 100 or 1000 designers working just as hard, with just as much talent but just getting by. Someday, one of them may hit upon the next big thing or get in to see the right CEO on the right day and become just as influential, but it’s a game of chance. I feel we are talking about those 1000 that haven’t made it and calling them chumps for having bought into a system that is so unfair. If it matters, some industries are even less fair (music, writing, hedge fund managers - the profession of “The Black Swan” author).

  1. There are things we can do, but it requires political action. Quebec tuition is $2500 a year and we have healthcare whether we work or not. We’re not a particularly rich place, but people demanded it and generally would never accept it changing. The US could do it too, but it will require 65% of the population to force the change through. It seems unlikely at this point, but stranger things have come to pass.

PS: People complain about how expensive school is here too. You can’t please everyone!

Ray - Perfection. Thank you.

+1

Let’s assume I’m reading the numbers correctly, and Cash is implying that they made $165K from $750K revenue that equates to 22%. They have not answered, so I am going to make that assumption for now.

Sweet, let’s do it.

The business that Cash is/was working for paid 22% of revenue in return for Cash’s work. Not knowing what company Cash work(s/ed) for, I have no clue on the overhead this company is carrying or even what kind of company it is. If it is a product company a huge portion of that $750K revenue has to go back into purchasing inventory towards future sales. Let’s give that a round number of 40% ($300K).

Nope. Consultancy. No inventory whatsoever.

We’re now up to 62% ($465K) of that revenue taken up. Marketing in a product company typically anywhere between 0%-20%. Let’s call it 10% to split the middle.

Fine.

We’re now up to 72% ($540K) of revenue taken up. The computers Cash had to work on, licenses for CAD, Adobe, Keyshot…again I have no clue what they were working on…but those had to be amortized into this equation. The working capital for the product needed to be purchased. Injection molded tooling isn’t cheap. Again, no clue what kind of product we’re talking about that Cash worked on. I’m going to give this discussion 15%…which I believe is on the low side. But it works for now.

Yeah no. Computer was a meh I7, worth $3k when it was new, old 21" Cintiq from 2009, and we weren’t even using CC yet, so software was purchased a lot earlier and paid for the first job we did. If I had to buy that IDENTICAL hardware and software brand new at the time, it would have been less than 15k.

We’re now up to 87% ($652K). We’re at less than $98K “left over”. Were there other employees? That’s more taken out.

Oh completely agree. Marketing people that worked from home. Managers that couldn’t full screen powerpoint presentations. Engineers that would waste time engineering overly complex stupid ideas that blow away the ROI. But mostly management. And upper management.

Was this over more than 1 year (my assumption is yes considering $165K/year would be a pretty darn good salary)?

3 years.

Either way, the business owner is “left” with $98,000 in the above scenario. A percentage of that needs to be saved for a rainy day. The “rest” of it goes to the business owner’s salarly (maybe?). Are there partners? Who else is taking a cut? Investors?

It’s strange to me that this forum finds my story so impossible to believe, and my opinion so ridiculous. By my calculations, I made 3/4 of a million dollars in 3 years, yet I was awarded LESS than average pay, despite being the 2nd most profitable employee in the entire fucking company. Taking away 10% for marketing, and and 15k for tooling, that leaves $513,000 left over. You can be DAMN sure that there was a lot of freeloading jackasses that contributed basically nothing, and my work was paying THEIR salaries, despite me being underpaid. Part of this was because I was fresh out of school, and there seems to be an ‘ageism’ in the workplace, where older people automatically get paid more than younger people, regardless of contribution.

Also, LOL at the fact you’re threatening to ban Shields for pointing out how horrifyingly selfish/stupid/greedy some of the viewpoints people are showing on this thread.

War is peace. Freedom is slavery. Ignorance is strength.

You must be so great to work with.

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