Benjamin Kuo’s Blog

I’ve been rather amused to read a number of job posts today from startup companies that describe themselves as “pre-IPO” in trying to attract employees. Given the news today that there were no IPOs in Q2 of this year, it appears that in reality most of the technology startup world is in a permanent “pre-IPO” condition.

Once upon a time, in the world of technology startups, “pre-IPO” meant that your company was planning to go IPO–soon–as your exit strategy. For awhile–during the bubble–that meant you were ready to file, most likely to have an IPO in the next 6-9 months, and basically you were luring the idea of pre-IPO stock to try to grab those employees.

Now, with such a dismal exit environment, I suspect you’re going to have to wait more than a few months (years?) for the “Pre-IPO” company to actually turn into an IPO, if it ever does.

With as much talk (and evidence) of a slowdown in the economy, it’s surprising how many recruiters and companies I have run into recently who still have a lot of trouble finding technical staff to fill open positions at their companies. In particular, I find there are lots of companies who are desperate to fill software engineering positions for their companies. In fact, I’ve spoken to several companies who tell me that they’ve been forced–not by costs or pressure from investors–to look to offshore outsourcing because of the challenges of finding qualified software engineers. It appears the demand for technical talent is very strong.

The problem is an interesting dilemma–both for local companies, as well as for the nation’s overall competitiveness in technology–because when I talk to software engineers, it’s quite an opposite picture. Many software folks I talk to feel like the writing is on the wall, that even if there is demand for software engineers there’s a huge salary and wage pressure, and that the outlook–at least for some–is bleak. College students appear to be thinking the same thing: there’s been a huge enrollment drop in the number of undergraduate computer science majors which has been hitting engineering and computer science schools since 2000.

Why the disconnect? In part, I think it’s the realization there is intense competition, from very hard working, smart, and willing people in China, India, Czechoslovakia, Russia, Pakistan, and elsewhere who are willing to work hard and for less; and that the Friedman’s “flat” world is becoming a reality particularly in the software area. Even if there’s intense pressure here to fill positions, the truth is that there’s enormous downward wage pressure and job insecurity looming over software. This is particularly true of entry level computer science graduates, who do not have the advantage of experience which often counters those wage and job security issues.

I also think it’s a bit of the challenge inherent in technical degrees. Engineering and computer science are all very math-centric, difficult degrees to attain, and — whether due to the well documented lag of U.S. students in math, or just an unwillingness of the current generation of students to buckle down to a difficult major–students just aren’t as interested in the hard word it takes.

It’s a challenge, because without the local talent base, I think “high tech” companies will struggle to be competitive. There are no easy solutions; however, I think a focus on companies cultivating new graduates (we’ve got great raw material coming out of our local colleges and universities); a true committment to developing employees (not just window dressing); and providing a vested interest in a company’s success to engineers can do a lot. Companies absolutely have got to be willing to pay more, for their own, local talent, even if it may seem cheaper and easier to send off your core IP elsewhere. For software and other engineers, I think they need to realize there’s a lot of hungry folks just an Internet connection away who are willing to work their best to fill their jobs; the world today has no room for a mediocre, expensive software developer living in a high rent district when there’s someone with better training and skills who happens to live in the second world.

Looking for a job at a high tech company here? It looks like there’s plenty of demand–here’s some of the latest Southern California technology jobs on our job board:

• Director of Network Operations, inQ, Agoura Hills
• Director of Search Engine Optimization, Santa Monica
• Web Development Lead, Practice Technologies
• Associate, Momentum Venture Management

Our job board is slightly different than the run of the mill job posting services; currently the way it works is members of our premium services can post unlimited local job positions–our focus is on providing this as a resource to the community, and we think that’s the best way to get lots of the positions from the local high tech and startup community listed.

socalTECH has a very active job board, where we let people who are members of our premium service post unlimited numbers of positions, and I’m constantly amazed by the amount of demand out there for technical talent.

In particular, there seems to be a lot of demand for software engineers  in the Los Angeles area, with Java, Flash, and other web-related experience. I also get lots of people asking me for referrals for software engineers–I think I’ve gotten more queries than people I know who are in the business (and I’m an ex-software engineering manager with lots of contacts!)

Some other recent postings of note:

• Vice President, Engineering, Avaak (San Diego)
• VP Marketing, Santa Barbara
• VP Business Development, Panache, Encino

Google just posted an interesting article to the company’s blog on the company’s stance on H-1B visas, the visa that allows highly skilled, foreign born workers to enter the U.S. The company argues for an increase in the currently 65,000 H-1B slots (which were filled in the first two days they were open this year), due to difficulty in getting highly qualified candidates.

There’s an ongoing, and often contentious debate about H-1B visas, which some contend takes away highly paid jobs from U.S. born workers, and which some also say that IT outsourcing companies abuse to bring in people willing to work for less (against H-1B rules). However, what’s often ignored is that highly skilled, technical workers who eventually stay here in the U.S. and become citizens are behind much of the technology and startup activity here. In my personal experience, most H-1B workers are not here as cheap replacements for citizens, they’re here because it’s very difficult to find qualified workers for technical positions, and because they want to become part of the great opportunities here in the U.S.

As much as technical professionals face concerns over outsourcing of jobs overseas, it seems like shutting out the best and brightest from working here in the U.S. isn’t the best policy. To continue the lead the U.S. has had so far in innovation and technology, it’s important to attract highly skilled workers here instead of shipping that work overseas.

BoingBoing today highlights an interesting program that looks to train computer programmers to become journalists, in a grant program which gives computer programmers a master degree in Journalism. Given the hand wringing over widespread cost cutting and layoffs in the newspaper industry (the latest being the San Francisco Chronicle), and with offshore outsourcing both reducing salaries and driving away college students from the software industry, it seems this is jumping out of the frying pan into the fire. Both the journalism business and the computer software profession are undergoing huge structural changes here in the United States. Given both the journalists and computer programmers I talk to are equally concerned about their career future and opportunities in their respective fields, I wonder about the idea of combining the two.

Tony Karrer, CTO of TechEmpower, recently started a new blog on being a CTO in Southern California. He has served as CTO of eHarmony, and talks in a recent post about the difficulty of finding good developers in Los Angeles.

Also, another pointer to a blog that might be of interest to Southern California technology/business readers, which is Startup Review, a blog run by a former VC at Sierra Ventures, Nisan Gabbay. Nisan started out the blog last year with a string of case studies on Southern California successes: eHarmony, Userplane, Lowermybills, MySpace, Rent.com, and Newegg.

And finally, in other press today, San Diego startup Brickfish gets some attention on VentureBeat. We covered the funding announcement here but it’s great to see many of the Silicon Valley startup focused publications starting to turn their eye towards activity here in Southern California.