Techdom's Talent Poaching Epidemic

As social networking and mobile computing grow, companies compete for top executives

Photo Illustration by Emily Keegin and Maayan Pearl

By John Helyar and Douglas MacMillan

Over the past seven months, executives at Zynga, the popular social gaming company, plotted how to recruit Neil Roseman, an engineer who had led Amazon.com's (AMZN) launch of its digital music business and development of the Kindle e-book reader's software. Instead of hiring a search consultant, Zynga relied on a former Amazon manager who had worked under Roseman to make the first contact. Then Chief Executive Officer Mark Pincus invited him for a one-on-one in his San Francisco office. Pincus told Roseman how much he wanted him to lead a team of engineers and assured him he wouldn't have to leave his home near Seattle. Roseman started working at Zynga as a vice-president last month. "I thought Mark was a guy I could hang out with, and I wanted to realize the future this company has," says Roseman, who'd turned down several offers from other technology companies in recent months.

As the economy rebounds, tech companies are battling over engineers, designers, computer scientists, and executives who can stay ahead of rapid change in the industry. Those workers are being courted with everything from coffee with the CEO to lots of cold cash. The competition for talent is especially fierce among social media and other Internet companies as well as computer systems manufacturers. Facebook's expansion "has outpaced our head count growth," says Lori Goler, the company's vice-president of people. "We're hiring to keep pace." Some companies are even staging repeated raids on rivals' stars. Juniper Networks (JNPR) has snatched three executives from Cisco Systems (CSCO) in the last year.

Big targets are fighting back. In January, Google (GOOG) rebuffed Twitter's bid to hire Sundar Pichai, a star product-development vice-president, by making a substantial counteroffer, say people familiar with the situation. Google also recently awarded a $5 million bonus package to a top engineer to keep him from defecting to a startup, according to a person with knowledge of the competing offers. The bonus will be paid out over several years. "Companies are now becoming very concerned about retention," says Jeff Sanders, vice-chairman of search firm Heidrick & Struggles. "You are seeing them do equity grants not during standard cycles. They are really taking a look at the top 10 percent of performers and asking themselves, 'Are they locked in?' "

All this is pushing up pay at technology companies for employees with skills deemed in short supply. Zynga, which has more than 1,500 employees, expects to double that number in the next year. The company uses software to match prospective hires with current employees who have worked with the candidates previously, attended the same college, or share a similar interest such as skiing. It then asks the employees to place an initial call to the target and talk about Zynga.

Executives at larger tech companies who jump to startups typically take a 20 percent to 40 percent cut in their base salary in the hope of securing a big payday later, says Jeff Stump, a former executive recruiter who now tracks talent for venture capital firm Andreessen Horowitz. If they land at a startup in a vice-president-level job, they'll likely receive shares of the company equivalent to 1 percent of its value when there is an acquisition or public offering, he says.

Several factors are driving the talent grab. The rapid growth of social media, mobile technology, and e-commerce has fueled a run on employees with expertise in those fields. The recent increase in the number of startups is also fueling hiring. And established tech companies such as Oracle (ORCL), Hewlett-Packard (HPQ), and Cisco are diversifying into one another's businesses—and stealing talent to speed the transition.