Now that Alibaba has gone public in a $25 billion deal, an avalanche of IPOs may follow. Dozens of disruptive mobile, cloud, network systems and biotech companies are rumored to be ready to tap public markets. Even before Alibaba, about 190 companies had raised $40 billion in 2014, a 40% increase from last year, according to a recent report from Renaissance Capital. Investors who remember the dot-com days of 1999 may cringe at the thought of a deluge of IPOs. But it may be a sign of vigor.
These companies all have one problem: They can't find enough coders. And every modern company, regardless of industry, needs software developers. The public has taken notice of the shortage. Britain, for example, recently announced that coding would soon be core curriculum in the country's primary and secondary schools. In Estonia, coding class starts in first grade.
The coders living in Silicon Valley enjoy a seller's market. One I met lives in San Francisco and commutes to a fast-growing publicly traded Web company in Silicon Valley. She takes an unmarked, Wi-Fi-enabled bus each way, allowing her to code as she commutes. But it can take two hours to get home on a Friday afternoon. Plus the Wi-Fi is kind of slow. So she's interviewing at a privately held company in San Francisco, and in this market, why not?
I also chatted about this shortage with a recruiter who works for a prominent venture-backed startup. I asked what hiring is like these days. He lowered his head, slumped his shoulders and said, "It's tough. Everyone that's any good knows they are good and don't hesitate to tell you how good they are." He networks until he finds someone decent. "They're maybe 27, 28 and working at Google. Can't stand it. They're just one of 52,000. They just get lost. They can't make an impact. But they're pulling in $240,000."
So he makes them an offer. The coders go back to Google, Facebook, Apple or Twiter; the companies bump their pay to $280,000 and give them $8 million in restricted stock units, typically vesting over four years. The recruiter tries to match this. He offers $180,000, which is about as high as his company can go—with $10 million in stock. The problem is that the stock is funny money. The company is still private and so the valuation is basically a made-up number that won't be realized if the company never goes public.
"Then," the recruiter tells me, "the wife gets involved. 'Wait, you're going to walk away from a guaranteed $8 million? Oh no you're not.' So it's back to the drawing board looking for decent talent."
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