Health and education start-ups say recruiting has gotten easier in wake of Facebook, Google scandals

Start-up executives in health and education say they're having success recruiting from tech giants like Facebook and Alphabet, where they previously struggled.

The tech giants have suffered a variety of scandals and negative press in the last couple of years, making retention harder in the notoriously cutthroat competition for talent in Silicon Valley.

Facebook has dealt with a series of crises, from allegations that the company doesn't do enough to protect user data, to a one-day 20% stock plunge in the wake of a bad earnings report in July 2018. Morale at the company dipped to the point where former Facebook employees told CNBC in December that ex-colleagues are reaching out to discuss job prospects far more frequently than they used to.

Alphabet saw employees protest about the company's sales of technology to the U.S. military and payouts to executives accused of sexual improprieties, and has struggled to keep misleading and abusive content off its YouTube service.

As employees look for greater meaning in their work, some start-ups with a clear social mission are benefiting.

Prior to 2018, start-ups could not compete against big tech companies' notoriously high salaries and other benefits designed to retain talent.

That has changed, according to conversations with half a dozen start-up execs in the health and education space.

"We're definitely getting more people in the pipeline from these big tech companies," said Ryan McQuaid, CEO of Plushcare, a health-tech company that recruits with the slogan "delivering health and happiness."

McQuaid's company aims to reduce the barriers for people to access the medications they need. One of its focus areas is PrEP, which is designed for people who don't have HIV but are at a substantial risk of getting to it.

"In Silicon Valley, every company tries to position itself as doing amazing things for the world," said McQuaid. "But employees are starting to realize that not all of them are actually doing that."

McQuaid's company can't compete on cash compensation, but they do pitch potential recruits on a large equity stake and an opportunity to work on challenging technical problems. They also emphasize the company's social mission.

Color Genomics, a Silicon Valley-based health-tech company that specializes in helping people understand their medical risks, has also seen an uptick of interest from engineers, designers and product managers at the large tech companies.

Othman Laraki, the company's CEO, who previously worked at Twitter and Google, said that a few months ago he hosted an engineering recruiting event in Burlingame, Calif., a stone's throw from the big tech campuses. More than 200 people showed up.

"It was on a Wednesday night, right when all those big storms in the Bay Area were happening, and yet we saw so much interest from engineers who wanted to tap into the opportunity to make an impact in a more direct way," he said.

Health insurance start-up Clover Health has found that there's a steady chunk of people who want to work at mission-driven start-ups. "Clover tends to attract a specific type of person who wants to work for a company with a mission-driven culture and business model," said Bob Huynh, Clover's vice president of talent, adding that he hasn't seen a recent uptick in engineers from big tech companies interested in joining the team.

Recruiters specializing in health-tech say there are other factors drawing more engineers, designers and other tech talent to the sector.

"There are so many important problems to solve," said Kevin Bijas, the founder of Bijas Search, who specializes in product and engineering searches. Bijas said that the health-tech and ed-tech sectors were once perceived as antiquated with legacy technology systems, but are increasingly now viewed as having a lot of opportunity and potential upside.

But he did note that "there are issues and there is some questioning," among employees who work at the big tech companies. It's "no mass exodus," he said, particularly among the highest-ranking engineers at companies like Facebook who can get paid up $1 million in cash compensation, but he's seeing opportunities for start-ups to recruit at a level or two down from that.

Social impact companies are increasingly finding success recruiting the "up and comers at director and senior management levels," he added.

Money can still be an issue. In some cases, it's a struggle to negotiate salaries down from $600,000 or more for a mid-level engineer, despite their equity package.

Punit Soni, the CEO of Suki, a health-tech company aiming to help doctors with their massive administrative burden, has seen a major increase in interest from employees at Facebook and other tech companies. (Suki gets 50 to 60 resumes per day, and a "single-digit" percentage are from the largest tech companies.)

But once he tells recruits that working at Suki is a bet on equity, and not on cash compensation, many won't take the job.

"I think people who want to come to start-ups should be motivated by equity and to own a chunk of the business," he said. "I clarify that up-front that with these big tech company folks who apply because they're looking to make an impact."

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