Uber and Airbnb are raiding public companies for talent. Has Google learned its lesson after Techtopus?
Mike Issac of the New York Times had a story yesterday that detailed yet another consequence of the growing herd of unicorns: Existing public tech companies are getting raided for talent by younger, hotter companies that can promise the riches of an upcoming IPO.
Guess who is the most aggressive? That’s right! Uber. The company synonymous with the word “aggressive” (if we’re being euphemistic.)
And who’s getting the most hit? Google, which Issac says is particularly vulnerable given the shift it’s undergoing to Alphabet.
I’d argue there are also a ton of city-dwellers who are just sick of the daily commute to Mountain View -- no matter how nice those busses are. In particular, Uber has plundered Google’s mapping unit, while Airbnb has siphoned talent from the search giant more broadly.
From the piece:
Among the most aggressive unicorn recruiters is Uber, the ride-hailing company based in San Francisco, which has expanded operations to 59 countries. Uber promises a fast-paced work environment and “world changing” ambitions, according to multiple people who have been approached by the company or work for it. Uber has more than 3,500 employees, up from roughly 1,300 a year ago, not counting its so-called driver partners, who are contract workers.
Uber does not shy away from dangling generous compensation packages to important hires, especially in engineering. In the case of some highly sought-after engineers from Yelp last year, Uber offered millions of dollars in restricted stock units, according to two people with knowledge of the recruiting practices, who spoke on the condition of anonymity.
Given the disconnect between private valuations and public valuations, those RSU dreams may end in tears. But employees like to dream. And at a big company, you already know the outcome.
Isaac notes this is nothing particularly new, just intensified. What he didn’t note is what happened last time a surging group of tech companies-- back then Facebook, LinkedIn, Twitter, etc-- started aggressively raiding Google and Apple: It lead to an unprecedented wage collusion suit where eventually dozens of companies worked together secretly and illegally to artificially suppress wages of millions of tech workers.
It was masterminded by the legendary heroes of young engineers everywhere-- principally Steve Jobs, Eric Schmidt, and Bill Campbell. It not only put a stranglehold on wages in tech, it spread through Hollywood animation too, via Jobs and Pixar. The plaintiffs in the class action suit, and the academic experts they hired, estimated that billions of dollars in wages were effectively stolen. Jobs was the hammer, threatening retaliation if any of the members dared to make a cold call to one of his employees. At one point, Google scuttled an entire planned Paris office for Android because it’s “rival” Apple objected to hiring people who’d once worked there. Then there was the famous “smiley face” incident.
From Mark Ames reporting on the wage collusion suit last year:
The companies in the pact shared their salary data with each other in order to coordinate and keep down wages — something unimaginable had the firms not agreed to not compete for each other's employees. And they fired their own recruiters on just a phone call from a pact member CEO.
In 2007, when Jobs learned that Google tried recruiting one of Apple's employees, he forwarded the message to Eric Schmidt with a personal comment attached: "I would be very pleased if your recruiting department would stop doing this."
Within an hour, Google made a "public example" by "terminating" the recruiter in such a manner as to "(hopefully) prevent future occurrences."
Likewise, when Intel CEO Paul Otellini heard that Google was recruiting their tech staff, he sent a message to Eric Schmidt: "Eric, can you pls help here???"
The next day, Schmidt wrote back to Otellini: "If we find that a recruiter called into Intel, we will terminate the recruiter."
One of the reasons why non-recruitment works so well in artificially lowering workers' wages is that it deprives employees of information about the job market, particularly one as competitive and overheating as Silicon Valley's in the mid-2000s. As the companies' own internal documents and statements showed, they generally considered cold-calling recruitment of "passive" talent — workers not necessarily looking for a job until enticed by a recruiter — to be the most important means of hiring the best employees.
If we’ve learned anything about past Silicon Valley bad behaviour, it’s that Silicon Valley often learns nothing from it’s past bad behavior.
It’s almost certain that Google and other Valley giants will want to try to “hack” startup poaching. The only question is whether, this time around, they’ll find a way to do it without forming the largest wage theft conspiracy the tech world has ever seen.