By Tim Ferguson, 13 November 2007 16:55
NEWS
The majority of people looking to work for web 2.0 start-up companies are prepared to sacrifice pay in exchange for shares in the venture they're joining.
More than 75 per cent of candidates joining dot-com start-ups through IT staffing company ReThink Recruitment have foregone up to a third of their salary in exchange for shares.
Two years ago just 10 per cent of workers did the same but the level is now close to that seen during the first dot-com boom.
Agenda Setters 2007 - Top 20
Find out who made it into silicon.com's Agenda Setters top 20 by clicking the links below
1. Mark Zuckerberg
2. Steve Jobs
3. Eric Schmidt
4. John Chambers
5. Ashley Highfield
6. Nicholas Negroponte
7. Niklas Zennström
8. Diane Greene
9. Jonathan Ive
10.Viviane Reding
11.Paul Coby
12.Marc Benioff
13.Emily Bell
14.Larry Ellison
15.Jeff Bezos
16.Ben Verwaayen
17.Nandan Nilekani
18.David Yu
19.Satoru Iwata
20.Mark Hurd
And companies are catching on, with many offering shares and options to induce contract workers to become permanent employees.
This goes against the trend in other parts of the IT industry where an increasing proportion of people are now looking to go freelance.
An example given is someone moving from a £72,000 salary as a contractor in a start-up, to a £50,000 wage with £20,000 in options to become a permanent member of staff.
Nathan Callaghan of ReThink said start-ups have always offered equity to secure top talent but this lost currency following the dot-com crash.
Callaghan said this is now changing following major acquisitions of web 2.0 start-ups such as Google buying YouTube in 2006 and MySpace being acquired by News International in 2005.
Equity offers are also a useful way of combating a skills shortage in web technology and they help to stop talent walking away at the end of a contract, he added.
Comments
There are 3 comments. Join the discussion
1. Rob
I'll take the higher wage thanks. Who wants shares in a hot air industry, did nobody learn any lessons from the dot com boom/bust?
Even more so in the current economic climate, I'd rather shore up my defences if there could be a recession on the way (IT will suffer.)
2. Karen Challinor
dot com bubble 2.0
easy money for the few, financial disaster for the many
bit like a pyramid scheme really, redistribute the money to the top of the chain and everyone gets rich, until there are no more links to add to the chain
3. anonymous
I find this a little hard to believe. I'm in the process of starting a web 2.0 company and one of the biggest challenges is finding talented staff (in the UK) that are willing to take a cut in pay in exchange for shares - for exactly the reason the other comment (from Rob) mentions. People are still afraid to take the risk because of the dot.com hangover - even when entrepreneurs like myself have learnt the lessons of the last crash and are now building businesses with sustainable business models.