While in the “salad days” of my business career, I had a motto which was helpful regarding employees- “If you don’t move them up, they’ll move on.” Google might have been thinking this was so in creating CEO opportunities for a rash of executives by restructuring to the new Alphabet paradigm. In one fell swoop, they were both able to reward and incentivize talented people and thus retain them. For sure they’ve been attracting attention from the Unicorns (start-ups) who have been seeking opportunities to poach talent from the big guys for years. You can grow talent, and that has its rewards in terms of retention but it is slow and the practice takes patience. If you want something to happen now, then recruiting is the way to go.
The unicorns, a class of hot start-ups valued at $1 billion or more, are all aggressively pursuing the best and brightest minds in Silicon Valley with promises of talked-about workplaces and eye-popping pay-outs. Amid a general scramble for talent, Google, the Internet search company, has undergone specific raids from unicorns for engineers who specialize in crucial technologies like mapping. Thanks to recruiting, Airbnb, boasting a $24 billion valuation has been able to double its work force over the past year.
The largest Unicorn, Uber – valued at north of $50 billion – has been especially effective in raiding Googles mapping unit of talent over the last year in a bid to shore-up its own growing mapping capabilities while Airbnb has taken a more scatter-gun approach in stealing its 100 or so recruits from across the board at Google. In the raids, both highly skilled engineers and even ‘lowly’ chefs have been plucked from their ranks. From all this one can only conclude that it is a buyer’s market as far as employees are concerned which has both befuddled and annoyed the tech giants.
This comes, however as no surprise, as recruiting forays are the common currency where technology companies wage war on one another for top prospects by doling out six-figure salaries and generous stock packages as if they were Halloween candy. The difference now is the scale of the talent clashes, with a growing number of young companies jumping into the fight, boasting fat war chests and boasting billion-plus valuations. Their ranks have swollen to more than 125 according to industry experts which track start-ups.
Employees of the tech giants are snatched by the unicorns using a persuasive pitch which both extolls their lofty status and talents while recognizing their heady valuations. The assaults have not gone unnoticed by the top-most executives as evidenced by Amazon chief executive, Jeff Bezos acknowledgment that his employees are highly prized and thus aggressively recruited. Amazon’s draconian work conditions have surfaced in the news which may be a contributing reason for employees looking to bail and the resulting success of the suitors. Another tool the start-ups have going for them to snag workers is the alluring prospect of a large payday when the fledgling firm goes public.
Nothing excites young tech talent than being on the cutting edge with high growth potential and the nimbleness of a smaller company. The giants can no longer provide this. Again, Google’s restructuring may at least portray the semblance of internal growth potential for employees while, at the same time seeking to maintain its cutting edge persona and digital agility. Good thing, too, as some former start-ups, now established companies like Yelp and Twitter have had their share prices hammered- Yelp by 73% this year. Replacing and retraining to offset losses due to recruitment raids have taken their toll at these companies as both are expensive propositions- and time- consuming. Yelp’s COO, Geoff Donaker in acknowledging the impact of the recruitment skirmishes opined, “We will do what we can to hold the dam on the whole thing and ride it out.” He may be optimistic that the end is in sight though their overall staffing numbers have increased YOY.
In the War, Uber has been the most aggressive unicorn and Google its most prominent plum. Perhaps its signature signing by Uber was Google’s vice-president for engineering, Brian McClendon who now heads Uber’s driverless car and robotics research division.
The titans are fighting back- paying up to keep talent- and, in the example of creating Alphabet, restructuring in a bid to retain top talent. Whether creating Alphabet establishes a mechanism for promoting and, thus, retaining key personnel or sows seeds of doubt and confusion among them remain to be seen. What is clear is that there is a war and, at present, the unicorns are winning.