The Panic Over Hiring

There's not much Silicon Valley recruiters won't offer in their "war for talent"

It's 7:30 a.m., and a two-hour pickup basketball session at Silicon Valley's tony Pacific Athletic Club is winding down. Nine guys and Amy Vernetti are drenched in sweat, their vocabularies reduced to grunts and four-letter words. "We gotta give Amy some s---," snarls one guy. "She worked us over." A player charges straight at Vernetti, a 32-year-old former college hoops player, who lands on her rear but pops back up smiling--and holding the ball.

Funny thing is, this basketball workout is probably the least competitive thing Vernetti will do all day. She's the chief recruiter at, an incubator for startups that helped 40 companies raise more than $100 million last year. But getting money is the easy part in the Valley these days. Vernetti's job is nabbing something far scarcer: human capital. has joined a slew of venture-capital firms and others to bring in experienced, professional recruiters such as Vernetti, a former whiz kid at Heidrick & Struggles International Inc. "She's a pistol," says Chief Executive Guy Kawasaki, a former Apple Computer Inc. exec and fellow hoopster. Her stats show it: In four months, she has helped bring 50 people to Garage's portfolio companies--and 17 to itself.

Established companies and startups alike need all the guns they can muster in what has become known as Silicon Valley's "war for talent." Unemployment in most towns in Santa Clara County and San Mateo County is between 1% and 2%, less than half the national average. Signs of the panic to find "great" people are everywhere. Movie theater screens flash recruiting ads before all the main attractions. Microsoft Corp. recently raised salaries for Silicon Valley employees. Interwoven Inc. is luring engineers with a two-year lease on a spiffy BMW Z3 as a signing bonus. OnLink Technologies Inc., a Redwood City (Calif.) startup that makes online customer-decision-support software, hires an airplane to fly above rush hour traffic jams with a banner that says: "Way-cool Start-Up Now Hiring."

That's not even the weirdest recruiting action in the fast lane: Lu Cordova, CEO of Acteva Inc., a San Francisco online events-ticketing company, says she once recruited a driver who rear-ended her car on the freeway because she was so impressed with the woman's efficiency in resolving the mishap. "I hired her boyfriend two weeks later," says Cordova.

Elite players are working overtime to score new hires. Some venture capitalists have even taken to showing up at a candidate's home on a Friday afternoon and offering use of his or her private jet so the family can get away for the weekend and think over the offer. Where will all this stop?

"All he offered you was a jet?" I imagine the second-in-line VC at a candidate's door stammering, before shouting into his cell phone: "Don Pardo, what do we have in store for the fabulous Fenwick family?"

Stanford University School of Business professor Jeffrey Pfeffer has some refreshing plain talk about all this. He's co-author of the provocative new book, The Knowing-Doing Gap. The book scolds companies that he and co-author Robert I. Sutton say know, but don't follow, simple established business practices. A classic case of that, Pfeffer argues, is the "free agent" labor market that Valley companies have created with their IPO funny money and frenzied hiring. "The myth is, you build a great and effective company by hiring only great people," says Pfeffer. "Well, great companies build systems that bring out the best in ordinary people....I hate the `war for people' imagery. It's a trend the companies have brought on themselves. They're paying people to switch jobs and wondering why they switch jobs so much."

Although Vernetti feels that a "great" candidate can absolutely make or break a startup, she doesn't fundamentally disagree with Pfeffer. Part of her mission at is to educate entrepreneurs about the basics of team-building. Many don't have a clue. For example, a single interview goes well, and the company assumes it has filled the job. "Candidates are trained to tell you in interviews they think you have a cool company," she says. But often the top choice bails at the last minute, and the company makes a default hire it later regrets. "Recruiting is about steady, consistent pressure," until the candidate shows up for work the second day, she says.

Right now, many entrepreneurs are desperate. At a recent job fair at Stanford University on a rainy Sunday morning, more than 100 dot-com companies jostled inside two huge tents, many flashing signs screaming "Pre-IPO!" To lure college kids to discuss their companies' hiring needs, some dumped half-foot-high piles of candy on folding tables. (In Silicon Valley, candy-wielding dot-coms are the strangers your mother warned you about.) George and John Kembel, the identical twin founders of DoDots Inc., a Palo Alto startup, tag-teamed the job fair on behalf of their Softbank Venture Capital-backed company. DoDots offers technology that lets companies repackage Web-site services by theme--say, sports schedules, online ordering, and live Webcasts. In the past year, they've gone from 3 to 40 people--and three of them are full-time recruiters. Says John: "We see people whose resumes show they stayed just to the end of their cliff at the last job [Valley parlance for the point where employees can cash out their IPO shares]. Those people are immediately discarded. We're building this to last."

I know they mean that sincerely, but competition is so intense, nobody's easily discarded these days. "They say Silicon Valley has 1% unemployment," says Lu Cordova. "But I say it's 100%. Everybody's looking for a better opportunity." And every company thinks it has got one to offer. As she downs a postgame orange juice, Vernetti grins: "Friday's a great day to close a candidate. I think I'll go close one today."

I e-mail her later: "Did you land your fish?"

"Yes, was there ever a doubt?" she replies. Not if you've seen Vernetti play.

Read a chapter from The Knowing-Doing Gap


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