Special Contributor to Silicon Hills News

The Austin Technology Council CEO Summit heated up toward the end of its first afternoon Thursday when John Price, CEO of Vast, led a panel on compensation packages for tech employees.
Price asserted that Austin lives in a bubble in which “culture” competes successfully against higher salaries. But the bubble, he said, is going to burst as the city’s tech companies import more talent from places like Silicon Valley.
Price spoke at the second annual CEO Summit at the Hilton Hotel. The Austin Technology Council sponsored the two-day event in which more than 150 CEOs and other top level technology executives meet to discuss the outlook for Central Texas’ technology industry and how to recruit and retain technology talent.
Price, a veteran of Trilogy Enterprises, which touted its culture but lost many employees to startup fever, said the compensation of his company was based on money and ownership, not on “fun” or “culture.”
Panelists, who included Bill Arend, General Manager of Oracle Corp., Kip McClanahan, a partner in Silverton Partners venture capital firm, Matt Chasen, CEO of uShip, Kevin Reinis, CEO of Flocasts and Rod Favaron, CEO of Spredfast, all argued that, while it was important to keep superstars on at a high financial cost, many people in Austin stayed with companies because they liked the culture.
Speaking of that notion and his experience in Silicon Valley, Price said “At Facebook, none of these principles apply. Engineers are going to go with what they perceive as the best opportunity. These are smart people. They can do the math. They’re thinking ‘I believe I have talent. The only thing I have is time.’ Austin lives in a logical bubble that is going to pop. We have to show these people that they’re working for a company that has real traction.”
Kip McClanahan retorted with “I think you’re crazy.”
“What I’ve heard a couple of times across this panel is that we do what we can do to retain top talent given the tools that we have. If the companies in town can do that with liquid equity they do. They use the tools they have.”
Matt Chasen talked about an employee offered a 50 percent increase in salary from a Dallas company. The employee walked into his office and said ‘I just want you to know I got this offer but I’m not taking it because I love working herewith these guys.’ To which Favaron quipped, “I know your tech crew, they’ve got their own culture. It has nothing to do with you.”
Later on a panelist pointed out that Price’s tech staff, too, had a culture in which the engineers had bonded and that that played a factor in his turnover rate, whether he liked it or not.
The panel agreed that there was a difference between compensation for “rank and file” engineers and the superstars. And that companies needed to do what they could to maintain the company’s top performers. But the
exciting part of the debate seemed a black-and-white argument over whether Austin’s groovy, easy-going, “fun” startup culture was enough to attract the talent needed to supply the city’s thousands of tech companies.
Other panels in the afternoon included the Top Three Things Every Tech Leader Should Know with Trevor Schulze, Vice President of IT at AMD, Lance Obermeyer, CTO of Digby and Kevin Meek, Partner of Baker Botts LLP.
Among their conclusions:
CEOs should seriously weigh the advantages and disadvantages of creating “Native” apps. Obermeyer pointed out that few companies have programmers with the IOS skills to create a good app and hiring it done by an agency is extremely expensive. Using HTML apps when possible is a more financially feasible option.
Companies should know if they’re using open source software, even if some exists somewhere in their code, because trying to get financing or complete a merger based on a company that uses software it doesn’t own can seriously tangle negotiations.
Companies need to be extremely careful about letting employees bring in their own iPhones and iPads because of intellectual property issues. In five minutes an employee can upload and put in a storage center, such as drop box, information and programs that cost a company millions to create.
Other speakers included Mike Rollins, president of the Greater Austin Chamber of Commerce who talked about the city’s initiatives to give Austin access to more talent, including a connection with LinkedIn that would let jobseekers know what they were looking for was available in Austin.
Graham Weston, Chairman of Rackspace, talked about his trip to Israel, spurred by the book Startup Nation: The Story of Israel’s Economic Miracle by Dan Senor and Saul Singer.
In the past, he said, America was the country that did the R&D and farmed manufacture out to other countries.
Now, he said, he’s talked to companies who farmed R&D out to Israel. America, he said is being disrupted. And the number one preventative to disruption is entrepreneurship.
“Do you know what America’s greatest invention so far is?” he asked participants. “The American dream. ..America is the place where the future came first. Texas has to be the place where the future comes first. We need to invite entrepreneurship into our communities, our companies. We have to open ourselves to disruptive answers, no matter how they affect our competitive landscape…or our bottom line.”
Finally, he said, we have to stop just having cities and create regions. An Austin, San Antonio region, for example.
Friday, the summit will continue, examining the question “Why Companies Leave Texas.”