Top engineers draw huge salaries in Silicon Valley
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Among Twitter Inc’s highest-paid executives, Christopher Fry’s name stands out.
The senior vice president of engineering raked in US$10.3 million last year, just behind Twitter Chief Executive Dick Costolo’s US$11.5 million, according to Twitter’s IPO documents. That is more than the paychecks of executives such as Chief Technology Officer Adam Messinger, Chief Financial Officer Mike Gupta and Chief Operating Officer Ali Rowghani.
Welcome to Silicon Valley, where a shortage of top engineering talent amid an explosion of venture capital-backed start-ups is inflating paychecks.
“The number of A-players in Silicon Valley hasn’t grown,” said Iain Grant, a recruiter at Riviera Partners, which specializes in placing engineers at venture-capital backed start-ups. “But the demand for them has gone through the roof.”
Stories abound about the lengths to which employers will go to attract engineering talent — in addition to the free cafeterias, laundry services and shuttle buses that the Googles and Facebooks of the world are already famous for.
One start-up offered a coveted engineer a year’s lease on a Tesla sedan, which costs in the neighborhood of US$1,000 a month, said venture capitalist Venky Ganesan. He declined to identify the company, which his firm has invested in.
At Hotel Tonight, which offers a mobile app for last-minute hotel bookings, CEO Sam Shank described staging the office to appear extra lively for a prospective hire. He roped in two employees for a game of ping-pong and positioned another group right by the bar.
It worked: the recruit signed on and built a key piece of the company’s software.
In Fry’s case, his compensation came mostly in the form of stock awards, valued last year at US$10.1 million, according to Twitter’s IPO documents registered with securities regulators. He drew a salary of US$145,513 and a bonus of US$100,000.
Some might call that underpaid. Facebook Inc’s VP of engineering, Mike Schroepfer, took in US$24.4 million in stock awards the year before the social network’s 2012 initial public offering. He also drew a salary of US$270,833 and a bonus of US$140,344. But Facebook that year posted revenue of US$3.71 billion, 10 times more than Twitter’s US$317 million.
Grant said more than three-quarters of candidates who took VP of engineering roles at his client companies over the last two years drew total cash compensation in excess of US$250,000. Many also received equity grants totaling 1 to 2 percent of the company, the recruiter added.
The hot demand for engineers is driven in part by a growing number of start-ups, venture capitalists say. Some 242 Bay Area companies received early-stage funding — known as a seed round — in the first half of this year, according to consultancy CB Insights. That is more than the number for all of 2010.
Another factor is the rising complexity of technology. Many in Silicon Valley like to discuss the lore of the “10x” engineer, who is a person so talented that he or she does the work of 10 merely competent engineers.
“Having 10x engineers at the top is the only way to recruit other 10x engineers,” said Aileen Lee, founder of Cowboy Ventures, an early-stage venture fund.
Former colleagues said Fry, who joined Twitter earlier this year, fits the bill.
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