Startups find better access to talent as top tech companies cut jobs, freeze hiring

When Briana Bell was trying to swap jobs this 12 months after stints at Salesforce and Snap, her method to the market had modified from prior years.

With layoffs hammering the tech business for the primary time in properly over a decade and hiring freezes making their approach throughout Silicon Valley, Bell took a have a look at her choices. She landed on a lesser-known non-public firm known as Everlaw, which supplies cloud-based litigation software program.

“I used to be a number of different bigger, enterprise-size firms within the San Francisco Bay Area,” Bell said in an interview. “Everlaw was in all probability the smallest firm I used to be interviewing with.”

It wasn’t the first time she’d heard of Everlaw. The company originally reached out to her back in 2019, but at the time she chose to join Salesforce as a senior analyst.

The environment looks a lot different now.

After a decade-plus of unfettered expansion, the tech industry hit a major snag in 2022. Layoffs hit some of the biggest companies, with others implementing hiring freezes. In November, Meta, Amazon, Twitter, Salesforce and HP announced significant cuts to their workforces.

More than 50,000 tech workers were let go from their jobs in November, according to data collected by the website Layoffs.fyi. The total for the year has surpassed 150,000.

“Given the tech layoffs and lower hiring by the big-tech companies, folks are looking for smaller tech companies to join,” said Christopher Fong, founder of Xoogler.co, a network for ex-Google employees.

In the absence of the stability that the largest tech companies once offered, workers are looking to startups and midsize companies that offer greater flexibility and, in some case, the opportunity to have a bigger impact.

Bell said the many headlines about job cuts at top companies in the industry played a role as she was considering her options.

In looking at startups, she had to have confidence in the business. The meltdown in tech stocks this year and tumult in the broader economy led to a dramatic drop in venture funding and a complete freezing of the IPO market.

“I tried not to think a lot about tech layoffs when interviewing,” Bell stated. But she admitted, “this is something that’s going to be very important in my job decision process, and I need to make sure the company is in good financial standing and that executives are being pragmatic.”

Rich Liu was employed as Everlaw’s chief income officer shortly earlier than Bell joined. Liu beforehand had the identical position at TripActions, a high-valued startup that gives journey software program.

“From the place I sit, we’re actually seeing this market shift might usher in a heyday for startups buying high expertise, significantly for ones like us which might be maturing,” Liu said. “It’s been a big-tech expertise loss however startups’ acquire.”

Recruiters advised CNBC that the tech job market stays aggressive, even when staff are entertaining fewer affords at a time than they had been in recent times.

Lauren Illovsky, expertise companion for Alphabet’s CapitalG enterprise agency stated “hiring has gotten slightly simpler” for the group’s portfolio companies. She highlighted cloud data analytics vendor Databricks as a company that still has dozens of job openings.

“They’ve still got product they need to build and ship, so they need people,” Illovsky said.

Coming into 2022, the tech giants appeared as impenetrable as ever. Shares of all of the FAANG (Facebook, Amazon, Apple, Netflix and Google) companies had reached record highs between June and December of last year, and their dominant position in their respective industries appeared mostly secure.

They’ve all been roughed up this year, to varying degrees. Facebook (now Meta) has lost two-thirds of its value and said last month it was laying off 13% of its workforce. Amazon is down by half and recently paused hiring for its corporate workforce. Netflix has eliminated around 450 jobs over two rounds of cuts, and Alphabet CEO Sundar Pichai told employees in July the company would be slowing hiring investments through 2023.

“It’s a good time for startups to access talent when you’re not competing against one of the FAANG companies,” said Megan Slabinski, West Coast district president for staffing firm Robert Half.

Barry Padgett, CEO of customer data platform Amperity, echoed that sentiment.

“It’s also easier to retain folks right now because they’re not getting 17 calls a day from recruiters,” said Padgett, whose 6-year-old company is headquartered in Seattle, putting it in the same market as Amazon and Microsoft.

Cybersecurity agency Expel CEO Dave Merkel stated his 470-person firm is planning on hiring for greater than 50 roles within the coming months. 

“This time of year is usually not very busy for our recruiters, but right now they are super busy, because we are seeing an influx of people from some of these kinds of companies,” Merkel stated. “Whether they’re in a role but nervous about what might happen next year or they were caught up in a layoff, they’re more interested.”

Relocation startup platform Gullie is so younger that it has fewer than 5 workers. Founder Rachael Annabelle Yong, a former fellow at Andreessen Horowitz-backed incubator Launch House, stated she’s had extra luck recruiting potential workers in the previous few months. 

Yong stated it is a theme that is working throughout a lot of her community.

“A lot of my friends are startup founders, and they all say it’s a really good time to be hiring,” stated Yong, who began Gullie final 12 months. “I’ve spoken to people from big-tech firms more lately, and they’re all very open to opportunities at early-stage startups, and some are even reaching out to us.”

Bell and others in the industry who spoke to CNBC said they’re looking for companies that offer a stronger sense of values or a clearer mission, which often gets lost over time. They also wanted to have a bigger impact than what’s often possible at the industry giants.

“When I was looking at companies, I thought about how much can the work I bring to this company really impact their go-to-market strategies,” Bell stated. “If you have a role at a larger company, especially like we’ve seen at Facebook and Twitter, some of their roles don’t seem like they were as impactful across the company.”

Bell stated she was additionally influenced by the emotionally charged occasions of the final couple of years. Her first week at Salesforce coincided with the homicide of George Floyd, who was killed in May 2020 whereas in police custody.

That “really reignited that fire I had from studying political science and policy,” she stated, including that she paid extra consideration to an organization’s values in her job searches.

In addition to themes of racial justice and equality, Liu stated that throughout the Covid-19 pandemic, “it became important to look for a company whose mission resonated with me personally.”

Amperity’s Padgett stated the pandemic modified so much in how individuals take into consideration their jobs.

“It looks as if should you want one thing extra inspiring than sitting in your home all day as part of a 100k-person firm feeling like a quantity, then you definately’re in search of extra like-minded people in a extra private setting,” Padgett said. “People are wondering, ‘how do I have a bigger impact if I’m going to be working my guts out 12 hours a day from my spare bedroom.”

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