Earlier this week, TechCrunch reported that the former head of payments at Instacart recently left the grocery delivery outfit for a new adventure. As it happens, Matthew Birnbaum, Instacart’s head of talent acquisition for the past four years, is also out the door, having quietly joined the venture firm Pear VC last month.
What do the moves suggest of Instacart? Birnbaum, who launched his recruiting career in 2010, insists the moves say less about Instacart and much more about the red-hot job market right now, where employees with options that may be “underwater” are particularly susceptible to being poached.
We had a wide-ranging chat with Birnbaum yesterday morning about why he was himself recruitable, and what other outfits should know about what’s happening in the market. Our conversation has been edited for length.
TC: You just made the leap from a growth-stage company to a venture firm. Why?
MB: I’d met with some top venture firms earlier [before joining Instacart], but some of the interviews were a little discouraging in the sense that some of the partners I was speaking with were really just looking to offload the network conversations they get dragged into, like, ‘My son is a new graduate’ or, ‘My daughter is graduating from XYZ school; can you help her find her first job?’
Yikes.
A lot of the thinking was just how to separate what the partners are being asked to do from a talent perspective so they could focus on more of the partner work. Candidly, too, while if you look around today, almost every venture firm has at least one talent person, their relevance within the firm is something these individuals question a lot. In many cases, [my acquaintances] feel like they were brought in to help the firm stay relevant. If a firm is competing with other venture firms that can roll out a talent function, it becomes harder for the firm that doesn’t have that to compete.
If you don’t believe in the model, why join Pear?
Pear actually wants to make companies self-sustainable. At Pear, we want to be able to hire, say, three to five engineers over 12 to 14 months [as part of our promise] with every seed investment we make. We feel that that’s truly a differentiator, in the sense that most VCs are unable or unwilling to make that commitment as part of their core offering when a founder signs a term sheet. And Pear has the relationships and infrastructure in place to do it, at, especially at the seed stage, when engineers are the most critical people required to take that next step. Pear already has some really cool stuff in terms of dorm programs and industry programs to start building a lot of the networks that are ultimately going to feed into the hires that we need to make for our portfolio companies.
Everyone is right now promising access to the same pool of top engineers. Earlier this week, I wrote about an accelerator that is hosting a career fair instead of an investor day this summer to connect founders to engineering talent.
There are a bunch of firms that are doing the same thing or have tried to do the same thing; Pear is alone in making this part of our core offering. But you’re right, the overall hiring market for engineers is brutal.
What do you have to offer a top engineer right now?
It’s different from startup to startup and from engineer to engineer. Historically, some have optimized for pay, while some for total compensation in the form of pay and equity. Some optimized for long-term potential — the chance to strike it rich by joining a company early on with a larger equity stake — and some optimized for location or prestige or their manager or how easy or difficult the job was going to be.
They still optimize for different things, but one of the big differences today versus five years ago is that it’s less of a binary decision tree. While it used to be that you might take an offer with high cash and lower equity or an offer with high equity and lower cash, in today’s market, you can shop around and get an offer with high cash and high equity. You used to have to optimize for two of five decision criteria and now you’re optimizing for four. That’s what’s making hiring more difficult, because a lot of companies aren’t in a position where they can provide for those things.
A lot of people are leaving Instacart. You were clearly open to being recruited out of there yourself. Why?
It was more of a personal decision for me. I’d been there for four years, scaled the company from 300 to 3,000 [employees], and hired 1,200 engineers over that period of time. I wanted to do something where I was closer to the build stage. My team was 125 [people]. I was managing through managers who manage managers who manage managers.
So there are no other reasons people might be leaving?
I can’t speak for other people. But one of the trends we are seeing — for a lot of companies that grew incredibly quickly during the pandemic and have subsequently [been impacted by a] kind of market correction — is if you look at the value of your equity, you may be underwater.
It’s a bad example because DoorDash is a direct competitor to Instacart, but if someone were to go from an Instacart to a DoorDash, and DoorDash’s equity right now is at 50% or 40% of what it was at its peak, someone can get the best of both worlds where they take their Instacart equity, lock that in, then go get twice as much DoorDash equity as they would have gotten if they joined a year ago.
I think there’s a lot of that going on in the market, where people are picking their head up and looking around and wondering, ‘Hey, what is the opportunity cost of me staying put at one company, versus looking at another?’ I don’t think that’s unique to Instacart and I don’t think this is just happening for engineers. Most companies that are late-stage or pre-IPO or have gone public in the last two years [are going] through the same journey, so I wouldn’t be surprised if we see a lot of movement across that cohort of companies.
The candidates are in the driver’s seat today, where they can really go and ask for everything, and there’s going to be one if not multiple companies out there that are willing to give that.
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