All Grown Up (Part 2)

Another sign emerges of Google’s maturity.

The company that popularized “Don’t Be Evil” as a corporate slogan has learned of another way that it is “one of the crowd.” Innovative engineers are leaving for newer start-ups. Google now has 23 thousand employees—4 and a half times more than the 5 thousand it had five years ago. Every day some of its legendary engineers are wooed by Facebook or some start-up that offers simplicity, autonomy, and a chance to get into a new company before its initial stock offering.

The global war for talent is standard fare for large companies. Google is finding that in order to grow it needs to add new talent and stop the exodus of the old. So it is making counteroffers, raising all salaries by 10%, and offering some key employees six-figure retention bonuses.

But often these rear-guard actions are a losing proposition. Programmers attracted to the “small-is-beautiful” ethos won’t stay on when they have to CC twenty-five other team members in order to add a comma to an error message. Of Facebook’s 1700 employees, 10% are Google alumni. A cadre of former colleagues at a smaller, more nimble rival offers a powerful pull.

The solution is to create your own talent. Google already does this by sending representatives to top college campuses, having active Facebook and LinkIn presences, and using headhunters to fill key positions. Eric Schmitt noted recently that Google fills more spots in one week than they have lost to Facebook it its lifetime.

But he’d better be careful. Such comments smack of competitive hubris. Those whom the gods would destroy, they first make proud.

Douglas R. Tengdin, CFA
Chief Investment Officer
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