Boston’s Talent War: Startups Gaining Edge Over Big Companies?

8/6/12Follow @gthuang

When Sravish Sridhar was graduating from UT Austin, he got an offer letter from a hot, mid-size software company. The firm even sent him a silver-plated pen from Tiffany & Co. to sign the letter. It was a nice touch, but Sridhar declined. Instead of taking the sure thing, he joined United Devices, a distributed computing startup, and he has never looked back.

That was in 2000—the height of the tech bubble—but some trends are back in style. Chief among them: the mainstream popularity of joining tech startups, and (in turn) the large number of startups looking to hire top talent. Over the past year or two, the competition for this talent has hit a fever pitch in the Boston area and across the country, with companies of all stripes pulling out all the stops to land their top prospects.

Within this landscape, a sub-trend has emerged around town, at least anecdotally. A fair number of experienced tech execs from established, bigger companies have joined startups that are looking to grow quickly (usually ones with some money). They have joined as employees, not founders. This says to me that startups—if they weren’t before—are now seen as a viable career path by an older generation of established tech workers, not just brash and brilliant 20-somethings bent on changing the world.

Take Sridhar’s latest company: Kinvey, a mobile software startup in Cambridge, MA, that closed a $5 million Series A round in July. In recent months, Kinvey has hired Annie Bourne and Sandeep Sikka, both veterans of Akamai (NASDAQ: AKAM) from its early days, as vice president of business development/general counsel and lead principal software engineer, respectively. Kinvey has also picked up Eli Lederman from Brightcove (NASDAQ: BCOV) in sales and Michael Katz from MathWorks (maker of Matlab engineering software) on the development side.

Some advice on how to close the deal, especially if you don’t have a ton of money to throw at recruits? “Be realistic about what you need to hire the best people,” says Sridhar, who is Kinvey’s co-founder and CEO. “And then work your ass off to get them.” That means, among other things, selling them on how challenging the position will be (in a good way), building a cool brand with some mystique and/or a strong employee culture, and putting together a package of salary, options, and benefits that is “worth people’s while,” he says.

Other small startups (sub-20 employees) seem to be having success with this approach as well. Objective Logistics of Cambridge, MA, recently brought on board Eric Poley, previously with Salesforce.com and Veracode, in sales; and Matthew Trail from Bullhorn in operations. “Big-time execs are going for bigger risk/reward and hopping on the rollercoaster,” says Phil Beauregard, the analytics startup’s co-founder and CEO.

That sentiment rings true for Lars Albright, the CEO of Boston-based mobile-ad firm SessionM (himself a veteran of Apple as well as other mobile startups). “There are people looking to find growth opportunities, and they recognize it’s a good time,” he says. “They’ve established credibility at bigger companies, and they’re looking for areas that are more stimulating. It’s a good hiring market for their services.”

Albright adds that it’s important to make sure candidates coming from big companies—especially if it’s their first startup—are “truly committed” and understand there’s “a different set of expectations, challenges, and opportunities you face.”

For its part, SessionM has recently beefed up with some notable hires from big companies, including Gerald Hewes and Amy Jerusalmi from Apple (on the engineering and client services sides) and Deborah Powsner from Google (in marketing). The startup, which has raised just over $26 million in venture capital, has more than 40 employees and expects to be in the high 50s by the end of 2012.

There are plenty of other examples. In the past year, Boston-based Gemvara, the online jeweler, hired Brian Kalma (from Zappos and Gilt Groupe), Janet Holian (from Vistaprint), and top engineering talent from the likes of Rue La La, Staples, and Kohl’s, as part of its efforts to go big. The company has raised over $50 million in venture funding to date, so it can afford some big-name talent in its management ranks. Similarly, mobile tech startup SCVNGR (which has raised $41 million so far) brought in Harald Prokop, a longtime Akamai vet, as chief technology officer this spring.

And a few more anecdotal moves off the top of my head: Startup evangelist Abby Fichtner from Microsoft joining HackReduce, the new big-data hacker space near Kendall Square. And the usual cloud of tech workers leaving recently acquired companies like Endeca/Oracle, Where/PayPal, and Vertica/HP, some of them taking jobs at local startups.

None of this is hugely surprising, of course. It might not even be a new trend. But enough local startups have enough money and momentum that we hear more about their new hires, it seems. By contrast, we don’t often hear about people leaving startups to join big companies these days (though it must be happening—probably at places like Google, Oracle, and PayPal). When big companies announce new hires, they are almost always experienced execs from other big firms. For example, one of Akamai’s most recent hires is Jim Ebzery, a veteran of Novell and IBM.

What does it all mean? HubSpot co-founder Dharmesh Shah, talking about startup recruiting, joked recently, “You have to convince really smart people to do a really stupid thing.” HubSpot, a marketing software firm, has certainly been a pioneer in recruiting talent over the past few years. But maybe joining a startup isn’t stupid anymore. Or maybe, just maybe, it’s 2000 all over again.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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