Durham tech startups have tough time hiring

Lower salaries, rapidly advancing technology make it hard to recruit

CorrespondentNovember 1, 2012 

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Two of Bandwith's Android guys mingled with area tech job seekers as part of the carnival atmosphere Thursday evening, Oct. 11, 2012, at the Tech Jobs Under The Big Top job fair in Bay 7 on the American Tobacco campus, Durham, NC. UNC sophomore Johnny Cross, left, has his photo with the Android guys taken by brother and UNC senior Zach Cross, right. More than 350 Triangle area tech job seekers attended the event.

HARRY LYNCH — hlynch@newsobserver.com

— The economy is still sputtering and unemployment is still at about 8 percent in the Triangle, but a depressed hiring environment is not what you find in downtown Durham’s startup scene.

At “Tech Jobs Under the Big Top” last month, a biannual startup jobs event at the American Tobacco Campus, 14 companies lined up to pitch 110 jobs to potential employees. They hoped to snag new marketing and accounting workers and software engineers, who seem to be perpetually in demand.

Durham startups are maturing out of the early stage and making hires as they grow, but surprisingly, they’ve had a tough time finding candidates to fit the bill.

“It definitely has felt like whatever this recession was, it was not in Durham or not in the tech sector,” said Will Elliott, vice president of marketing at Contactology, an e-mail marketing company that has six job openings. “You think you’d be inundated, but we did not find that to be the case.”

The problem boils down to a couple issues: Lower salaries at startups compared with big corporations; and a digital divide in which even some programmers have difficulty keeping up with the rapidly evolving technology.

When it comes to the difference in pay, the annual salary for a software engineer at IBM and Cisco in the Triangle starts at the $50,000 to $60,000 range, according to GlassDoor.com, whereas at a startup, they would start at about $30,000 to $40,000, which could be supplemented with equity in the company.

“A startup isn’t the best fit for everybody,” said Ed Holzwarth, CEO of Little Green Software, a mobile applications maker that’s planning to double in size in the next year with eight more hires, six of them software engineers.

“Because there’s a nationwide sustained demand for engineers, if they go to work for a big company, they can earn a salary that the startups just can’t afford,” Holzwarth said. “And so, it is harder to find a person who is a fit for a startup where they like working on a small team, they like learning things and being self-motivated, self-started.”

Holzwarth said he has had better luck hiring by word of mouth. “We post on the school job sites. … (But) the students don’t seem to be as good of a fit. It’s not so much about necessarily the skills. It’s more about the team environment and the sort of career path you’re looking for.”

Because of the lack of available engineers, national entrepreneurship organizations have been calling for loosening immigration laws to make it easier for tech workers to remain in the U.S. The Startup Act 2.0 bill would allow for the creation of 50,000 new visas for those graduating from an American university with an advanced degree in a STEM field, short for science, technology, engineering and math.

Digital divide

Durham startups say the immigration issue has not been as significant to their hiring concerns. What has been more significant is a digital divide that affects not only software engineers, but also support positions such as customer service, accounting and marketing.

Elliott, with Contactology, said that surprisingly, many young people who have interviewed with the company have had problems with technology, so it’s not only an older workforce issue. “Not every 22-year-old is coming out the door as a digital native,” he said.

“Everyone that you need to run a tech startup – the sales people, the marketing people, the support people – they have to have an aptitude to understand what customers might be experiencing,” Elliott added. “We don’t require everyone to code a web page, but you have to understand what that code looks like to be able to problem-solve.”

Computer programming also has evolved to platforms like “MySQL” and “Ruby on Rails,” which are preferred by fast and nimble startups.

The newer programming tools are open-source, meaning that they are more cost-efficient to use, according to Chris Heivly, organizer of the Big Top and co-founder of Triangle Startup Factory, a startup accelerator in American Underground in American Tobacco.

“Five to 10 years ago, we’d be paying Microsoft $2,000 to $3,000 each for a platform to write the code,” Heivly said. “(Ruby on Rails) is popular among startups because of the open-source community nature of it. … You don’t have to invent everything. You can pull from the community and stitch together things. It means you can have a prototype very quickly.”

But the technology is evolving quickly even for fresh computer science graduates, who often have more knowledge of theory than of current tools, according to Heivly, and there’s still another new one, “Node.js,” that has become more popular in the past year.

Heivly said he has begun reaching out to Durham Technical Community College to see if classes could be held to teach the new languages. He and others also have organized a workshop to teach Ruby at American Underground. The inaugural workshop, for 20 students on Friday was full within a week and a half, so Heivly said they will look into holding a second class.

“So OK, there’s a need!” he said. “We’re planning on an intermediate version or advanced version of the class.”

Chen: monicaxc@gmail.com

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