SOFTWARE firms are supposed to be a paradise for “talent”. Not only are their workers fabulously paid, but they are showered with perks as well. They can gorge themselves on free food cooked by Cordon Bleu chefs. They can snooze in nap pods or, if they feel more energetic, work out in on-site gyms or take yoga classes. There are dry-cleaners on the premises to do their laundry and buses to ferry them to and from work.

There is some truth in this. Such companies have few resources other than their employees’ brains. And the battle for those brains is becoming more intense as the digital revolution reconfigures swathes of the business world. Giants such as Google and Facebook are seeking to reinforce their position at the heart of this new economy by investing heavily in research and expanding into ever more areas. Google’s headcount has grown by 157% in the past five years, to about 60,000. Smaller startups are also scrambling to attract talent; and manufacturers are responding to the digitisation of their industries by hiring coders and other tech geeks. Carmakers such as GM, Ford, Nissan and Toyota have all set up research outposts in Silicon Valley.

This is producing a pay-and-perks arms race. The biggest companies are building awe-inspiring headquarters: Apple’s “spaceship”, designed by Norman Foster, will cover 2.8m square feet (260,000 square metres) and Google’s new offices will sit under a vast, translucent dome. Some firms, such as Netflix, offer staff “unlimited” holidays. Facebook is offering up to $20,000 to female employees who want to freeze their eggs. Uber and Airbnb, two stars of the sharing economy, have lured away a couple of Google’s top chefs, Alvin San and Rafael Monfort.

However, a career as a software developer or engineer comes with no guarantee of job satisfaction. A survey last year of 5,000 such workers at both tech and non-tech firms, by TINYPulse, a specialist in monitoring employee satisfaction, found that many of them feel alienated, trapped, underappreciated and otherwise discombobulated. Only 19% of tech employees said they were happy in their jobs and only 17% said they felt valued in their work. In many areas they were even more discontented than non-tech workers: 36% of techies felt they had a clear career path compared with 50% of workers in areas such as marketing and finance; 28% of techies said they understand their companies’ vision compared with 43% of non-techies; and 47% of techies said they had good relations with their work colleagues compared with 56% of non-techies.

Tech firms that offer lavish perks to their staff do not do so out of the goodness of their hearts. They offer them because they expect people to work so hard that they will not have time for such mundane things as buying lunch or popping to the dry-cleaners. As Gerald Ledford of the University of Southern California’s business school puts it, they are “golden handcuffs” to keep people at their desks. Some of the most extravagant perks are illusions: “take as much holiday as you like” may really mean “take as little as possible, and as much as you dare.” Some have vaguely sinister undertones: might the option for women to freeze their eggs end up becoming the expectation?

The tech economy is a ruthless meritocracy. “A great lathe operator commands several times the wage of an average lathe operator,” Bill Gates once said, “but a great writer of software code is worth 10,000 times the price of an average software writer.” The most talented workers can command princes’ ransoms. Google reportedly offered a star engineer $3.5m in stock to dissuade him from defecting to Facebook. And Facebook paid $1 billion for Instagram, mainly to hire its 13 employees. But in this business those who are merely good, rather than great, are expendable; they can expect to labour in obscurity while the stars get the credit.

On top of this merciless meritocracy is a layer of cruel fortune. No amount of talent or effort can make up for having chosen to work at Sidecar, a ride-sharing service which shut down in December, rather than Uber or Lyft, its still-expanding rivals. Moreover, tech startups typically attract talent by offering shares. Employees work like dogs in return for supposedly making a fortune when the firm goes public. However, such firms often use multiple classes of shares that preserve the biggest gains for insiders, leaving the employees with common stock that can easily lose value. In particular, startups have taken to offering later-stage investors guarantees that they will get their money back, if either a subsequent funding round or an eventual initial public offering (IPO) values their shares at a lower price than they are paying. When firms have to pay out on such guarantees, they generally do so by issuing extra shares, which dilute other common shareholders such as their staff.

Unicorns and unicorpses

Disappointments of this sort are becoming more common. A succession of startups, such as Square and New Relic, have sold their shares at substantial discounts to their previous valuations on going public. Others have been bought at a discount after abandoning hopes of an IPO: Gilt Groupe, an e-commerce firm, sold itself to Hudson’s Bay Company for $250m, having reportedly enjoyed a “unicorn” valuation of above $1 billion in its earlier fundraising. Michael Moritz, a venture capitalist, talks about “subprime unicorns” and James Clark, an entrepreneur, talks about “unicorpses”. If there is another tech bust, it will be the employees who will be most hurt.

The tech industry offers fabulous rewards for a fortunate few: almost half of the world’s billionaires aged under 40 are tech types. It offers a wonderful life for many thousands more: they get to make serious money by turning science fiction into reality. But the industry is also rife with disappointments: endless toil that produces meagre returns; and dreams of reinventing the world that turn into just another tough and insecure job.