Two months ago, Jacob Eiting shut down Series B for his startup RevenueCat, which is building an in-app subscription management platform. The $ 40 million investment was aimed at growing the business and, most importantly, hiring more people. The 35-person startup hopes to reach 50 employees by the end of the year and 100 by the end of next year. To woo them, RevenueCat offers a series of perks – unlimited vacation, a home office allowance – as well as equity and salaries comparable to some of the big tech companies, regardless of geography.
Such offers were less common in startups two years ago, before the pandemic. Today, a competitive hiring market has pushed up wages, strengthened benefits, and encouraged companies to offer more flexibility to candidates. “Partly it’s like, ‘How do we stand out from the Google of the world? ”, Explains Eiting. “We take advantage of our strengths. We pay well if you’re out of the Bay Area, that’s how we set ourselves apart. (Google, among other big tech companies, has said it could cut wages for remote workers.)
Like RevenueCat, startups around the world are in expansion mode. The first half of 2021 marked a world record for venture capital spending, with $ 288 billion invested in startups around the world. For most of them, an influx of money means an influx of employees, which has inflated the number of jobs available in startups. 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, vacancies in the tech sector increased 16%, according to a report by Dice, an industry career database. While big tech companies are still growing, a year of Zoom meetings, telehealth, and restaurant menus with QR codes has driven demand for programmers and software engineers more broadly. Between March and July, there were more than 323,000 jobs for software engineers, according to analytics firm Emsi Burning Glass, which tracks job growth and labor market trends. This is 13% more than in 2016. Postings for other tech jobs, like data engineers, have increased by 312% over the past five years, suggesting increased interest in these jobs over time. .
All of this created what Silicon Valley insiders have called the most frenetic hiring market since the dot-com boom of the 1990s. “The engineering market has become so competitive,” says Justine Moore, an investor who manages a job site on Pallet to promote openings in startups and venture capital companies. “I’ve seen a lot of startups offer referral bonuses. I would say $ 10,000 is a pretty standard referral fee, but I’ve heard of people making up to $ 50,000.
Other startups have used more creative tactics to find referrals, or at least to stand out from other job openings. One-step start posted on Moore’s Pallet board offering four tarot readings, two boxes of succulents, a giant piñata of ‘mysterious goods’, plus a cash prize of $ 3,000, to anyone who recommends a candidate who stays with the company for at least six months. Another startup offered a year of providing cookies from Levain Bakery to referrals. (A gift set of four of the bakery’s chocolate chip nut treats sells for $ 27 online, or $ 6.75 per cookie.) On Twitter, the founder of a mobile game company Free to “personally pay a Bitcoin” – valued at $ 44,500 – for a referral that resulted in a hire.
A year ago, job seekers preferred the stability of Big Techs to startups, which experienced more volatility during the pandemic, but small businesses may have an advantage in today’s market. A study, which examined research on AngelList between February and May 2020, found that job applicants were 20% more likely to apply for jobs at companies with more than 500 employees, like Apple and Google. Today, more and more job seekers are prioritizing the flexibility and benefits of remote working, according to a recent survey of U.S.-based tech employees. This survey also found that technologists experienced high levels of burnout in the last quarter and that 48% were interested in changing companies this year, up from 32% in the same period last year.
Small businesses may have a chance to capture some of this talent in transition, offering the things that job seekers feel they care about the most. “Startups are increasingly targeting other companies that are going to be great places to hire,” said Hunter Walk, partner of early stage venture capital fund Homebrew. As CEOs create new policies on office work or social issues at work, there will naturally be attrition of people who disagree. For startups, Walk says, there is an opportunity to recruit these people. “What I see is that more and more candidates are thinking about a mission they want to participate in or the culture of the company in which they work, and this is a more important factor in taking decision.”
Walk believes it could help startups access talent they didn’t have a few years ago and help applicants find the work environment that suits them best. “My most optimistic view is that we are entering a time when mission-oriented founders are able to more easily attract mission-oriented team members,” he says.
Alternatively, it could just give tech workers more say in the terms of their employment. Those who disagree with a company’s culture have more freedom than ever to vote with their feet. This has the potential to reshape the industry for years to come.
This story originally appeared on wired.com.