

Will Startups Get Squeezed by a Tech Hiring Binge? - luminary
http://gigaom.com/2010/04/16/will-startups-get-squeezed-by-a-tech-hiring-binge/

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strlen
Were start-ups squeezed by hiring in 2004-2007?

Joining a pre-funding start-up is a _huge_ decision which takes dedication,
passion for and expertise in the company's focus. It's a lot closer to
starting a company yourself than working for Google. Salary is not the
deciding factor, engineers considering such a decision are very specific in
what they're looking for. From the company's point of view, first non-founding
engineer is an employee that can make or break a company and set the
engineering culture. It's a mistake to take someone who's only there because
he had nowhere else to go: the sort of people you want for that position are
confident that they could get hired elsewhere, even in a recession.

On the other hand, funded early-on start-ups (i.e., post series A, but pre-
revenue/follow-on funding) can afford to pay market salaries, unless they're
hiring "warm bodies" which is again a mistake. The _big_ way to save is by
hiring less engineers, not by paying engineers less. The way to make do with
less engineers is to go for quality instead of quantity: you're always going
to be paying top dollar for top talent.

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techiferous
"The big way to save is by hiring less engineers"

The big way to save is by hiring less _business people_. I've come to the
realization that in today's startup climate, developers often add more value
than business people, because a skilled developer, if interested and
motivated, is able to eventually pick up the business side of things pretty
well.

I'm finding this a wonderful economic climate for a single technical founder
to bootstrap a startup (or two technical cofounders).

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strlen
Good catch, I'd argue non-technical people should be as few as possible. The
big way to save is by hiring less in general.

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techiferous
Oh, I also forgot to say that you made some _really_ good points.

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madmanslitany
Anecdote: I'm a software developer writing trading systems at the moment at a
large bank, and I've known three people at my workplace who have interviewed
at NYC area startups in the past year or two. All of them received offers from
at least one of the startups they interviewed with, but only one of them took
it, and this was during the period of the recession when morale at the bank
was at its lowest.

I think there's probably going to be some squeeze on startups, but the people
willing to work for a startup are a subset of all developers out there, so the
effect won't be as dramatic as this article seems to be implying. There are
plenty of developers, who probably would do great at a startup, simply won't
take the risk.

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hga
Hasn't there been a lot of discussion about how people in this culture aren't
likely to go for the startup culture? I can't assess it since I know nothing
of the former, but the case for this sounded at least plausible to me.

ADDED: And then there's the risk of staying where you are. _Some_ people will
realize that their job security isn't great to begin with, which changes the
risk side of calculations for those not paralyzed by the situation.

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catch23
At least in silicon valley, I don't think the tech sector was ever in a
slump... companies left and right have been trying to hire people here.

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kls
There are some of us out there that are actively looking for start-ups to jump
to, I think a lot of top caliber guys look for start-ups to get involved with.
But I have to agree the market is pretty hot right now, which is a good thing.

~~~
ismarc
There are a large number of people that would dive head-first into a startup
if it sparked their interest. I know I've been itching to join another one, so
I've been bootstrapping a couple of ideas at once, seeing which one ends up
getting better initial feedback (I've even scrapped one because after an
elevator pitch I had a potential user go "So it's like X but better?" and I
had the realization of "oh man this idea really does suck"). I've tossed a
resume here and there, too, for interesting startups hiring the first couple
of folks.

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codexon
I thought this was conventional wisdom. Just a couple of months ago, we all
kept hearing stories about how a recession/depression was great for finding
cheap workers for a startup.

~~~
pw0ncakes
At least in New York, it's not panning out that way, unfortunately. This
economy has been bad for startups-- maybe not as awful as for everyone else,
but still undesirable.

The dramatically increased difficulty of getting money (clients or investors)
is much greater than the discount (maybe 15 or 20%) at which you can now hire
talented people. Also, real estate (which is disastrously expensive in New
York) hasn't fallen fast enough, which is unfortunate but expected (real
estate takes a long time to fall, even when money runs dry).

In general, awful times lead to conglomeration, not liberation and small-scale
organic growth. People who have stable jobs are clinging to them, and those
who don't have them are willing to take big-company jobs at a discount, but
there isn't a huge rush of interest in pre-money startups. Many of the
original European nobles (although, in practice, it was often possible to buy
a title after the Renaissance) are the descendants of those who could offer
protection (in exchange for slave labor) after the Fall of the Roman Empire.

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hga
Hmmm, many of the arguments for NYC not having a good culture for startups
would seem to be even stronger in this sort of period ... but would that be
true for other areas, especially ones with a good track record (well, Silicon
Valley and Boston)?

Your point about _awful_ times is well taken, but I don't think we're there
yet, and it's not clear to me we'll get there anytime soon. E.g. Japan's two
Lost Decades aren't necessarily quite "awful times".

E.g. before we get to the Fall of the Roman Empire, where from what I'd read
serfdom started for the reason you describe as a means to escape the exactions
of the falling Western Empire (e.g. impossible taxation, a law that required
people to follow the career of their father (to prevent escaping the former),
etc.), we could look at the Great Depression, where at the time the USDA
estimated 1/4 of the US was malnourished, which was confirmed by WWII
conscription.

We'll see.

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pw0ncakes
No. A hiring binge will be good for startups.

Consider the rash of multiple liquidation preferences we've seen over the past
2 years. Are VCs hurting more now than in 2007? Not especially, since the
money they're investing has been pledged years ago, mostly before the
liquidity crisis. They're offering these awful terms because a lot of people
are unemployed and desperate to get a paying job of any kind, so they have
leverage. When the alternative to starting up is a $100k/year Google job, the
"involuntary entrepreneurs" will vanish and terms like multiple liquidation
preference and participating preferred will go back into the tarpit where they
belong.

