Two months ago, Jacob Eiting closed the Series B for his startup RevenueCat, which makes a platform for managing in-app subscriptions. The $40 million investment was meant to grow the company and, crucially, to hire more people. The 35-person startup hopes to expand to 50 employees by the end of the year, and 100 by the end of next year. To court them, RevenueCat offers a suite of perks—unlimited vacation, a home office stipend—plus equity and salaries on par with some of the big tech companies, regardless of geography.
Such offers were less common in startups two years ago, before the pandemic. Now a competitive hiring market has driven salaries higher, beefed up benefits, and encouraged companies to offer more flexibility to job candidates. “Part of it is like, ‘How can we stand out against the Googles of the world?’” says Eiting. “We take advantage of the strengths we have. We pay well if you’re out of the Bay Area—that’s how we stand out.” (Google, among other big tech companies, has said it may reduce salaries for remote workers.)
Like RevenueCat, startups across the world are in expansion mode. The first half of 2021 marked a global record for venture capital spending, with $288 billion invested in startups worldwide. For most of them, an influx of cash means an influx of employees, which has caused the number of available startup jobs to swell. Engineers and software developers, who have always been in demand, can now write their own checks.
It’s not just startups, either. In the first quarter of 2021, overall tech job postings increased 16 percent, according to a report from Dice, an industry career database. While the big tech companies are always growing, a year of Zoom meetings, telehealth, and restaurant menus with QR codes has driven demand for software programmers and engineers more broadly. Between March and July, there were more than 323,000 job openings for software engineers, according to the analytics firm Emsi Burning Glass, which follows job growth and labor market trends. That’s 13 percent higher than in 2016. Postings for other tech jobs, like data engineers, have grown 312 percent in the last five years, suggesting a greater interest in those jobs over time.
All of this has created what Silicon Valley insiders are calling the most frenzied hiring market since the dot-com boom of the 1990s. “The engineering market has gotten so competitive,” says Justine Moore, an investor who manages a job board on Pallet to promote openings at startups and VC firms. “I’ve seen a lot of startups offering bonuses for referrals. I’d say $10,000 is a pretty standard referral fee, but I’ve heard of people who will do up to $50,000.”
Other startups have used more creative tactics to find referrals, or at least to stand out among other job postings. One seed-stage startup posted to Moore’s Pallet board offering four tarot readings, two boxes of succulents, a giant piñata of “mystery goods,” plus a $3,000 cash prize, for anyone who refers a job candidate who stays at the company for at least six months. Another startup offered a year’s supply of cookies from Levain Bakery to referrals. (A gift box of four of the bakery’s signature chocolate chip walnut treats sells for $27 online—or $6.75 per cookie.) On Twitter, the founder of a mobile game company offered to “personally pay one Bitcoin”—worth $44,500—for a referral that resulted in a hire.
A year ago, job-seekers preferred the stability of Big Tech to startups, which experienced more volatility in the pandemic, but smaller companies may have an edge in the current market. One study, which looked at AngelList searches between February and May of 2020, found that job candidates were 20 percent more likely to apply for jobs at companies with more than 500 employees, like Apple and Google. Now, more job-seekers are prioritizing flexibility and remote work benefits, according to a recent survey of US-based tech employees. That survey also found that technologists experienced high levels of burnout last quarter, and that 48 percent were interested in changing companies this year—up from 32 percent the same time last year.
Smaller companies may have a chance to capture some of that talent in transition, by offering the things job-seekers say they now care about most. “Startups are getting smarter about targeting other companies that are going to be interesting places to hire from,” says Hunter Walk, partner at the seed-stage VC fund Homebrew. As CEOs create new policies about working from the office, or speaking out on social issues during work, there will naturally be attrition from people who disagree. For startups, Walk says, there’s an opportunity to recruit those individuals. “What I’m seeing is that more candidates are thinking about a mission they want to be a part of, or the culture of the company they work at, and that’s a larger factor in the decision making.”