In the News

We’re Pleased To Offer You A Job. Base Salary: $0
June 1, 2009
By Timothy Hay

How would you like to get in on the ground floor, and work for a start-up company that could take off and become the next Silicon Valley success story?

There’s a catch, though - you have to work for free.

Max Shapiro - a serial entrepreneur who once scouted talent for NBA teams and now hunts talent for emerging technology companies - encourages job candidates to do just that.

His San Francisco-based staffing agency, PeopleConnect, has been connecting people to jobs at start-ups for the past decade. And for much of that time, new hires have gone off to work with the understanding that they might not see a paycheck for months – until their company secures its first financing from angels or VCs.

“Some candidates say, ‘Are you crazy?’ and you just can’t convince them that it’s a risk worth taking,” said Shapiro. “But some people are risk-takers. Some people just want to get out of the house.”

Launched in 1999, PeopleConnect has ridden the waves of the tech boom and bust, as well as the current economic downturn. What started off as a straight-forward staffing agency for tech start-ups evolved into something different – something that combines gainful employment with gambling.

During the tech boom of the late ‘90s, “It was a gold rush, the easiest money I ever made,” Shapiro said. “After the bubble burst, there was no business for recruiters. The only way to stay in business was to think of something new.”

Shapiro decided to recruit for tech companies that have no funding to pay staff, but who are on the fund-raising trail with every hope of being able to raise a round. Since 2001, Shapiro has placed some 60 people in jobs where they worked for equity, options or other benefits, and without pay.

“I estimate that 80% [of the start-up companies] do get funded,” he said.

And as the current recession grinds, more applicants are willing to take a chance, and go to work without a paycheck, Shapiro said.

One of them is David Kuhs, a staffing professional who three weeks ago went to work at Silicon Valley-based IT and healthcare staffing agency Renovan Labs Inc. Kuhs is one of three employees at the company, which is currently seeking its first round from angels or venture capitalists.

“My first reaction was ‘I don’t know if I can do this,” Kuhs said. “But health care is a great industry to go into…A lot of the jobs out there are sales jobs, and salaries have dropped. Also, when you go out on the street, it takes a long time to make your first sale.”

So why not spend that same time at a start-up that could become a breakaway success?

“My kids are older now,” Kuhs said, “and my wife has a solid job with solid benefits. We can live on our savings for a period.”

That period could be weeks, or months. But Renovan stands a chance of raising a round – at which point they will put Kuhs on salary, he said.

Shapiro said that, during the tech bust, as many as 80% of his job-seekers were placed at companies that did not offer paychecks.

That number dropped significantly as Silicon Valley picked itself up, he said. But now, with the economic downturn, about half the applicants he deals with are willing to take a job where they might not see a check for as long as six months, he said.

Shapiro has a good sense of what start-ups are well-positioned to raise funding. He is an angel investor himself - his investments include wind-turbine start-up Mariah Power Inc. and Malvern, Pa.-based nanotechnology company Carbon Nanoprobes Inc. - and is a member of the Keiretsu Forum, the world’s largest network of angels.