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In 2021, tech talent had the upper hand. Across Silicon Valley, job seekers routinely negotiated impressive compensation packages, sometimes even with multiple companies at once. But, after the turbulence of last year’s valuation reset and mass layoffs of 150,000 tech employees, the job search playbook that drove the previous market cycle is no longer useful.
Today, US tech job seekers face new challenges, including:
A large pool of high-skilled domestic candidates looking for work
A growing number of international workers who can work remotely for less
Increased investor pressure to reduce headcount
A wave of AI tools that enable companies to do more with fewer employees
These shifts have drastically changed power balances in the job tech job market. However, it’s not all bad news for job seekers. This new environment also presents opportunities. Unlike in the previous cycle, where employees were granted stock at the market's peak, job seekers now have the chance to secure options from some of the world's top companies at a significant discount to their pandemic highs.
To help you navigate this new landscape, we teamed up with compensation expert, Niya Dragova. Niya is the Co-Founder of Candor, a platform that simplifies RSU management for tech employees. I first encountered Niya through her excellent newsletter, which provides unique insights into the companies that are worth working for. If you haven’t come across Niya’s writing before, you’re in for a treat.
Here are Niya's tips for navigating the new job market:
In the previous market cycle, tech companies hired aggressively and competed for talent using lavish compensation packages. However, as tech valuations dropped, companies have come under increasing pressure from investors to reduce headcount and cut back on stock-based compensation.
For instance, Starboard Value, which took a large stake in Box, publicly criticized the company for spending approximately 20% of its revenue on employee stock-based compensation. Although Box's case isn't an outlier, companies like Robinhood paid out nearly three-quarters of their revenue as stock-based compensation in early 2022.
This is the background that many candidates overlook when negotiating compensation packages.
Navigate your negotiation carefully
While negotiating is a great way for individuals to increase their lifetime earnings and for societies to address pay equity, now is not the time to get overly aggressive in seeking the most out of your initial comp negotiation. As a negotiation coach for senior tech leaders, I've heard several stories of companies revoking offers when candidates push too hard. With tight budgets and CFOs facing pressure from analysts who view employee stock pay as a significant OPEX line item, companies generally tell candidates "This is our best offer; take it or leave it."
Climb the ladder to get paid
While tech companies are becoming stingier with initial compensation packages, I've seen more companies allocate their compensation budgets to retain and reward top performers. The smart move in this market is to choose a strong company and position yourself for an early raise.
The employees who will receive the most significant rewards in this cycle will be those who excel and know how to motivate others to do the same.
Think like an investor
Picking the right company has always been critical, but it's more important now than ever before. Unlike in 2021 when the entire tech sector was thriving, the 2023 job market is split between companies that will never meet their inflated valuations and promising companies with discounted stock prices.
The type of tech companies worth considering generally fall into two categories:
Public companies with undervalued stock. Joining a company is similar to buying their stock on the open market. Currently, across the tech industry, several excellent companies have prices far below their highs. Joining a company with an undervalued stock price is a fantastic way to make a significant impact on your personal net worth.
Private companies with fresh funding. VCs are particularly risk-averse right now, so any company that has managed to secure at least 2 years of funding in this environment is worth investigating.
Some tips for evaluating opportunities:
Listen to earnings calls and read analyst reports (for public companies)
Look at recent investments from major venture and growth-equity funds (for private companies)
Reach out to VCs and founders directly to conduct extra diligence (for private companies)
Join teams or business units that are revenue-generating vs. cost centers
Understand the leveling structure of the organization
Quick tips for job seekers
For those of you who are on the job market today, here are the three pieces of advice I’d recommend:
Focus on securing a job at a great company where your stock will be worth something.
In any comp negotiation, be conscious of the pressures and incentives companies are facing that may impact how they respond.
Creating value and performing at a high level never goes out of style
Thanks to Niya Dragova for partnering with me on this piece and sharing her insights. I’d highly recommend subscribing to her newsletter and checking out Candor.
If you’re on the job hunt and looking for a world-class career coach, feel free to drop me a note and I can help you get set up with someone great.
Ash and I just got back from an incredible week in South Africa, celebrating the wedding of two of our closest friends (who also happen to be Cooper’s Godparents).
The wedding took us from Cape Town to wine country and capped off at Babylonstoren, an amazing hotel surrounded by a sprawling farm/vegetable garden. Every bite of food we ate during our stay came from the property, which made for some of the best meals I’ve ever eaten.
While it was great having a week off from parenting duties, we constantly found ourselves wishing we could see the trip through Cooper’s eyes. Of course, with Ash in her third trimester of pregnancy, it never felt like we were completely alone (particularly for Ash). But, it was great to get some one-on-one time before baby #2 arrives in June.
We’re still not at the phase of our business where I feel comfortable fully taking a week off of work. That said, I was amazed at how smoothly things went with just 2 hours a day of responding to customer emails.
Overall, it feels like we’re really cracking something special here. That said, since I haven’t officially announced what I’m doing yet, I’m going to save a longer work update until I provide you all with some more context.
If you enjoyed this issue of the newsletter, I'd really appreciate it if you could forward it to a friend, family member, or colleague who you think might like it too.
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Until next time,
Thanks, Nick and Niya! I'm curious about the efficacy of job hopping as means of increasing comp in this market. Anecdotally, it seems this won't work as it once did, though I wonder if you have any insights/data to share?