Facebook in Silicon Valley talent battle

Story highlights

  • A new generation of start-ups is reigniting the Silicon Valley talent wars
  • Google and Facebook to compete harder -- and spend more -- to find and hold on to the best
  • Pinterest, Square, Airbnb and Dropbox are increasingly winning the hearts and employment contracts

At the launch of Pinterest's new Android app in August, new employees mingled with some of the fanatic users of the rapidly growing online bulletin board site.

As they nibbled on devilled eggs and popcorn coated in rainbow sprinkles, both creations of Pinterest users, recently hired mobile developers and business executives exchanged pleasantries about how excited they were to be part of the hot Silicon Valley start-up. Many repeated a common refrain about another hot company that last employed them.

"I used to work at Facebook," said one new hire after the other.

A new generation of start-ups is reigniting the Silicon Valley talent wars, forcing established companies such as Google and Facebook to compete harder -- and spend more -- to find and hold on to the best engineers, designers and mobile developers.

Pinterest, Square, Airbnb and Dropbox are increasingly winning the hearts and employment contracts of Silicon Valley's most talented. Massive funding rounds have armed these companies to go on hiring sprees, while a steady flow of venture capital to smaller start-ups puts further pressure on an already limited talent pool.

Now that Facebook is a public company that recently surpassed the 4,000- employee mark, it has arguably moved into the category of larger, older companies from which engineers often decamp, in favour of smaller ventures with new exciting challenges, and more favourable equity packages.

But Facebook is fighting that perception -- and its flailing stock price -- with an increasingly aggressive recruiting effort.

Mark Zuckerberg, Facebook's chief executive, acknowledged that the halving of the company's share price was hurting employee morale and even caused some people to leave. Speaking before a room full of tech workers and writers in September, he made a point of highlighting how the company was now multiplying the number of shares given to new hires to make up for its low stock price.

"The best people want to work on a mission they believe in," he said, "and they also want to make a bunch of money."

The ante is further upped by the evolution of new technologies, such as mobile development, which companies like Facebook must compete in, but for which the talent pool of engineers with those new, emerging skills is even more limited. Facebook is racing to hire people with skills in mobile technology, mobile advertising, monetisation and ad targeting -- and it is willing to poach and pay to get them.

"There's no scenario where Facebook wouldn't give an offer to a Google engineer," said Morgan Missen, a former recruiter for Google, Twitter and Foursquare who now runs her own talent consultancy. "If an engineer can tweak an ad algorithm to a fraction of a per cent, that could be millions of dollars for the company, so they are compensated really highly."

Facebook, along with several other companies, is also wooing more and younger candidates with summer internship programmes for university students. This summer, Facebook employed more than 500 interns, almost double the number last year, from which it hopes to draw a steady stream of full-time hires.

It is also turning more to the acquisition of start-ups to capture teams of talent at once, known as "acqui-hires". In recent months, it acquired Face.com, which develops facial recognition software; Karma, whose gifting technology is being rolled out on Facebook now; and Carsabi, a price comparison site for used cars.

Acqui-hires tend to be more expensive than regular hires, as investors still expect a payday for their initial investment. Acqui-hires can add between $100,000 and $250,000, in addition to individual compensation packages, to the total hiring bill, according to Ms Missen.

"Facebook, in wanting to maintain relationships with the venture capitalists, will make sure investors are paid out at least a bit," she said.

Salaries are also going up, and the gap between private and public company compensation is shrinking. The median salary for a software engineer at a private tech company increased 44 per cent in the last 10 years to $137,500, to virtual parity with publicly-listed companies, according to data from Radford, a compensation consultancy. Dwight Crow, the co-founder of Carsabi who recently began work at Facebook, said some of his engineering friends with three to five years of experience recently received total pay offers of $2m, even $5m. Such stakes make engineers very protective of their social networks. Who they know becomes very valuable in the talent wars.

"There is a set number of people that are building the entire internet and it really does become this personal battle of who have you worked with before, whose reputation do you want to bet on," he said. "I would guard which engineers I think are leaving companies more closely than I would guard a hot stock tip."

There is even inflation of perks. In addition to the increasingly standard benefits of free food, free laundry and an on-site gym, Facebook now has an on-site doctor and nurse station at its Menlo Park campus, a subsidised employee barber shop and salon, and soon, a campus bike repair shop. It also offers $4,000 "baby cash" to new parents to cover all the costs associated with a newborn, from strollers and cribs to onesies and nappies.

While Facebook is maintaining a stable position in the talent war, some employees still feel they have reached the limit of their tenure. A string of employees, some high profile, have left in the past year to launch their own start-up, or to join the ranks of another. Their friends or former colleagues sometimes follow.

The social and visual nature of Pinterest, its rapid growth trajectory, and its perceived challenges for monetisation and policy, is a natural fit for former Facebookers, though it has done well to draw its more than 80 employees from places like Google, Amazon and Yahoo.

"Smart people want to work with smart people," said Tony Huie from Dropbox's business operations team. "We believe if we have the superstars on our team, then we'll attract the right people."

*****

High profile executives leave Facebook

A string of high-profile executives and key staff have left Facebook since the IPO six months ago. Some were longstanding employees who had been at the company for four years or more, and whose options had vested. Others had stayed only two or three years, or less.

The most common reason employees gave for leaving was to launch their own company.

Among the most substantial losses was Bret Taylor, Facebook's former chief technology officer, who announced his plans to leave in June to start his own company. Joanna Shields, Facebook's vice-president and manager for European operations, will leave to head London's Tech City Investment Organisation in January. Ethan Beard, director of platform partnerships, and Katie Mitic, platform marketing director, both announced their departures in August, citing vague plans to work on their own ventures.

"That is the way the Valley works," said Lise Buyer, an IPO adviser with the Class V Group which helped with Google's IPO. "You ride the company for a time, then, unless you're the founder, you go on to start another company. That's why the Valley regenerates itself."

Some did not specify a plan, while others soon appeared on the rosters of other, smaller tech start-ups.

Carl Sjogreen, the director of product management who oversaw Facebook's Open Graph project, left in July after just two years with the company.

Joe Lockhart, who served just over a year as Facebook's vice-president of communications, announced his departure last month.

There is the crew of Facebookers who decamped to Pinterest, for example. Barry Schnitt, Facebook's director of corporate communications and public policy, became Pinterest's head of communications in May. Don Faul, Facebook's former vice-president of online operations, Cat Lee, who led developer tools for Facebook's platform, and Tim Kendall, Facebook's director of monetisation, are all now at Pinterest.

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