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Startups Rev Up Recruitment Efforts

Light Reading
News Analysis
Light Reading
11/28/2000

With the stock market slumping in the U.S. and fears of reduced capital spending from service providers still looming, one might think that it would be a bad time to look for a job at a startup. But, in fact, just the opposite is true. Startups are actually increasing their recruitment efforts.

A big development in the last couple of months, according to recruiters, has been startups' willingness to dig deep into their pockets to get the right talent on their teams. One vendor reportedly is willing to give away as much as 10 percent of the company to fill four positions: VP of manufacturing, VP of engineering, director of manufacturing, and director of engineering. This is a big step up, considering that most director-level appointees are offered less than one percent equity, say recruiters.



“Startups are focused now more than ever on execution,” says one recruiter who didn’t want to be named. “They want people who have been there, done that before, and they are willing to pay a premium for it.” Other companies have upped the ante in terms of cash bonuses and are offering interest free loans for housing in the Silicon Valley. One company offered $100,000 to an “individual contributor” or staff engineer to entice him on board, says the recruiter. This is ten times the average, which is about $10,000 for an individual contributor.

“There is definitely more of an emphasis on finding someone with the exact skill set needed,” says the recruiter. “And startups are willing to pay a premium for that once they find it. But not everyone is going to get the $100,000 bonus.”

California-based Calix Networks even sent around a memo to recruiters offering $10,000 on top of the usual fees to find talented people to work at the company.

But it isn’t only the amount startups are willing to pay that is changing. There has also been a shift in terms of which jobs are most in demand. Nine months ago, application-specific integrated circuits (ASICs) designers and micro-electro-mechanical system (MEMS) engineers could write their own tickets, but today startups are looking for manufacturing experts or software designers. Specifically, in manufacturing, companies want to see semiconductor packaging experience; while in software, Multiprotocol Label Switching (MPLS) and management expertise are key.

Why the shift? For one, as the optical industry matures, vendors need to be able to cost-effectively mass-produce their products. This is especially important when it comes to component vendors. Today, many optical components are still assembled by hand. What is needed is a process that will allow vendors to automate and increase yields from a couple hundred a day to tens of thousands a day. And because this evolution has already happened in the semiconductor industry, individuals with that experience are very much in demand.

With groups like the Optical Domain Service Interconnect Coalition (ODSI) and the Optical Internetworking Forum (OIF) working to standardize optical signaling technologies, software differentiation will also become more important. Hardware technology will become commoditized, which means that software will be what sets one vendor apart from another.

The market slump has not only failed to dampen startups' demand for employees: Some people in the industry are anticipating a flood of new recruits from large public companies with falling stock prices. Startups in New Jersey have already started to reap the benefits of Lucent Technologies Inc. (NYSE: LU) and AT&T Corp.'s (NYSE: T) sagging stock prices (see New Jersey Startups Clean Up).

“What has happened in the stock market has actually been helpful,” says Matthew Glenn, director of product marketing for Allegro Networks, a Silicon Valley-based startup. “When people at Cisco [Nasdaq: CSCO] and Nortel [NYSE/Toronto: NT] see that their stock options aren’t doubling anymore, they’ll jump ship.”

-- Marguerite Reardon, senior editor, Light Reading, http://www.lightreading.com

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