👋 Hi, this is Gergely with a subscriber-only issue of the Pragmatic Engineer Newsletter. In every issue, I cover challenges at Big Tech and startups through the lens of engineering managers and senior engineers. If you’ve been forwarded this email, you can subscribe here. Hiring software engineers and engineering leaders from Big Tech (Part 2)Tactics and approaches for startups to hire software engineers with Big Tech experience, and why Amazon is a leading source of talent for early-stage businesses
Before we start: performance reviews/promotions are around the corner at many companies. As the end of the year is closing in: these events will happen at most organizations in a month or two. The best time to prepare is now – waiting longer might push things too late. See the deepdives Preparing for promotions ahead of time and Preparing for performance reviews ahead of time for tips on what you can do, now, to ensure a fair outcome for these processes. In the first part of this two-part series, we looked into why Big Tech hires sometimes don’t work out for startups, and also when recruiting from the biggest companies does work for new tech players. Today, we cover how to recruit from Big Tech, with some tried-and-tested tactics for doing it successfully – and what to avoid, as well. For this, I talked with nearly a dozen startup founders and hiring managers with Big Tech backgrounds. Thank you to everyone who contributed! In this deep dive, we cover:
The bottom of this article could be cut off in some email clients. Read the full article uninterrupted, online. Related articles: 1. When it’s VERY hard to hire Big Tech talentIt’s never easy to attract talent from Big Tech for startup recruiters and leaders, and there are factors which make it harder. MoneyGolden handcuffs. When someone is on handsome compensation that’s paid over time, it’d be irrational for them to quit a Big Tech workplace. This is usually related to stock appreciation, or more rarely, generous retention bonuses. For example, most NVIDIA employees who joined in the last 2-4 years have “golden handcuffs”. We covered why rising stock prices make it hard to hire from public companies. Pending retention bonus. Big Tech pays these to a small number of engineers and managers seen as top performers or key contributors. Retention bonuses may be cash or equity, and are paid after a set period, usually between 6-24 months, or in installments. If someone quit sooner, they’d say goodbye to a significant sum. Hiring such people usually involves offering an equivalent amount as a signing-on bonus. Hiring from Netflix. The streaming service is a special case in Big Tech because it pays all cash compensation with no equity component; meaning it’s impossible for small enterprises to compete on cash with Netflix. Here’s what it offers:
The only companies that can match liquid total compensation packages like these are Big Tech and publicly traded tech companies, which offer much lower base salaries and make up the rest with equity. We previously covered Netflix introducing levels to replace its single senior software engineer level. TimingClose to promotion. Leveling up can mean a significant 25-30% jump in compensation within Big Tech. An engineer close to a promotion might want to wait and see what happens, before deciding whether to quit. Cycles are typically twice yearly at most large companies. We cover promotion advice in Preparing for promotions ahead of time. Engaged in a project. As a general rule, engineers and managers generally dislike leaving a large project before it’s finished. When investing a lot of effort, most people want to see it through, and so delay new opportunities until a launch is over. Upcoming annual bonus. A month or two before bonuses are revealed is a hard time to hire from Big Tech because people understandably want to collect their bonuses; especially as some Big Tech companies reveal them up front, like Meta. Big Tech bonus dates:
Offering no equity to new hiresThere are small companies which offer a base salary and even a cash bonus to new hires, but no equity, which makes hiring from Big Tech close to impossible. People interested in quitting Big Tech generally accept their total compensation will take a hit, short term. However, the expectation is that comp will shoot back up if they help make a new company into a success. This is why equity stakes matter. Companies offering massive cash bonuses are an exception, of which hedge funds are the best example. They typically pay a relatively small base salary, but pay cash bonuses several times bigger, depending on fund performance. Hedge funds in locations like New York City and London are probably the only places that can issue no equity while still attracting Big Tech engineers and managers. Other exceptions:
Basically, if a for-profit company doesn’t offer an equity stake or big job title boost, then it should probably forget about hiring directly from Big Tech. 2. Which companies do engineers quit for early-stage startups?Sure, it’s hard to recruit people from major tech companies to startups, but it’s far from impossible. Some businesses have a track record for making such hires, and I gathered some data on this, with the help of Live Data Technologies. It tracks real-time data on employment changes, and contributed to this publication’s recent report on the state of the software engineering job market in 2024. Companies where founding engineers are hired fromFounding engineers are among the first software engineer hires at new startups. The data below shows where founding engineers come from:
Four of the world’s five largest tech companies are the top sources of founding engineers for smaller companies. Among them, Microsoft lags behind. Most businesses on this list are publicly traded, and it’s fair to assume plenty of engineers left the likes of Affirm or Instacart after they went public. What I find surprising is that there are private companies from which plenty of founding engineers are hired, such as Stripe and Airtable. This is unusual because usually most engineers would wait for an IPO – and getting a payout – before leaving. What might explain these two companies is that Stripe organizes secondary stock sales (providing liquidity to current and past employees), and that Airtable let go of about half its employees 2022-2023, as we previously covered. In a separate deepdive, we covered How to thrive as a founding engineer. Companies which “stealth startups” recruit fromWhen a software engineer updates their LinkedIn profile to say they work at “Stealth Startup,” it can mean one of several things:
Tracking “stealth startup” is a pretty good way to get a sense of early-stage companies. Here’s the data:
Google, Amazon, Meta, Microsoft, and Apple are the largest tech companies by numbers of employees, so it’s unsurprising they’re the most common source of “stealth startup” hires. Uber being so high could be due to the so-called “Uber mafia” network known for founding startups, as well as former Uber staff at Cloud Kitchens having to put “stealth startup” on their LinkedIn profiles. It’s curious that hardware companies such as Intel, Cisco, Palo Alto Networks, VMWare, and NVIDIA, are not leading sources for founding engineer hires. I wonder if this is because software startups are more likely to call early their hires “founding engineers”, or if ex-hardware company people are more likely to join hardware startups. If you have any thoughts on this, please drop a note in the comments! The data confirms it’s eminently possible to hire from the largest tech companies when offering a founding engineer role, and when operating an early-stage, stealth startup. In Part 1, we previously covered tactics on how to poach workers from Big Tech; recruiting “founding engineers” was one method. 3. The right time to make an offerIt’s critical that a startup knows when to approach candidates in Big Tech, who rarely think about quitting the industry’s largest workplaces. Obviously, much depends on individuals, but there are moments when people may be more open to the idea than usual. Passing a four-year equity vesting cliffFor senior Big Tech hires, equity is a major part of total comp. Almost all the Big Tech companies issue generous initial equity grants which typically vest over 4 years. Top-ups can be issued, but it’s common for a Big Tech engineer’s total compensation in year 5 to drop lower than in years 1-4. This steep fall may be reason enough to start exploring alternatives. We cover plummeting comp in the deep dive, Why techies leave Big Tech. As a founder or hiring manager at a startup, reaching out to Big Tech engineers who are at the 4-year mark could be the time when they’re most responsive to offers. It’s worth bearing in mind that a Big Tech employer could give a candidate a refresher or retention bonus if they’re seen as a standout performer. For a startup, softening the blow of a comp drop will make recruiting these people harder. Declining stock valueFor senior-and-above folks with 30% or more of their total compensation in stock, a downward stock price movement lasting 6+ months will cut their take-home pay. This is why Meta was a relatively “easy” place to hire from in late 2022, when its stock price was at a 7-year low. It’s also why many tech companies that IPO’d in 2020-21 and then saw a 50-80% stock price drop in 2022, became easier places to poach talent from. If you are a founder or hiring manager at a startup, check the stock price trajectory of the companies which your candidates work at. Employees at places with standout stock performance are less likely to be interested in a switch, than at places which have lost significant share value. We cover more on compensation drops, in numbers, in Why techies leave Big Tech. After a stock-vesting milestoneMany people open to leaving Big Tech like to wait until the next major stock vest date before they decide. As a hiring manager at a startup, it can be useful to know some important dates for this. At Meta, stock vests are quarterly on 15 Feb, 15 May, 15 Aug and 15 Nov. When people leave, it’s usually after one of these dates. BurnoutA founder of a pre-seed startup in California who hired an engineer from Meta and one from SpaceX, believes both these people were motivated by intense working conditions to seek more flexible working cultures elsewhere. They say:
Poor performance feedback, PIPsBig Tech employers use Performance Improvement Plans (PIP) to tell workers they’re not meeting expectations. Bouncing back after getting a PIP is possible, but it’s highly dependent on variables like manager relationships and other specifics. One place that’s notorious for using PIPs to essentially drive people out is Amazon. I’ve talked with a few engineers at the online retail giant; the consensus is that few people ever “clear” a PIP, and as little as 10% stay at Amazon. One engineer spoke with authority on the topic because they achieved exactly that. A problem with PIPs is that they slow down career trajectory:
“Below expectations” feedback can push engineers to consider options elsewhere because this is often a step towards a PIP, and prevents internal transfers and stifles career progression. For example, at Meta, the rating is “DNE” (Does Not Meet Expectations) and MS (Meets Some), as we cover in Inside Meta’s engineering culture. Many engineers in Big Tech are ambitious people for whom a slowdown in career trajectory could be reason enough to look elsewhere. They’re more likely to start actively looking for a job when a PIP starts if they suspect they will not clear it, or if they believe their short-term career growth will be hampered even if they do. LayoffsIt used to be very rare for Big Tech to do large layoffs, or even fire software engineers for relatively minor breaches. Those were different times. Recently, Meta unexpectedly fired staff in its LA office for spending $25 dinner vouchers on non-food items. For people not even directly affected by firings over vouchers, episodes like this can contribute to decisions to quit because they reveal how expendable workers are at the biggest companies. Some might be open to a small compensation cut in exchange for more job security. Venture-funded startups can rarely offer more job stability than Big Tech, but profitable, bootstrapped businesses, or traditional companies can. Also, while startups aren’t famous for job stability, they are more “personable” places to work at than large corporations. There’s a good reason why recruiters’ emails overwhelm the inboxes of engineers at companies doing job cuts: it works! It’s when the quantity of responses is highest from people affected, and also from colleagues who dodged the chop this time, but fear future rounds of job losses. 4. FlexibilityBig Tech companies (except Amazon) use hybrid setups, with 2-3 days spent working in the office each week. Startups can get a competitive advantage by offering more remote working to Big Tech employees. This may tempt Amazon workers who will soon be in the office all five days a week, following the online retail giant’s recent announcement. Other flexible work patterns are also available:... Subscribe to The Pragmatic Engineer to unlock the rest.Become a paying subscriber of The Pragmatic Engineer to get access to this post and other subscriber-only content. A subscription gets you:
|
Hiring software engineers and engineering leaders from Big Tech (Part 2)
Subscribe to:
Post Comments (Atom)
Hiring software engineers and engineering leaders from Big Tech (Part 2)
Tactics and approaches for startups to hire software engineers with Big Tech experience, and why Amazon is a leading source of talent for ea...
No comments:
Post a Comment