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Silicon Valley’s Hiring War–And The Impact to Startups

The WSJ has a good article on Silicon Valley’s war for talent (paid registration required, unfortunately), which has been driven largely by Google, eBay, Yahoo, and Amazon.

Google, for example, is apparently hiring about 10 people a day. To do so, the company has increased the size of its recruiting team to about 300 (compared to the 355 recruiters working for Microsoft) and now doles out restricted stock units (which, unlike options, retain value even if stock price tanks). Since the beginning of 2005, according to the article, Google has awarded about 500,000 such shares with a total value of about $200 million.

My sense is that the talent wars will continue for some time. Market growth in many sectors is strong, and there are plenty of untapped opportunities.

Many people ask what the impact of all this will be for startups. While there are obvious challenges (how can a small company compete for a great engineer when she has a million dollar offer from Google?), I think the talent wars will be an eventual boon for startups for a few reasons.

First, GAMEY (Google, Amazon, Microsoft, eBay, Yahoo, etc) provides a great platform for learning how to build a successful technology company. Many current GAMEY employees will eventually leave and either join existing startups or launch their own; either way, these employees will bring valuable networks and lessons learned. Second, GAMEY’s tremendous and well-known success has, to a large degree, reduced the stigma of working for a technology startup. Immediately post-bubble, this was often no small problem. Many talented, but risk averse, people chose to find employment at “safe” (ie non-technology based) companies.

Also, I think the talent wars will be good for cities outside of the Valley, as companies look elsewhere to find smart people. It’s already possible to stay connected and contribute from almost anywhere in the world. On a small scale, this is already very clear in the blogging world–some of the best commentary comes from places far from California. For example, Andrew Carton’s Treonaut.com is based in London, Richard MacManus’s Read/Write Web is based in New Zealand, etc. Similarly, I think we’ll see an increasing number of important startups based outside of the Valley over the coming few years.

Posted by Dan Grossman on Wednesday, November 23rd, 2005 at 12:08 pm.

12 Responses to “Silicon Valley’s Hiring War–And The Impact to Startups”

who lives in New Zealand — just wrote something about how maybe being far away from Silicon Valley isn’t such a bad thing… he notes that Dan Grossman of A Venture Forth says companies may increasingly start to look outside the Valley when they’re hiring. Technorati Tags: Google, Riya, TechCrunch, Web+2.0, Web2.0

Left by mathewingram.com/work on November 20th, 2005

If the startups want to be competitive, they will soon have to start allowing employees to work from home on a regular basis.

I currently work 1 day a week @ home, and it’s not enough…why do I have to come into the office? It’s 1:30 hour drive each way, I sit in traffic, and I can do the exact same stuff in half the time @ home without the interruptions. Most of the communication is via email or instant messaging anyway, unless they are sitting next to you.

So far, I’ve only had 1 or 2 companies say “maybe” to 2+ days a week at home. Even after I told them I wouldn’t expect to work from home until I got settled in (1 month or so).

Left by Anthony Ettinger on November 23rd, 2005

May I give an example?

Blogtronix, the startup I’m involved with, is headquartered in Oakland, CA, and has additional offices in Colorado and Bulgaria.

Profile - Blogtronix
http://www.techcrunch.com/?p=162

Robert Scoble: BlogTronix impresses
http://divedi.blogspot.com/2005/11/robert-scoble-blogtronix-impresses.html

Left by Dimitar Vesselinov on November 23rd, 2005

November 23, 2005 | Category: Two Way Web | 0 comments Dan Grossman has a thought-provoking post entitled Silicon Valley’s Hiring WarAnd The Impact to Startups . He suggests that Start-ups will start looking outside the Valley for talent: “…I think the talent wars will be good for cities outside of the Valley, as companies look elsewhere to find smart people. It’s already possible to stay connected and

Left by Read/Write Web on November 24th, 2005

ó példa a b5media. A vállalkozásoknál, startupoknál van precedens arra, hogy csak a cég fele van az USA-ban, a másik pl. Indiában dolgozik, de ez még nem általános. Dan Grossmann viszont azt írja

Left by sztahanov on November 24th, 2005

Dan [Grossman] also said that “we’ll see an increasing number of important startups based outside of the Valley over the coming few years.” Again, I think this is a trend to watch out for. Not only in big countries like China, but in very small countries like

Left by Web2.0 Ireland on November 24th, 2005

I am in direct sales and working from home is luckily a reality with most companies I have met. I do agree developers and other positions could benefit immensely from this.

Your data points make sense for the long-term, but in the short-run, the aggressive recruiting does not appear to help create an entrepreneurial spirit for developers and others to take more risk ( going to Google etc. does not appear to be risky ) and create new ideas and turn them into action.

Mark

Left by Mark Milligan on November 24th, 2005

There are also a lot of other companies forming (or have formed) outside of the valley and in smaller cities throughout the country. We’re based in Blacksburg, Virginia for example - being right next to a major university (Virginia Tech) helps a lot and likewise, a lot of people simply don’t want to leave the area even if they could work for GAMEY in big, bad California or wherever. I think you’ll see a lot of companies forming in smaller cities throughout the country over the coming years. There are so many benefits to doing so (like a seven minute drive to work)… and like you said, a lot of talented folks don’t want to work for the big boys regardless.

There was a good article (and there is a book by the same author) on what I’m talking about, if you’re interested:

http://www.forbes.com/columnists/forbes/2005/1128/039.html

Pat

Left by Pat on November 24th, 2005

I still think that start ups have the advantage over GAMEY. Top guys want to change the world. 95% of the new hires at GAMEY are doing fairly ordinary work. I don’t think there is enough action over there for all the rocket scientist that they’ve got.

Left by Chris Marino on December 5th, 2005

I’ve read with great interest about the struggle many small companies face trying to recruit top engineering talent here in Silicon Valley. I find this surprising since just a short time ago I think I read about these same companies trying to ship their development organizations to India or China? So, which is it?

Left by Tumbling Duke on December 5th, 2005

Silicon Valley’s Hiring War-And The Impact to Startups Posted by Dan Grossman on November 23rd, 2005 The WSJ has a good article on Silicon Valley’s war for talent (paid registration required, unfortunately), which has been driven largely by Google, eBay, Yahoo, and Amazon.

Left by Hoffbauer on December 21st, 2005

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Left by Hoffbauer » Archive for the ‘Startup Ideas’ Category on December 23rd, 2005

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