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The improving economy and a rash of startup activity have turned the tables on Boston’s growing stable of consumer-facing Web startups, as the hiring market for technology talent has quickly shifted to favor the seller. High-tech startups basked in a brighter-than-usual pool of talent during the recession, attracting candidates who might have otherwise been out of their league. Now, with big technology companies’ hiring programs adding head count in the thousands, and startup competitors rapidly coming out of the woodwork, startups are in a fight for the people they believe are critical to early-stage success.
“I just filled two positions and it was incredibly hard,” said Chris Quirk, VP of engineering at the 18-person virtual goods startup Virtual Goods Market Inc., which does business as Viximo. “I haven’t had this much trouble since ’99.”
C-level recruits are getting signing bonuses again, headhunters say. Meanwhile, salaries have risen moderately for candidates with hard-to-find expertises, like mastery of emergent Web development frameworks like Ruby on Rails, or the combination of design and development skill needed to build an intuitive, attractive user interface online. West Coast tech giants like Intel Corp. (Nasdaq: INTC) and Cisco Systems Inc. (Nasdaq: CSCO) have announced plans to hire up to 2,000 and 3,000 workers this year, respectively.
In terms of compensation, it’s nothing like the go-go ’90s, where mid-level hires saw signing bonuses and techies jumped from startup to startup for $10,000 raises and options packages that made them paper millionaires. Early-stage companies are operating on leaner budgets than ever, and with lucrative startup exits still anything but a certainty, stock options are still somewhat out of fashion.
Instead, startups are finding themselves forced to compete on substance, pitching potential hires like they would investors.
Spark Capital general partner Todd Dagres said he’s spending more time helping portfolio companies recruit talent. “We have to convince employees how meaningful the company is going to be,” he said. “It’s kind of like you have to treat them almost like an investor.”
The hardest group to nail down has been young up-and-comers, said David Chang, vice president of product at the Boston location-based service company Where Inc. As the company expands — it’s profitable, and growing from 45 to upwards of 55 employees this year — it’s looking to fill out its ranks with late 20- and early 30-somethings who have become experts in marketing or development.
To get them and keep them, Chang said Where has been offering its young star employees a faster trajectory to greater responsibility, putting them in charge of product development teams, for example.
For consumer-focused Web companies at earlier stages, however, 20-somethings may not cut it. The need for capital efficiency increases the demand for experienced talent, said Keith Cline, principal at Dissero LLC, which recruits mid-level high-tech employees for Boston-area startups. Launching a consumer Web startup has gotten less expensive — and as a result investors are more keen to back lean companies.
“In Boston, you’re starting to see more consumerish stuff going on. There wasn’t a lot of that but there’s more of it,” Cline said. “To build that in that environment of lean startups ... they need their three pick-of-the-litter guys that know how to scale and build it.”
Polachi Inc. managing partner and co-founder Charley Polachi, an executive recruiter, said companies are beginning to offer signing bonuses to VPs of engineering and C-level executives. “Boy, I’ll tell you what a difference from this time last year,” Polachi said. “You’d get an offer and it was pretty easy to close.” Now, candidates have two or three offers at a time, and they’re taking the time to evaluate any startup — and its investors — carefully, he said.
Candidates at lower levels aren’t getting signing bonuses, but their compensation has started to come up, hirers and recruiters said. As more mid-level candidates are seeing multiple offers, they’re also putting potential hirers through their paces.
“Everybody — junior folks — are asking me questions I never would have gotten except from senior candidates,” he said. “What’s our financing? What’s our run rate? What was the valuation coming out of the last round?”
Another area candidates are looking at closely: company culture. It may be easy for a Viximo to beat a tech giant out to engineers who want to join a startup at the cutting edge, but with more and more similar-minded startups joining the quest for top talent, it becomes harder to differentiate.
“It used to be foosball. Well, we have pingpong. People wear shorts and T-shirts to work and have flex time,” Quirk said.
“I think that’s still attractive, but when you’re competing against other companies that have the same things, it’s hard.”
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