Emerging Tech

Are tech startups losing their cool in Silicon Valley?

Silicon Valley may be in the process of repeating the labor cycle from the dot-com boom and bust, when tech workers fled to startups in droves during the boom and then quickly abandoned them for the safety of the IT blue bloods during the bust.

Silicon Valley may be in the process of repeating the labor cycle from the dot-com boom and bust, when tech workers fled to startups in droves during the boom and then quickly abandoned them for the safety of the IT blue bloods during the bust.

Over the past three years, Silicon Valley startups have become cool again with the Web 2.0 mini-boom, driven by the success of startups like Facebook, Flickr, and YouTube. The magnetic pull of potential IPO riches led many techies to gravitate to startups again.

However, with the U.S. economy on uncertain footing, a number of tech workers are already beginning to abandon startups for steadier gigs with established tech companies, according to the report In Silicon Valley, a Flight to Safety, from The Wall Street Journal. The report states:

There's no data on these job shifts, and recruiters and companies say the trend is nascent. Start-ups certainly aren't being abandoned en masse. But early signs of a mind-set shift are unmistakable, evoking memories of previous migrations to stabler jobs. During the dot-com bust that began in the year 2000, dozens of Silicon Valley start-ups withered or disappeared, while many large tech firms survived. Sure, big tech companies eventually began firing as well, but engineers who leaped to safety early were more likely to survive cutbacks.

The article cited stories of several IT pros who made the move from startups to established companies. It specifically featured the following three:

  • Ameet Kher, a senior software engineer who left a telecom startup called Ditech Networks to join Research in Motion (BlackBerry)
  • Thomas Hanley, an engineer who left an unnamed startup to join the software company Intuit
  • Ian Arcuri, an engineer who left a local tech start-up in North Carolina to join Cisco Systems

Conversely, the Journal ran a related article called Tech Execs Still Willing To Stick With Start-Ups, which declared that senior executives -- unlike the professionals in the trenches -- are showing no signs of jumping ship from startups:

Senior professionals are no strangers to the tech sector's ebbs and flows, so they're less inclined to have a knee-jerk reaction to changes in the economy, says Andy Price, a managing partner at Schweichler Price & Partners, a boutique technology recruitment firm. "There is absolutely no pattern," he says.

While that sounds logical, I think the real reason why senior execs are sticking with startups is summed up in this quote from the article:

Those who've already reached the corner office -- or are close to it -- also often have a financial cushion to rely on should something go wrong. By contrast, "if you're a low-level person, you're living hand-to-mouth in Silicon Valley," says Mr. Price.

If tech talent is migrating away from startups, it's a great opportunity for the Oracles, Ciscos, and Hewlett-Packards of the world to cherry-pick the best engineers and use that talent to improve products lines and grow market share, even during a economic downturn.

About

Jason Hiner is the Global Editor in Chief of TechRepublic and Global Long Form Editor of ZDNet. He is an award-winning journalist who writes about the people, products, and ideas that are revolutionizing the ways we live and work in the 21st century.

2 comments
mahipat
mahipat

ya, they are flying.