Management Toolkit

Web 2.0 staff swap salaries for shares

Published: 14 Nov 2007 11:26 GMT

The majority of people looking to work for Web 2.0 start-up companies are prepared to sacrifice pay in exchange for shares in the venture they're joining.

More than 75 percent of candidates joining dot-com start-ups through IT staffing company ReThink Recruitment have foregone up to a third of their salary in exchange for shares.

Two years ago just 10 percent of workers did the same but the level is now close to that seen during the first dot-com boom.

And companies are catching on, with many offering shares and options to induce contract workers to become permanent employees.

This goes against the trend in other parts of the IT industry where an increasing proportion of people are now looking to go freelance.

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An example given is someone moving from a £72,000 salary as a contractor in a start-up, to a £50,000 wage with £20,000 in options as a permanent member of staff.

Nathan Callaghan of ReThink said start-ups have always offered equity to secure top talent but this tactic lost currency following the dot-com crash.

Callaghan said this is now changing following major acquisitions of Web 2.0 start-ups, such as Google buying YouTube in 2006 and MySpace being acquired by News International in 2005.

Equity offers are also a useful way of combating a skills shortage in web technology and they help to stop talent walking away at the end of a contract, he added.