A local company www.dependablecarpetcare.com sent us a very interesting story about Silicon valley and what it takes to do business in such a cutthroat market.
Silicon Valley is famous for its trailblazing firms but something that the public might not know is the intense fighting for workers among the various companies.
This fighting is not new. Established giants such as Google, Apple and Facebook have always known how important it is to retain their employees and this is something every new entrant learns the hard way.
A scarce resource
The innovations that are the hallmark of the technology firms in San Francisco are driven by a small group of highly trained engineers and software developers who cannot seem to meet the demands of the market. The workers are a scarce resource which means that companies not only fight to keep them but are also forced to provide compensation that is much higher than is the case in other locations. Yet the companies really have no choice – operating within the Bay area has distinct advantages.
Okta goes public
The latest Silicon Valley firm to go public is Okta, a software developing firm which issued its IPO Friday, April 7, 2017. The IPO saw the company’s shares rise by close to 40% on the first day of trading but Okta is already aware of the kind of competition it expects from other firms for scarce programmers and sales persons and it s prospectus said as much.
Acknowledging the scarcity of personnel, the firm which already has offices in other locations admits that the compensation required for personnel in the Bay area tends to be rather high. Like other firms before it, Okta uses the word “intense” to describe the competition for personnel among technology firms.
Competition not new
Okta’s sentiments are nothing new in the Silicon Valley. Older companies, including the giants, have continuously lamented the competition. When Google went public in 2004, one of its biggest laments was that some of its competitors were using the most aggressive tactics to lure its employees.
Trend likely to continue
The fierce competition for workers and the high compensation rates common in the Valley are things which are unlikely to change any time soon. When you consider the attraction of the Silicon Valley for all technology firms, you can only expect more companies to relocate here. Moreover, apart from the qualifications that make workers here demand higher than normal compensation, the cost of living in California tends to be much higher than it is in most other places in the US. You just need to remember that ten of California’s cities have the most expensive housing in all the States to appreciate the demand for high compensation for Silicon Valley workers.
The trend is also guaranteed to go on because there are many other technology firms that are yet to go public and also plenty of start-ups which are receiving plenty of funding from venture capitalists. In fact, more than 50% of all venture capital funding targets start-ups in California and we can therefore only expect the competition to intensify in the years ahead.
After reading this article I had some time to reflect. Our little city of Spokane isn’t the biggest but being big has it’s problems. We can definitely reap some of the perks coming out of California, but I personally wouldn’t want the headache of living amongst them. No thanks, I’ll keep my little city and let the Californians have their silicon valley.