Wednesday, August 8, 2012

The dark underbelly of Silicon Valley recruiting (and there is a silver lining)

It has become beyond difficult to find talented software engineers, and that's why the recruiting industry has rallied around this sector.  Companies like Facebook, Zynga, and Google are making it even more difficult by driving up not only salaries, but also tightening the market. Recruiting firms are capitalizing on this and raising their fees as well - it seems as though 20-30% commission is now the norm, up from around 15-20% just 18 months ago.

This is all well and good if and when recruiters do their jobs well.

But what do recruiting firms do, anyways?  How do they source their candidates?  If you examine a cross-section of recruiting firm websites, you will see them claim that they source "passive candidates" from "target companies".

what recruiters and headhunters promise
The Recruiter's Promise

In my book, that means recruiting firms work hard by cold calling employed engineers, and trying to convince them to consider new opportunities.  They're also actively screening these candidates by interviewing them, assessing their skill-level, validating their experience, and gaining a deep understanding of what the candidates want to do.  They should 'sell' your company and the opportunity to candidates. When a candidate finally makes it to you, not only should they be knowledgeable about your company, but they should also be excited about the position.  Is that worth 25% of an engineer's yearly salary?  Quite possibly - it's a lot of work!

The Growing Problem

But a disturbing trend has been brewing over the past 12 months - the industry has developed a dark underbelly of resume-trafficking.  Here's how it often works:
  • A recruiter sets up alerts on the resume boards to identify new candidates as they post their resumes
  • As soon as they get the resumes, they paste the body of the resume into their own letterhead
  • They forward the resumes directly to clients, asking them if they're interested.  I get several of these a day from a slew of recruiters
  • If a client is interested, they then reach out to the candidate, telling them there's a company really interested in speaking with them.  This is often the first contact the recruiter has with the candidate.  During this call, they may ask a few general questions - 'what kind of company do you want to work for, are you okay commuting, etc
  • They then set up the interview with the client
  • After the interview, they loop back with the client to get their feedback - they take notes.  Effectively, they are using their clients to do the actual screening process for them.
Now is that worth 25% of an engineer's yearly salary?  Not in the least bit.

It gets worse.  A large percentage of engineers who post their resume on job boards are recent graduates or very junior engineers.  These people have absolutely no idea that the second a recruiter contacts them, the hiring firms have to pay a 25% markup on their salary.  I was recently forwarded resumes from two Computer Science majors from Berkeley who had just graduated, and placed their resume on  One of them, when he came in for the interview, was completely disinterested, and didn't know a thing about our company.  I felt like reaching out to Berkeley's placement office to let them know that there are predators out there dealing in human trafficking of their recent graduates, and making a fortune off of it.  I would much rather see Berkeley get the money for placing their grads.

Vultures feeding on a gazelle (photo credit: Guido Appenzeller)

I for one refuse to play this game.  Would I pay a fee for a very qualified and screened candidate?  Absolutely.  But I will not support the dark underbelly of this industry by paying their exorbitant fees for the minimal value they provide when re-selling junior candidates.  These practices are giving the whole recruiting industry a bad name.

The Silver Lining

So what's a startup to do?  Leading the way is a new model for recruitment put forward by the same great people who brought you AngelList.  They recently launched AngelList Talent, which matches screened engineers with screened startups.  No recruiters allowed here - they are very strict about it.  Not even your company's internal recruiter - you must be one of the founders of a startup to get access to these candidates.

AngelList seeks to disrupt the broken tech recruiting industry
Brought to you by the folks who created AngelList

We have received a higher flow of quality candidates from AngelList Talent than from any recruiter - and this includes engineers who are currently employed and 'just browsing'.  It's a simple process - but you need to have bona fide startup listed and vetted on AngelList to participate.  And you need to be totally transparent on salary & equity range you are willing to offer.  The service presents suggested candidates to you, and you can demonstrate interest with a simple click.  If the candidate is interested on their end, the service arranges an intro.  We recently hired a fantastic developer through AngelList - he is self-taught, and he absolutely kicks butt.  It took us less than 3 weeks from posting to hiring.

If you're an engineer, I would think very hard before taking that recruiter intro.  If you're even slightly interested in looking at new opportunities in exciting startups, go to and create a profile.  Then, while there, browse all the exciting startups that are looking for someone just like you, and cut out the middle man.  Who knows, some of that 25% your new employer saves might come back to you in the form of a higher salary...

So will you join me in saying "NO" to resume-trafficking (under the guise of 'recruiting')?

Oh, and by the way, we're still hiring!  See:

1 comment:

  1. I agree, many recruiters are phenomenal and do great work. These people, not so much.