111 Eighth Avenue

The Wall Street Journal devotes considerable inches today to covering Google's expansion in New York City. In 2011, the tech giant added about 750 employees to its Chelsea outpost, bringing the total number of employees here up to 2,750.

About half of those new staffers are from acquisitions. Google acquired four companies, also in New York City, last year.

While the company overall grew 33 percent from 2010 to 2011, Googleplex East expanded by 38 percent. The Journal called it, "the most prominent example of a technology company shifting its focus toward New York. "

It reminds us of what one former city official said after Facebook's big presser about vague plans to start an engineering hub in New York. "Thank you? I guess," said the source, contrasting it with Google who just "all of a sudden had 1,400 engineers."

Twenty percent of the new hires were in sales, 20 percent are engineering hires, and 10 percent are in administrative and HR roles. Although proximity to Madison Avenue obviously drives the advertising focus, a number of tech initiatives are also run in New York, like building new features for Google Docs:

New York is one of the two important sites in speech recognition, such as voice search on Android phones, and natural language processing. Engineers are also plugging away at local search, such as using a map on a mobile device to find something where the location is relevant, like a restaurant, Mr. Spector says. To boost those focuses, Google also acquired restaurant reviewer Zagat and licensing and royalty service provider Rights Flow in 2011.

Google's New York office also plays a role is creating a platform for online ads, especially display ads. Various reports cite the industry running between $10 billion and $30 billion but Mr. Bender said it can be "much, much bigger than that," estimating $200 billion.

The company has also started making nice with the locals by donating "large sums" to New York City  colleges and donating space to community organizations. Betabeat also heard Google is in negotiations to figure out how to contribute to the new software engineering high school in Union Square.

No more Deutschland?

The last time Betabeat was at Googleplex East, we rode the elevator up with a Russian-speaking developer sporting a Google "5th floor" t-shirt. But if the search giant has its way, those floor-pride shirts might soon read "14th" and "15th."

For now, however, Donnie Deutsch, the ad exec and former CNBC host that New York magazine called "the last of the Madison Avenue wild men," is standing in the way. His advertising agency has a lease for 140,000 square feet on the 14th and 15th floors that doesn't end until 2013, reports the New York Post.

Google has been trying to buy out tenants in plans to expand within its 2.9 million square foot building, "which looms over the neighborhood and provides great light and air to its tenants."

But while Mr. Deutsch has been searching for alternative spaces, it's hard to give up the thrill of offering visitors a scooter in case it takes them too long to ride the length of your office. Not to mention competition for space from other techies, says the Post:

"Other brokers say the search isn’t going so well, as the submarket is the tightest in the country and large suitable blocks are rare. According to a new report by Jones Lang LaSalle, 45 high-tech companies alone are looking for over 3 million square feet in Manhattan, and many of them are targeting Midtown South."

The showdown with Mr. Deutsch may be a problem money can solve:

"As Deutsch is known for believing that there’s a price for everything, we wonder if Google will make it worthwhile for the ad firm to move or if they will simply dig in their heels for the long run."

Pro tip for Mr. Deutsch: Google has no problem spending, as long as you keep it tight-lipped.

This way to the arcade.

Brush up on your ping-pong skills, advertisers, you're about to get to get the Silicon Valley treatment.

With Advertising Week poised to take New York City, the New York Times reports that the sales and marketing teams of internet behemoths like Yahoo, Google, Apple, and yes Facebook are poised to make good on their Manhattan real estate investments. Although Twitter's new Madison Avenue digs somehow don't warrant a mention.

Rather than flying big brands out to the West Coast, they've set up shop in the Flatiron (Apple's new iAd division), Times Square (Yahoo's new digs), Madison Avenue (Facebook and Twitter are new neighbors), and don't forget the Googleplex East on Eighth.

Those companies will be on display at Advertising Week's 200 events with panels on mobile connectivity, online privacy and social networking, but the real ticket are the baller office parties to entertain clients as the digital world goes searching for their one guaranteed revenue stream: ad dollars. Yahoo has purple conference rooms and door pulls in the shape of exclamation points and Google has a heli pad and, Betabeat's persona favorite, a food truck that sells a mean knockoff of the Momofuku compost cookie.

But Facebook is playing up the startup vibe:

The company’s new office evokes a kind of romanticized view of a Silicon Valley start-up, including an open bar, video games and threadbare couches that reflect the dorm-room sensibilities of the roughly 100 employees who work there.

“When you get to that critical point in terms of the number of employees,” said Carolyn Everson, the vice president for global direct sales, “we like to have a look and feel similar to how Facebook looks and feels in Palo Alto and Singapore and London. And with this market — where we’re all on Madison Avenue and entertaining and meeting with clients every day — we wanted to have a proper presence. And we just weren’t able to do that in the limited space that we had across the street.”

We hope the gift bags include hoodies.

Illustration by Oliver Munday

“If I’m not the most well-connected guy in New York, I’m one of them for sure,” Dave Carvajal told The Observer, leaning back into his chair at the Park Avenue South headquarters of Dave Partners, the executive search firm he founded in 2009. It was the Friday before the Fourth of July and Mr. Carvajal, olive-skinned and trim, was already dressed for the long weekend in salmon-color khakis and a snug white shirt.

Mr. Carvajal was discussing the finer points of recruiting developers—a skill suddenly in great demand, as Google, Wall Street and top media companies battle an army of starry-eyed young co-founders for technical talent, raiding a local labor pool better known for its dreamers than its doers.

After all, those mobile apps, data-mining algorithms and high-frequency trading applications aren’t going to build themselves.

“I love it! It’s the age of the recruiter,” Mr. Carvajal said. “In New York City the only thing hotter than tech people are tech recruiters.”

Mr. Carvajal, a type-A optimist who still finds time for a rigorous Ironman training schedule, wasn’t talking just about himself. In September, Foursquare poached Susan Loh, a former lead technical recruiter at Google, away from Yelp to head up its efforts in New York. A month later, Yoonie Kim, a veteran tech recruiter for Meetup, Mozilla, and Google, opened up an office for her own agency, Lab 8 Ventures, in New York. She had to turn down 15 start-up clients last quarter because she was too busy between staffing up Amazon and Gilt Groupe. This March, Rob Dennis traded in a five-year career leading technical recruiting for Bridgewater Associates, a cult-like Connecticut firm New York magazine recently called “the world’s largest and indisputably weirdest hedge fund,” to recruit at Lincoln Square Advisors, an independent midtown i-bank and consultancy. From the Solow Building, upstairs from Brasserie 8½, he now hunts for tech talent for big tech and finance firms as well as start-ups. Mr. Dennis, in turn, raided Facebook’s Palo Alto headquarters to lure Aaron Kirchner away from his position as lead tech recruiter to join him at Lincoln Square. Meanwhile, Mr. Carvajal’s firm filched Sean McDermott from Googleplex East’s recruiting team last month so he could work on beefing up Tumblr’s engineering staff instead.

Indeed, while the rest of the city anxiously watches unemployment hover just below a demoralizing 9 percent and Wall Street braces for more layoffs, developers are complaining about being spammed with too many job offers on LinkedIn. The best recruiters know how to catch an engineer’s attention. Working in their favor is the fact that at the top of the market, salaries for chief technical officers and VPs of engineering are the most competitive they’ve been in years.

For example, one high-profile fashion e-commerce start-up recently attempted to hire a CTO away from its main rival. The desired candidate was offered a $350,000 package ($275,000 base and a $75,000 bonus), 1.5 percent equity and a board-approved $500,000 loan that would allow him to exercise his stock options at his current employer—the “golden handcuffs” keeping him in place—and pay off the considerable income taxes he would incur. (He politely declined.)

“CTOs typically go for like $225K, with $50K bonus and 1 percent equity, but that’s rich for a small start-up,” said Mr. Carvajal, who recruits for large companies like Microsoft and Amazon as well as for New York’s suddenly ubiquitous venture capitalists. Though recruiters report that start-up salaries for engineers rose 20 to 30 percent in the past year and a half, to upwards of $140,000 for a developer with three to five years experience, that still leaves start-ups priced out of top talent in a city where working for a hedge fund can mean bonuses of up to 80 percent on a good year and CTOs command seven figures.

“We came from a place over the last two years where people were going to start-ups for below market [rates],” Mr. Carvajal noted. “People aren’t necessarily going to do that now.” In fact, they’re likely to ask for more equity, especially as the high-flying IPO market has opened up the plausibility of a lucrative exit. The fact that Forbes’s list of the world’s richest billionaires now features three early Facebook employees not named Mark Zuckerberg made a bewitching case for the upside of equity.

Even recruiters themselves are willing to put their ear to the train tracks to hear those ka-ching sounds in the distance. Mr. Dennis mentioned Lincoln Square accepting equity payments from promising start-ups in the same breath that he reminisced fondly over Peter Thiel’s plunking down $500,000 for a 10 percent stake in Facebook. Mr. Carvajal also accepts equity in start-ups, but Lincoln Square plans on doing him one better by launching its own venture capital arm and incubator.

“Investors are giving them money, but these start-ups are just turning it around to get talent. In the early stages of a company, a single superstar hire can mean the difference between success and failure,” added Mr. Dennis, who gives off the same bookish, hmm-how-should-I-explain-this-to-you vibe as his sitcom doppelgänger, Doogie Howser. “It occurred to me, why not just take out the middleman?”

But Lincoln Square is even more ambitious. This fall, Mr. Dennis is beta-testing a college recruiting program that borrows a business model from sports agents. Avoid the campus cattle call and let Mr. Dennis do the leg work. “I’m going to do the job that career services should be doing,” he tells them. In theory, the employers pay Lincoln Square's fees. Then, when those kids become managers, who do you think they’ll call when they hire their own team?

IF THAT’S WHAT IT TAKES to close a coder, it might explain why tech man-about-town Rex Sorgatz was forced to delete recruiting from the menu of services his company, Kinda Sorta Media, offers start-ups. “It was too difficult finding people,” Mr. Sorgatz told us over beers at a digerati meet-and-greet. “If you want a CTO, you have to go to, like, Tel Aviv.”

Eager to hang onto talented staffers, Google—a company known to aim for the 85th percentile in terms of compensation, to separate the greedy from the truly passionate—has gotten fast and loose with its counter-offers. Out in the Valley, Google reportedly tried to load down employees with stock, worth $3.5 million in one case and $6 million in another, to keep them from jumping ship to Facebook. But even in Manhattan, it’s turning into a numbers game. Mr. Carvajal said he recently had two bids from start-ups for a developer from Google’s $1.8 billion Chelsea outpost who was also weighing another outside offer. “One of the highest was $180,000, and Google offered him $240,000 and the chance to work from Paris, because it was some special project they needed.” He stayed with Google.

Although Googleplex East employs a team of roughly a dozen recruiters, each with a dedicated support staff of “résumé sourcers” hunting for engineers, a source familiar with the company’s hiring process says in the last quarter, the New York office’s efforts resulted in the most rejections ever: 13 Thanks, but no thanks—up from a typical one or two. Although Google is quick to note that this was a record year for hiring, our source paints a more desperate picture: “All someone needs to say is, ‘Oh, I got an offer from a start-up,’ and Google will come back and give you this real generous counteroffer to stay.”

Typically that means something along the lines of a 50 percent raise and a couple thousand shares of restricted stock units, or R.S.U.’s, for a valued employee. Those units work on a four-year vesting schedule, which means employees have to stay to cash in. “They’re giving them out like candy,” said the source.

“Look I’ve got guys at Google who want to leave Google, some top engineers,” Mr. Carvajal said. “But the problem is, you know, they’re sitting on $2.5 million of Google stock. On a cash basis, they could leave, but it’s the equity keeping them there.” That said, Google’s increasingly bureaucratic infrastructure is losing its sheen. Mr. Carvajal says he talked to one of the top developers from Facebook’s Palo Alto headquarters who broke down the decision tree for a typical top engineer on the West Coast. “He said, ‘If you’re lazy, you go to Google; if you want cash, you go to Facebook; if you want cool work, you go to a start-up.’”

The source familiar with Google’s inner workings concurred: “Google is a little stale. It’s almost impossible to get fired.”

For start-ups processing meta-data (or data about data) like Bit.ly, which not only shortens URLs to help users meet the 140 character requirement, but also pulls information from the source page and how it’s shared, the talent pool they want to tap might be closer to Wall Street than Chelsea. Mr. Carvajal says they’re looking for engineers who have experience with “algo trading” at big securities firms or hedge funds building systems for processing massive meta-data. “The problem is the Betaworks guys, the Bit.ly guys, they’re cheap,” he says. “They want the guy to leave his job making $400,000 to $500,000 and do it for equity.”

Jonathan Basker, Betaworks newly-hired "vice president of people" sees it differently. "More and more, engineers are turning away from the financial industry completely (yes, pay-cuts and all) in order to find more meaningful and rewarding work," he emailed The Observer. "We're here because it's good for the soul and we can leave everyday with smiles on our faces and 100 new ideas racing through our brains. Frankly, the type of engineer we like to hire couldn't possibly be happy in one of those firms, so this doesn't present much of a problem for us."

“SO YOU MET DAVE, huh? Was he smiling?” Marc Cenedella, founder of TheLadders, a website that lists only $100K-plus jobs, asked The Observer. Mr. Cenedella and Mr. Carvajal were both pivotal in scaling-up HotJobs before Yahoo bought it for $436 million. (Without admitting any wrongdoing, Mr. Carvajal paid a $32,398 settlement to the S.E.C. on allegations that he bought HotJobs shares in his parents’ name and unloaded them shortly after the sale.) The two also worked together again on TheLadders.

Why, yes, we did notice the permasmile, we told Mr. Cenedella. And why not, he seems to have some tricks up his Ralph Lauren sleeve.

“I like Dave—don’t want to expose his secrets,” said Matt Pavelle, now the new CTO at Moda Operandi, wrote The Observer via gChat. Dave Partners recently secured Mr. Pavelle for the members-only fashion e-commerce company, co-founded by socialite Lauren Santo Domingo. “Let’s call him an excellent communicator,” Mr. Pavelle conceded.

About that sizable network of his, Mr. Carvajal said he built it up over years in the business. “Gilt Groupe is a good example,” he noted, sucking down a Swamp Thing-color smoothie concoction of kale, spinach and green apple. Mr. Carvajal says Gilt founder Kevin Ryan, who was on the board of HotJobs and an early investor in the Ladders, initially asked him to head up talent acquisition for the flash sale site. "I was just having too much fun. But I introduced him early on to some people, including the guy who’s running the Jetsetter business,” said Mr. Carvajal. After letting Dave Partner’s agreement with Gilt expire, “Now half the company at Gilt Groupe is reaching out to us and asking for help," he said of the notoriously difficult environment for developers, adding, "Now it’s okay to pull people out of there because they’re not a client.” Gilt responded that its attrition rate is “extremely low.”

With developers kvetching about “recruiter fatigue” and turning off their cellphones to avoid calls, it takes a psychological understanding of what geeks want to get them to jump.

Mr. Carvajal views companies as either clients or targets, figuring out which are which by conducting interviews that end up functioning not unlike therapy sessions. “Once [employees understand] that everything we talk about is going to be strictly confidential, then they open up,” he said. “People prioritize their own self-interest over loyalty to the company.”

Mr. Dennis takes a more mathematical approach at Lincoln Square. He’s a few months into a plan to map the country’s top technical talent and how they move through the market in real time. “An example of mapping we’ve done is looking at every Harvard graduate back to 1970—with the caveat that school isn’t always necessarily the best aggregator of top talent,” he said. To find indicators of talent, which he defines as “the raw capability to do difficult things and a track record of having done difficult things,” he sorts data from candidates and employers using various algorithms. He’s even trying to figure out a way to incorporate in cultural influences—the release of Hackers, say, which set off the ascendance of the nerd.

As it turns out, Mr. Dennis himself is among the growing ranks of folks who turned down an offer from a company with a market cap approaching $200 billion. Last year, a source says Google offered to invent a position just for him, head of engineering recruiting strategy. He declined.

-ntiku@observer.com