The unemployment rate in the U.S. is 8.6%, but you wouldn’t know that by looking at the tech industry.

There is an all-out war for engineering and design talent here in Silicon Valley, and the battle is driving up salaries and making a lot of us wonder: where are all the engineers?

The Wall Street Journal is just the latest to write about this phenomenon. It had an article last week about the battle for engineering interns, and this week it has a piece on how startups are finding it difficult to raise funding without having a full team of engineers ready to go.

There are simply not enough qualified programmers to fill the rosters of tech’s biggest and smallest companies. Google and Facebook are rapidly expanding, while more and more engineers are deciding to strike it on their own and start their own company rather than work for one. This phenomenon has only grown with the falling costs of starting a company and films like The Social Network, which I believe have sparked a renewed interest in entrepreneurship.

The talent crunch has been a problem in tech for years, but I believe 2012 is going to be the year that it hits the breaking point and the general public starts paying attention to the engineering talent wars.

A couple of factors are going to make the race for talent even tougher:

• Facebook’s Impending IPO: What do you do if you’re the Internet’s hottest company and you suddenly are given $10 billion? Simple: you hire a shitload of engineers. Facebook is well known for keeping its headcount relatively low, but it will always content for the top-tier talent.
• Google Doubles Down: Did you know that 2011 was Google’s biggest hiring year ever?. Don’t expect that rate to slow down in 2012. The company is erecting new buildings to accommodate the new talent.
• Starting Your Own Company Has Never Been Cheaper: Five years ago, you would have had to buy a bunch of servers and a whole team to manage them. Now we have Amazon EC2 and Rackspace to deal with that problem. All you really need is enough money for personal expenses and decent hacking skills, and you can launch something.
• No Startup Visa: The U.S. is not doing enough to bring foreign technical talent into the country. The Startup Visa, introduced by Senators John Kerry (D-MA), Richard Lugar (R-IN) and Mark Udall (D-CO), has gone nowhere. It’s a rich pipeline of talent we are ignoring for some reason.
• There are just not enough students becoming engineers in the U.S.

There will be a lot more stories about the lack of engineering talent in the U.S. in mainstream publications like The Wall Street Journal in 2012, and it will result in a lot more attention on the issue, especially as more people realize that their old jobs are never coming back. A laid-off manufacturer would be smart to retrain and rebrand himself as an IT guy.

There will also be a greater focus on getting U.S. students trained in programming and engineering, especially as China and India continue to swell with bright engineering talent. It will take some time, but I hope and believe that U.S. schools will eventually make programming a required course in high school and/or college. Hopefully it’ll happen sooner rather than later.

The result of this attention will eventually be more foreign engineers (can we please pass the Startup Visa Act already?) and more students who become engineers. But it will be years until these talent flows enter the pipeline.

So for now, there’s going to be a talent crunch. The most innovative companies and savvy entrepreneurs will end up being the winners, while lots of startup ideas will begin to wither and die because they couldn’t recruit the talent needed to support them.

Begun, the Talent War has.

Earlier today, I received an email from SpeakerGram, announcing that it was shutting down. The service helped speakers manage their inbound speaking requests:

“We have decided to shut down SpeakerGram. While we are thankful for the support that our users have given us, we have changed our focus to a new product, and need to shift the balance of our energies towards that effort.”

This kind of thing happens to startups all the time. It’s just not something the media reports on because most of these startups don’t reach the name recognition that makes them big stories.

But why was SpeakerGram the wrong idea? Why do thousands of ideas end up in the deadpool? And what makes for a great idea that captivates the masses?

I’ve heard, seen, analyzed and written about thousands of startup ideas over the years, and while the reasons most of those ideas die varies, there are a few consistent themes that I’ve noticed typically signal a doomed idea.

Here’s the short list:

1. The idea is too narrow: It simply addresses too few people and too small of a market. In SpeakerGram’s case, the issue is that there are just so few people that actually need something to manage their speaking engagements. It’s a very small group of people that engage in significant public speaking.
2. The idea isn’t fully formed: Many startup founders just come up with an idea, jot it down and start building. The problem is that they haven’t thought the whole thing through before building. Will people actually use it? What are the idea’s flaws? Will it survive against the competition? Don’t start building until you’ve really thought about and addressed these questions.
3. The idea doesn’t evolve: Ideas need to evolve as the market evolve. If the idea or the team is too rigid, then the project starts to suffer and can’t pivot fast enough to survive.
4. The vision isn’t ambitious enough: This, above all, is what kills a startup. Big ideas derive from a big vision. Radical product changes are easier to implement if they fall within an ambitious vision that the founders are willing to fight for.

Great ideas take years, not months, to emerge. Facebook wasn’t a billion dollar idea when it launched at Harvard. It became a billion dollar business when it launched the single most important feature in the history of social networking: News Feed.

Very few entrepreneurs nail the idea on the first try. That’s why VCs always say that they prefer to invest in “A” teams with “B” ideas instead of “B” teams with “A” ideas. The “A” team will eventually get its act together and throw for the game-winning touchdown, while the “B” team will get a few first downs before settling for a field goal or fumbling the football.

My advice to anybody with a great startup idea: think it through first. Make sure you ask the hard questions, go through all the scenarios and have a bold vision that can carry the team to the finish line, even when the original idea doesn’t catch fire. A little patience before you jump into the building process will save you from building a product that nobody wants.

Image courtesy of Flickr, Twenty Questions

If you’re in college and your goal in life is to be an entrepreneur, there are a few things you should be doing now that will help you tremendously when you finally walk away with that diploma.

A few weeks ago, I was giving some advice to a college student over the phone. His aspirations are entrepreneurial, and he wanted my advice on what he should do to really be prepared once he had that billion dollar idea.

Here’s what I told him:

1. Define and Build Out Your Reputation

“Personal brand” is a bit of a dirty word, but it is important to be doing things that build up your reputation as a smart and entrepreneurial individual. This means starting a blog and commenting on the subjects that interest you the most. This means setting up About.me and LinkedIn accounts. This means using Twitter regularly. This means not posting too many pictures of your drunken frat night on Facebook.

When a recruiter searches for you, they will find your name on the top of Google Search results. More importanty, they will find smart commentary and a following. Those are invaluable assets in the social era of business.

Building that out now, even before you leave college, makes it easier to network, secure a job and build a company. It makes it easier to recruit for your startup, as well.

2. Network, Network, Network

Networking is fundamental to business, and it’s even more important in entrepreneurship. Convincing users to try your crazy product or partner with your tiny company is a matter of master salesmanship and relationships.

If a personal friend asks me to try out their product, I’m going to try it. Unfortunately, I cannot say the same for the thousands of entrepreneurs that email me regularly. There simply isn’t enough time.

Network now, and network hard. Network not just with your classmates and professors, but with smart professionals in your area. This is especially helpful if your school is near a major business hub (Northwestern –> Chicago; Stanford –> Silicon Valley).

When you have a large and powerful network, job offers come to you and term sheets are easier to secure.

3. Find Your Entrepreneurial Mentor

Mentorship goes a long way towards increasing your knowledge and having someone to rely on when you do finally decide to take the leap. You’d be surprised how many people are willing to mentor you if you only ask; it’s a really positive feeling for the mentor, especially when they see you go off and succeed.

I’m grateful that I found not one, but two amazing mentors while I was at Northwestern. Without my mentors, I wouldn’t be where I ma now.

One more thing: mentors make for great angel investors.

4. Learn to Code While You Still Can

I’ve saved the most important piece of advice for last. No matter your major and no matter your aspirations, learn to code. It will serve you tremendously as an entrepreneur.

I may not have majored in Computer Science (though I wish I had), but I did take programming classes and I did teach myself PHP. The reason is simple: if you can’t code, you can’t build.

Sure, you can find yourself a technical co-founder, but engineers will respect you more if you can speak their language. You don’t need to become a zen master at programming; you just need to know enough to understand what’s going on under the hood of your product.

While things like Codecademy definitely help, there is no substitute to a half-year immersion in programming. That opportunity slips away once you leave the ivory tower.

Northwestern University image courtesy of Flickr, wallyg

Finding investors for your startup is tough business, but choosing the ones that will enable your company and your product to change the world is a far greater challenge.

There are lots of reasons for choosing investors. Perhaps they have large reach and influence. Perhaps they have a great track record. Perhaps they are brilliant when it comes to product. Perhaps they’re known for their founder mentorship.

There is one rule you should never deviate from when choosing investors, though. It’s one that too many entrepreneurs break in their quest for the next round of funding.

The #1 rule of choosing investors for your startup: Only work with investors you’d grab a beer with. Some people call this the “don’t work with assholes” rule, but I prefer to call it the Beer Rule.

Investors are just as much a part of your team as your co-founders or employees. You’re going to have to work with (and answer to) these people. You better respect the shit out of them if you’re going to take their money. You better be comfortable enough to challenge them and still be friends after a screaming match if you’re going to take their money.

One other piece of advice: the worst reason for taking an investor’s money is for the money. Always work with investors that have skills, connections, knowledge and insight that you don’t have. Always work with investors you respect and can trust. Life is too short to work with people you don’t like.

P.S.: Replace “Beer Rule” with “Tea Rule” if you aren’t much of a beer drinker.

Image courtesy of Flickr, shaggy359

On Friday, I gave a presentation on the future of entrepreneurship at the LeWeb conference in Paris, France.

I’ll be posting the full video soon, but I want to share the slides as well.

Hope you enjoy!

~ Ben

One of the things I’ve found myself carrying around these days is a sketchpad.

The reason is simple: I have a lot of ideas, for both the companies I advise and for my own startup ideas. I’m a visual person when it comes to developing products, so I’ve always found a sketchpad to be immensely useful for drawing out the product and user engagement flows for my ideas.

When ideas get more structured, I bust out OmniGraffle, one of my favorite apps for Mac and iPad. Most product people already know about OmniGrafflie: it’s a great way to build visual product roadmaps and mockups. If you aren’t using it, I highly suggest it.

The point I’m trying to make isn’t that you should carry a sketchpad around with you. My point is that you need to have a way to immediately record and expand the ideas in your head. You can write out a story, record a voice note, start a Wiki, call your co-founder, or mock something up in photoshop. Use the medium that suits how your mind works.

In my case, I use sketchpads and whiteboards. They are my canvas. Make sure you find yours.

If you want to build a multi-billion dollar business, you can’t just build a product: you need to build a platform.

That was my major takeaway from the news that Spotify is launching an app platform. It’s in its infancy (thus why journalists are rightfully bashing it), but it’s the start of a transformation for Spotify.

In my opinion, the major inflection point for Facebook — the moment it transformed from a million dollar business into a billion dollar one — was May 2007, when it launched the Facebook Platform. When it opened up its APIs to developers, it created an ecosystem that drove up Facebook’s value. The next year, Facebook hit 100 million users and the engagement skyrocketed from there.

That’s why Facebook is the king of identity, and that’s why it will IPO for north of $100 billion next year.

I make the same argument for mobile, specifically Apple and the iPhone. When Apple opened itself up as an app platform with the launch of the iPhone 3G, the mobile economy boomed and so did iPhone 3G sales. Twitter, Salesforce, Amazon Web Services and others have gained tremendous growth by positioning themselves as platforms.

The platform is king, and Spotify knows it. That’s why it’s launching a platform.

Image courtesy of Flickr, Andreas Blixt

Women are still paid far less than men on average. Women make approximately 0.77 cents to every dollar a man makes, according to Time Magazine.

There are a lot of contributing factors to this problem, but one that a lot of people don’t focus on is how most women are losing out during the salary negotiation.

I ran across an extraordinarily interesting thread on Reddit today. The thread is by a person who performs the salary negotiations for a large multinational technology company.

“I regularly hire women for 65% to 75% of what males make,” the anonymous Redditor says. “I am sick of it.”

More from the thread:

“Our process, despite the pay gap, is identical for men and women. We start with phone interviews, and move into a personal and technical interview. Once a candidate passes both of those, we start salary negotiations. This is where the women seem to come in last.

The reason they don’t keep up, from where I sit, is simple. Often, a woman will enter the salary negotiation phase and I’ll tell them a number will be sent to them in a couple days. Usually we start around $45k for an entry level position. 50% to 60% of the women I interview simply take this offer. It’s insane, I already know I can get authorization for more if you simply refuse. Inversely, almost 90% of the men I interview immediately ask for more upon getting the offer.”

This problem continues to the counteroffer. Men will simply put out a higher number, while many women in this person’s experience don’t even put out a number, so the negotiator continues to lowball it.

You may say that this type of salary negotiation is unfair, but this is how markets work — two sides haggling over perceived value. The fundamental issue here is how women perceive and carry themselves during these negotiations and how often they ask for a raise.

This is an issue that Facebook COO Sheryl Sandberg, a woman I deeply admire, has continually noticed. “Women systematically underestimate their own abilities,” Sandberg told an audience during her famous TED Women talk. 57% of men negotiate a higher salary for their first job out of college, while only 7% of women do the same.

Fighting this issue is not just about laws and regulations, but awareness and mindset. Tell that young college senior niece or daughter of yours that she is worth more and that she should be confident in demanding more. If a company doesn’t accept her terms, it’s their loss and not hers.

I’ve embedded Sheryl’s TED talk for good measure. Let me know what you think of the male-female salary gap issue in the comments.

Image courtesy of Flickr, GS+

As some of you may know, I’m an advisor to Tracks.by, a startup founded by my longtime friends Matt Schlicht and Mazy Kazerooni. They’re building an awesome social platform for artists to launch their content and reach millions of fans.

One of the biggest artists using their platform is Lil Wayne (you can see Tracks.by live on Lil Wayne’s Facebook page). And yesterday, they took him out skating at a skate park in Silicon Valley.

To say I’m jealous is an understatement. Their pictures with them are simply badass.

Tracks.by has quietly become one of the top 200 apps on the Facebook platform. It has more than 1.6 million monthly active users after launching in private beta a month and a half ago.

The New York Times published a great article this weekend on the “tough culture” within Zynga, the creator of FarmVille, CityVille and dozens of other social games. I’m not surprised by the report — more than a few employees have told me that Zynga isn’t exactly the easiest or happiest place to work.

From Evelyn Rusli’s NYT piece:

“Led by the hard-charging Mr. Pincus, the company operates like a federation of city-states, with autonomous teams for each game, like FarmVille and CityVille. At times, it can be a messy and ruthless war. Employees log long hours, managers relentlessly track progress, and the weak links are demoted or let go.

But that culture, which has been at the root of Zynga’s success, could become a serious liability, warn several former senior employees who agreed to speak on the condition of anonymity because of fear of reprisals.

As the discord increases, the situation may jeopardize the company’s ability to retain top talent at a time when Silicon Valley start-ups are fiercely jockeying for the best executives and engineers. It could also hamper deal-making, a critical growth engine for Zynga, which has spent about $119 million on acquisitions in the last two years.”

Zynga has a relentless culture that is, like Google, focused on data. The numbers need to be up for you to keep your job. The result is an IPO that could be worth north of $20 billion.

However, that same culture is clearly at its breaking point. Without big changes, Zynga could experience an exodus that could seriously damage the bottom line. I’ve been told things are getting better though, and that the culture isn’t as unforgiving as it once was.

Understanding Mark Pincus

To understand the culture at Zynga, you need to understand its unquestioned leader, Mark Pincus.

He’s a unique character to Silicon Valley. He’s a business guy, not an engineer. He got a degree in Economics from UPenn and an MBA from Harvard. He worked in finance for many years.

The result: Pincus lives and breathes numbers and data — it is his comfort zone. It’s no wonder Zynga is so data-driven.

By his own admission, he also didn’t fit in with a lot of these places. “I found that I couldn’t be successful in anyone else’s company,” Pincus told a group of entrepreneurs at the 2009 Y Combinator Startup School. “So I got kicked out of some of the best companies in America.”

(by the way, I’ve embedded the video of that talk above. If you really want to understand Pincus, watch it.)

The man follows his own vision, and it rubs a lot of people the wrong way. He’s also incredibly intense about it. It’s made Zynga relentless in its quest to be #1, but its rank-and-file have definitely paid a high price for it.

Understanding Zynga’s Culture

Why is Zynga so data-obsessed? Why is it so intense that countless employees are simply burning out?

The answer should be obvious: it all stems from Mark Pincus and his personality. His intensity and obsession with data are fundamental to his nature, and thus they are fundamental to Zynga. Those traits made Zynga into a multi-billion dollar company.

However, I think Pincus is finally realizing that his level of intensity and his style of leadership aren’t something most people can sustain for long periods of time. That’s why Zynga’s doing more to ease workloads and make its employees happier.

Zynga is in a period of transition. It’s about to turn into a public company, and it will no longer be able to use the promise of pre-IPO stock to retain talent. It will have use other weapons, such as perks and keeping employees happy, to stay on top.

Zynga’s culture will have to adapt if the company expects to continue growing.