Thread: Hiring picks up in Silicon Valley

Hiring picks up in Silicon Valley

Tuesday, February 15, 2011
MANNY CRISOSTOMO / mcrisostomo@sacbee.com

Workers cluster around a computer screen in a "collaboration pod" at Skype's new Palo Alto office. In the background is a "chill out lounge." The company plans to hire 280 workers this year.

By Dale Kasler
dkasler@sacbee.com
Published: Tuesday, Feb. 15, 2011 - 12:00 am | Page 1A
Last Modified: Tuesday, Feb. 15, 2011 - 8:04 am

PALO ALTO – You don't have to stray too far from Sacramento to find a place where economic recovery is more than just an idea.

Silicon Valley is starting to pop again. Green tech is alive, as is anything in social networking. Venture capitalists are investing. Google is hiring 2,000 workers this year; Facebook is moving into new quarters with room for hundreds of additional employees.

"We've got a lot of recruiting to do," said Dena Quinn, facilities manager at Skype's Palo Alto office. The Internet phone company will hire 280 workers in Palo Alto this year, more than doubling its Silicon Valley employment.

What's happening in Silicon Valley, and throughout the Bay Area, is a striking example of California's "bifurcated recovery," said Palo Alto economic consultant Stephen Levy.

Simply put, inland California remains depressed while coastal California is showing life.

The Central Valley and Southern California's Inland Empire, which gorged themselves on housing during the boom, remain crippled by foreclosures and weak job growth. Unemployment is in the high teens in many Central Valley cities; it's 20 percent in Yuba City and Merced.

Sacramento, stuck with a 12.5 percent unemployment rate, carries the extra burden of the state's budget deficit. Furloughs have erased tens of millions of dollars from the economy, and budget cuts could lead to layoffs.

The coast, meanwhile, is starting to rev up. Unemployment is still high –just under 11 percent in the East Bay, 10.7 percent in San Jose, 13 percent in Los Angeles. But signs of growth are abundant. Exports, tourism, and movie and television production are creating jobs in Los Angeles. Unemployment is falling in a broad range of industries in San Diego.

Why the split? The economy doesn't recover all at once. Coastal industries like technology and international trade are doing better; housing isn't. Wealthier Californians, who tend to live on the coast, are making money off the stock market.

"Bonuses are being spent," said Chris Thornberg, head of Beacon Economics consulting in Los Angeles.

Recovery will spread

The improvement in the coast's economy will eventually boost Sacramento.

As the Bay Area recovers, and real estate begins inflating, people and jobs will migrate toward Sacramento in search of lower costs. About 149,000 Bay Area residents moved to Sacramento during the housing boom, according to Internal Revenue Service data.

"When that part of the arena starts to heat up, it typically bodes well for us in Sacramento," said Kris Vogt, who runs Coldwell Banker Residential Real Estate in the Sacramento area.

Wealth creation on the coast also will mean additional tax revenue for the state treasury. That will ease the crunch on state workers.

But what's happening on the coast isn't an instant or complete remedy for what ails Sacramento. Levy and Thornberg estimate that the Bay Area's growth could add about $5 billion in new taxes over the next year or so. That's substantial, but not enough to patch a deficit estimated at $26.6 billion.

"Don't expect Silicon Valley in the near term ... to be right there to bail out the budget," said Fred Silva, senior fiscal adviser with the budget-oriented think tank California Forward.

Indeed, the latest Bay Area boom is proceeding with some caution. This isn't a repeat of the late 1990s dot-com era; companies are growing slowly.

"Employers are being more picky," said Dawn Block, a Bay Area headhunter who works with tech companies. "There's such an oversupply of talent right now."

Investors still cautious

Today's Silicon Valley start-ups are on a shorter leash. Venture capital funding jumped 19 percent last year, according to a survey by PricewaterhouseCoopers. But it's still less than one-third what it was during the peak of the dot-com bubble.

"What it is is a lot of smaller bets," said Nick Nguyen, co-founder of a Palo Alto software startup called Tasty Labs.

Tasty Labs is emblematic of a small bet. The company was founded in November and has $3 million in venture capital, chump change by the standards of a decade ago. Its five employees work in a stuffy one-room office, wedged between an auto-repair shop and the legendary Peninsula Creamery diner. Furnishings include factory windows and an abandoned sofa.

But Tasty Labs is attracting buzz. The company is building a social-networking site for dispensing advice on, say, hiring a plumber. It was featured in Forbes magazine last month, and is about to move to larger offices in Mountain View.

Right now, its biggest hurdle might be attracting top talent, said co-founder Joshua Schachter. Even with Silicon Valley unemployment above 10 percent, the best engineers are proving elusive.

"They're often employed happily somewhere, or starting companies," said Schachter, who sold his last company to Yahoo. "It's very hot right now."

A similar vibe exists, on a larger scale, across town at Skype. It's looking for dozens of engineers to tackle any number of projects. "Different products, new developments – anything Skype," Quinn said.

The company just moved into a futuristic building that seems pure Silicon Valley. There's a free cafeteria and a game room with a foosball table. Instead of offices or cubicles, there are "collaboration pods" where co-workers can cluster.

There's also plenty of elbow room. Many of the workstations sit empty.

But not for long.

"Those are for all those jobs we're looking to fill this year," said Brianna Reynaud, public relations manager.

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