On a recent Wednesday evening, Idealab’s loftlike office was teeming with software engineers and developers. They were there to look for jobs.
Not unusual amid record unemployment, right? Actually, it was unusual.
The Pasadena tech incubator is desperate to fill about 30 positions among its startup companies, so it was hosting its first job fair in 10 years in hopes of luring some workers.
“One of the challenges we have is getting the message out that we’re here. We have jobs,” said Andres Castaneda, director of recruiting at Idealab.
He’s not alone. Many of L.A.’s “Silicon Beach” companies are hiring like its 1999 – even though Los Angeles County’s unemployment rate of 12.5 percent makes it among the highest of all urban counties.
As a result, recruiting events such as Idealab’s are becoming more common. Companies are trying to get the word to talented techies by posting open positions on online job boards, hiring recruiters and using personal connections.
But even with all that, getting the right people isn’t easy, said Andy Riabokin, branch manager in consulting services for the downtown L.A. office of recruiter Robert Half International.
“We do have a bit of a war,” Riabokin said. “People are really going after talent.”
“Extremely high-demand developers are getting hits on a daily basis by recruiters,” said Castaneda. “So they’re starting to ignore calls and e-mails.”
And we’re not talking about a few dozen positions. For example, ValueClick, a Westlake Village digital marketing firm, announced in July a plan to hire 100 employees. TrueCar, a Santa Monica publisher of auto sales data, plans to add 200 people by the end of next year. Dozens of startups are also hiring, each looking for more modest growth of between five and 30 employees.
To many, the irony is obvious.
“You watch the news and they talk about unemployment rates,” said Thomas Swalla, chief operating officer of Savings.com, a West L.A. company that’s looking to hire about six people. “But I’m stuck in this Santa Monica tech industry where that’s just not the case.”
The hiring boom has been spurred by the return of venture capital investments, which had subsided during the recession.
Companies founded before or during the recession have been raising money lately and are hiring the employees they need to grow. TrueCar, for example, was founded in 2005 but recently raised $217 million to launch products.
Small startups founded in the last two or three years are also raising money to grow their staffs.
“When you have companies that are getting funded for $3 million to $20 million-plus, they’re primarily going to use that money for hiring,” said Jason Nazar, chief executive of Santa Monica online document provider Docstoc. “It’s created a lot of competition.”
Nazar, who founded Docstoc in 2007, is hoping to add 10 employees to his team of 36.
Although most tech companies are hiring in all departments, including marketing and sales, they say it’s hardest to find engineers and developers.
But it’s not a lack of engineering applicants that’s the problem, but a lack of trained engineers that fit each company’s specific requirements, said ZaoYang, chief operating officer and co-founder of Santa Monica employee benefits startup BetterWorks, which is looking to add 15 people to its 60-person staff.
“Of the top engineers, there’s just not as many as in an area like the Bay Area,” said Yang, who created popular social game Farmville and later sold it to San Francisco game company Zynga. “They don’t get the training here that they would typically get in Silicon Valley.”
Some people in L.A.’s tech world believe that they’re handicapped because the area doesn’t have a giant such as Google, Apple, Microsoft or Amazon to draw from. If a big tech company were based here, a young software engineer could get some experience there and then look for a job at a startup. That would help deepen the talent pool, said Todd Gitlin, founder and managing partner of Beverly Hills executive recruiting firm Safire Partners.
“What we don’t have is a farm league,” Gitlin said. “We don’t have the depth.”
Once a tech worker has some experience, the job opportunities are plentiful. Savings.com’s Swalla spoke to seven companies and got three job offers before landing at the online coupon company.
“There definitely was a demand for an executive position,” he said. “From the time I started looking to when I joined Savings, it took about three months.”
Many companies have started looking nationally for talent. BetterWorks, for example, has hired employees from Chicago, Seattle and San Jose.
But the challenge in recruiting from other technology hubs is convincing candidates to move to Los Angeles, said Paige Craig, co-founder and chief executive of BetterWorks. Some may not see it as a tech hub, and consider it the wrong career move as a result.
Then there’s the challenge of competing with tech giants such as Google, Facebook and Zynga for talent. Those firms, all of which have opened L.A.-area offices, recruit heavily from universities with top engineering schools, and are known to poach employees from other companies with promises of high salaries and perks.
“Google is expanding like crazy, and that just brings even more competition to a small candidate pool,” said Idealab’s Castaneda. “How do you compete with the Googles of the world? It can’t be head to head so we have to find our niche.”
L.A. companies offer their share of competitive pay and perks. Engineers with only a few years experience can command salaries of about $100,000 to $150,000.
Hulu, a Santa Monica online video company that plans to add about 50 employees to its 350-person staff, has standard tech office perks such as video games, basketball and table tennis.
“We certainly pay a lot of attention to what it’s like to work here,” said John Foster, senior vice president of talent and organization for Hulu. “Employees will stay late because it’s fun and interesting and challenging.”
L.A. tech veterans said that the community has built up a bigger presence in recent years, which helps attract employees from the Northern California and New York tech centers.
“There’s a lot of momentum here when, 10 years ago, that wasn’t the case,” said Eva Ho, vice president of marketing and operations at Century City data developer Factual. “There’s a lot of perks to being part of an emerging market in tech.”
Ho said Factual, which has about 45 employees, is looking to hire more engineers, but would not say how many. She helped organize a job fair in July to look for hires. Factual and 14 other companies set up booths.
Having more startups in Los Angeles has also made hiring more challenging than it was during the early Internet days.
When Idealab last hosted a job fair in 2001, more than 500 job-seekers showed up at the event, Castaneda said. This time, 160 attended and about 20 now have interviews scheduled with Idealab companies.
“I think there’s a lot more competition now,” he said. “Also, the candidates are much savvier than they’ve ever been.”
The challenges of getting the best employees will improve the environment of L.A.’s tech world, said BetterWorks’ Craig. Companies will get bigger and better, and veterans will start their own businesses – creating a growth cycle.
“There’s going to be a great labor pool,” he said. “All of these folks are going to end up, five years down the road, creating relationships and starting their own companies in Los Angeles.”
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