"Even 9 Months' Experience Earns $400,000: Talent War Intensifies Among U.S. Startups"

Expansion of Cash Compensation Over Stock Options

Opportunities Concentrated Among Top Talent... Hiring Polarization Intensifies

As competition for talent in the artificial intelligence (AI) sector intensifies among U.S. startups, compensation structures are evolving. There is a shift away from the traditional model centered on low salaries and stock options, with a growing emphasis on cash compensation.

According to The Wall Street Journal (WSJ) on March 30 (local time), U.S. AI startups are increasingly transitioning to cash-based compensation structures to attract talent.

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Until recently, startups in the industry have attracted talent by offering stock options with the potential for significant gains upon a future initial public offering (IPO) or acquisition, instead of high base salaries. However, this compensation method has drawn criticism due to the uncertainty over whether those gains will actually materialize.

Recently, though, with the inflow of large-scale investments and intensifying competition for talent, cash-based hiring practices are expanding. Michael Zhang, CEO of the recruitment firm Candidatelabs, stated, "There is fierce competition for a limited pool of talent," adding, "What might have seemed excessive in terms of compensation in the past is now being accepted as the norm."

Startups are focusing on securing top-tier talent while maintaining small organizations. As a result, the top 5–10% of talent are being presented with the majority of job opportunities, leading to a polarization where others find it increasingly difficult to secure positions, according to recruitment industry experts.

Annual Salary in the 300 Million Won Range... Total Compensation Including Equity Up 18%

Salary levels are also rising rapidly. According to the global job information platform levels.fyi, the median base salary for software engineers at venture-backed startups increased by about 25%, from $160,000 (approximately 24.56 million won) in 2022 to $200,000 (approximately 30.7 million won) recently. Total compensation, including equity allocations, has also risen by 18%.

High salaries are spreading beyond engineers to a wide range of roles, including sales, product management, and marketing. Even positions that support client companies in leveraging AI are receiving substantial compensation packages.

Some companies are also adopting compensation schemes that provide a certain percentage of profits from specific business sectors in addition to base salaries.

Chris Vasquez, CEO of recruitment firm Quantum, noted, "Cash compensation for some startup employees is approaching the levels offered by major IT firms such as Meta and Google." He added, "In the past, it was rare for early-stage startups to offer base salaries exceeding $300,000 (about 46.05 million won), but recently, such compensation packages have become feasible."

The outlet also reported that some candidates are receiving offers of $250,000 to $300,000 (approximately 38.28 million to 46.05 million won) per year with just one to two years of experience, and there have been cases where candidates with only nine months of experience have been offered a base salary of $400,000 (about 61.4 million won).

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Accelerated Compensation, Shorter Tenure ... "Need to Build Organizations Where People Want to Stay"

In the past, realizing gains from stock options required waiting until an IPO or acquisition, but now, the timeline for cashing out is accelerating through "tender offers"—where investors purchase employees' shares. Some startups have even done away with the "vesting cliff" policy, which previously required employees to work for a certain period before receiving equity.

However, some analysts point out that expanding cash compensation alone may not be enough to prevent talent from leaving. As compensation becomes more quickly liquid, the incentive to remain at a company for the long term can weaken.

Liz Hughes, talent partner at GV (Google Ventures), Google's venture capital arm, said, "It can become a situation where people join for the money and leave for the money," emphasizing the importance of fostering an organizational culture where people actually want to stay.

This content was produced with the assistance of AI translation services.