In Silicon Valley, It Is the Summer of FOMO

In Silicon Valley, it is the summer of compensation FOMO.

Startup employees and venture investors have been swapping stories about eye-popping salary and equity packages as Meta CEO Mark Zuckerberg has rushed to pay top dollar to poach elite AI and machine-learning talent. While some people are getting offers in the tens of millions of dollars, others who aren’t getting such rich packages thrown their way are feeling left out.

“There’s a ton of ripple effects I’m hearing in the Valley,” said Deedy Das, an AI investor at Anthropic backer Menlo Ventures. “There is a sense of jealousy, envy, and helplessness, and everybody being like, ‘I thought I was doing pretty well. What am I doing wrong? I would love to get those offers.”‘

Das heard from three friends who are machine-learning engineers or researchers at OpenAI or Anthropic who are being offered between $8 and $20 million in total compensation a year to join Meta, which declined to comment for this story.

“I would describe them as in a state of shock,” Das said of one of his friends, whom he declined to name, who decided to turn Meta down because they did not think it was a good fit. “You plan out your career with certain assumptions, and then when something like this happens, it’s like you are getting paid more in a year than you had predicted you would ever make in your career. It’s honestly hard to digest.”

Tech companies have long shelled out top dollar for the most elite talent, but the eight people BI spoke to for this story agreed that the hiring frenzy of the past few weeks has been on an entirely different level.

It started when Meta recruited Scale CEO Alexandr Wang last month as part of a $14.3 billion deal to take a 49% stake in his company. Then Sam Altman, CEO of OpenAI, said Meta had tried to poach his best employees with $100 million signing bonuses. Meta executives recently pushed back, saying that the signing bonuses were not that generous.

This week, Zuckerberg announced Wang would co-lead a new unit, Meta Superintelligence Labs, with six star researchers poached from OpenAI.

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Some on X have compared the bidding war for top AI talent to sports franchises competing for star athletes like Cristiano Ronaldo and suggested researchers hire agents to represent them.

“In my 20 years in tech, I have never seen as clearly defined a market for extraordinary talent in a single category as for people who are capable of doing work on the frontier in AI right now,” said Roy Bahat, the longtime head of VC firm Bloomberg Beta.

A shortage of talent and an excess of money

Driving the frenzy is the confluence of two factors, according to Bahat and others. On the one hand, there are a limited number of researchers and engineers capable of building foundational models — something in the neighborhood of 2,000 people. At the same time, companies led by Meta, which is approaching a market capitalization of $2 trillion, have the resources to spend almost anything to avoid falling behind.

“These companies are just all so much bigger than they used to be,” Bahat said.

The bidding war is trickling down to classrooms, where companies are going after top machine-learning Ph.D. interns as early as possible.

“They’re pressuring them to drop out of school,” according to Bill Aulet, managing director of the Martin Trust Center for Entrepreneurship at MIT. “It’s dizzying.”

Explicit in the pitch for students is that advances in AI are happening so fast that a once-in-a-lifetime moment could be over by graduation, according to Bahat.

“A lot of people are figuring out they spend these few precious years when this technology is at an inflection point,” said Bahat. “It’s a really high-stakes choice.”

The calculus has also changed for would-be founders thinking about starting foundational model startups who are daunted by how much they have to raise, according to Navin Chaddha, managing partner of Mayfield Fund.

“For PhDs in the past, you could start a company for $5 million, but now you may need to raise $30 to $50 million to pay starting salaries,” he said. He added that some would-be? founders stay at big tech companies because the salaries have gotten so high. “A lot of people don’t want to take the risk because they have guaranteed money in the pocket.”

Mira Murati, the former CTO of OpenAI, has paid some talent around half a million dollars in salary for her new startup, Thinking Machines Lab, before even announcing a first funding round or a product, BI reported this week. The figure does not include equity or signing bonuses, which is where startup employees hope to make most of their money.

Eye-popping new salaries side, some in the industry hope that startups can maintain their ethos that money isn’t the only draw.

In contrast to Wall Street, tech has long espoused a view of doing something good for the world.

“At the very elite levels for AI research, there are a lot of people who are extremely values-driven, so not being mission-driven is a dead end,” Das said. “Usually when you’re not mission-driven, attrition is bad and productivity is poor.”

Do you have a tip to share about the AI recruiting wars? Contact reporter Ben Bergman securely on Signal at BenBergman.11