Washed It!

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Newsweek, a 77-year-old magazine that once helped set the national news agenda, is linking its future with a startup website just two years in the making.

Three months after agreeing to buy the money-losing weekly for just $1, audio equipment magnate Sidney Harman has completed on-again, off-again negotiations to merge it with The Daily Beast.

It is not just a marriage between old and new media. Harman will also be getting as an editor for Newsweek Tina Brown, who led both Vanity Fair and The New Yorker before deciding to give Web publishing a try.

Brown said in a posting Thursday on The Daily Beast that the deal was settled Tuesday evening “with a coffee-mug toast between all parties.”

It will create a joint venture called The Newsweek Daily Beast Company. Brown, who was a co-founder of The Daily Beast, will be editor-in-chief.

Harman and Barry Diller, who backs The Daily Beast through his media conglomerate, IAC/InterActiveCorp., will serve as directors on the venture’s board.

Neither side disclosed how they will split up revenue that the company generates.

Although Newsweek has faced a steady decline in both readership and advertising revenue, print magazines still generally take in far more money than their Web-only counterparts.

Even so, the latest tie-up is just one of several instances lately in which Web and print publications have decided they can do better teaming up than remaining apart.

Another struggling but still prominent magazine, Forbes, bought out a Web operation called True/Slant over the summer. Like The Daily Beast, the site was also run by a print veteran, Lewis Dvorkin, who is now remaking Forbes as a more Web-centric company.

Even the staid New York Times is beginning to partner with local startups to expand its coverage at a time of shrinking resources, most recently striking a deal with the nonprofit Texas Tribune.

In the case of The Daily Beast and Newsweek, Brown wrote that it will give her site “the versatility of being able to develop ideas and investigations that require a different narrative pace suited to the medium of print.”

She added that “for Newsweek, The Daily Beast is a thriving front line of breaking news and commentary that will raise the profile of the magazine’s bylines and quicken the pace of a great magazine’s revival.”

Newsweek is certainly in need of a turnaround. The Washington Post Co., which had owned the weekly since 1961, put it up for sale back in May, conceding that it did not see a way to make the magazine profitable. It racked up $30 million in losses in 2009 and is on track to lose more money this year.

Since news of the sale, some of its most prominent talent, including columnist Fareed Zakaria and senior Washington correspondent Howard Fineman, have defected to other publications.

Brown pointed out some of The Daily Beast’s own brand-name contributors, who may be able to help shore up the magazine’s ranks. They include Howard Kurtz, The Washington Post’s former media columnist, and Peter Beinart, who came from The New Republic.

Harman, the 92-year-old founder of audio equipment company Harman International Industries Inc., said in a statement, “In an admittedly challenging time, this merger provides the ideal combination of established journalism authority and bright, bristling website savvy.”
Daily Beast, Newsweek reach deal to join

The leaders of the world’s 20 major economies on Friday ended a frequently rancorous two-day summit in this northeast Asian capital without reaching agreement on specific steps to avert damaging currency and trade wars.

There were far more setbacks than gains, but President Obama suffered the biggest disappointment, falling short in his attempt to forge a unified approach to boosting the global economy.

In one blow, G-20 members refused to endorse a U.S. effort to force China to raise the value of its currency, prolonging a bitter dispute that many say could eventually lead to a global trade war. Before world leaders left the city, they issued a watered-down statement agreeing merely to refrain from “competitive devaluation” of currencies.

The joint statement described their intent to promote growth while balancing trade and exchange rates and avoiding protectionist policies in general. U.S. officials described it as a substantial deal that will help relieve some of the pressure on countries suffering big trade deficits. But nations are under no binding obligation to follow the agreements.

The previous day, the U.S. and South Korea acknowledged that they remained in a stalemate over a free-trade agreement that has languished in the national legislatures of both nations.

In his final speech, Obama put a positive spin on a disappointing summit, saying that the world’s developed and developing economies have been successful in putting the global economy back on a path toward recovery.

Yet he acknowledged that the summit nations risk slipping back into the old imbalances that contributed to the global economic crisis.

Still, he would not admit defeat in back-door meetings that often seemed on the verge of breaking into hostility.

“The work that we do here is not going to seem dramatic. It is not always going to be world-changing. But step to step, what we’re doing is building stronger international mechanisms and institutions” and reducing tensions among nations, Obama said.

He also blamed the media, saying that the reporting on the G-20 summit has been “all about conflict,” while ignoring that what was accomplished.

He stressed that G-20 leaders made strides, including the development of a system to give the international community a mechanism to determine whether countries are engaging in unfair practices with their trading partners.

“Sometimes I think naturally there’s an instinct to focus on the disagreements,” the president said, when in fact “in each of these successive summits we’ve actually made progress.”

But time and again in Seoul, world leaders showed that they were in no mood to compromise and instead were headed toward broad, general pledges that did little to mask their inability to find common ground for immediate action.

At times, that failure to find consensus raised the specter of countries pursuing their own interests at the expense of coordinated and balanced global growth.

British Prime Minister David Cameron warned of the risks of that route at the summit opening, saying failure by the G-20 to accomplish some sort of global accommodation could lead to “a return to what happened in the 1930s: protectionism, trade barriers, currency wars, countries pursuing beggar-thy-neighbor policies; trying to do well for themselves but not caring about the rest of the world.”

Many countries, however, appeared to be doing just that. In particular, they took aim at the Federal Reserve’s recent decision to pump $600 billion into the U.S. financial system, a move that critics saw as an attempt to lower the value of the dollar and therefore make U.S. exports more competitive.

As the leaders gathered in Seoul, Bank of China Chairman Xiao Gang called the Fed’s move “dangerous,” writing in the semiofficial China Daily newspaper that it had driven the dollar down in value, raised expectations of inflation and hurt other economies. That position was backed by former Federal Reserve Chairman Alan Greenspan, who said the U.S. was “pursuing a policy of currency weakening.”

U.S. officials declared they were doing no such thing. And, in fact, the U.S. dollar has been rising in value in recent days.

“We will never seek to weaken our currency as a tool to gain competitive advantage or to grow the economy,” Treasury Secretary Timothy F. Geithner told CNBC from Seoul. “It’s not an effective strategy for any country, and it’s not for the U.S. We’ll never do that.”

G-20 summit ends with watered-down agreement

As Jerry Brown prepares to take over as governor, California faces a $25.4-billion deficit — far larger than state officials were projecting only days ago — the state’s chief budget analyst said Wednesday.

The figure, projected over the next year and a half, results from billions of dollars in phantom savings approved by Gov. Arnold Schwarzenegger and legislators last month, more budget restrictions passed by voters last week and predictions of a “painfully slow economic recovery,” according to the report from the nonpartisan Legislative Analyst’s Office.

In addition, more than $8 billion in temporary sales, car and income taxes are set to expire in the coming year, and the federal stimulus program that has helped prop up schools, healthcare for the poor and other state programs also will soon disappear.

The report shows $20-billion annual shortfalls in future years as well.

“There is no good news,” said Legislative Analyst Mac Taylor.

Simply keeping K-12 public schools funded at their current level would expand the deficit, Taylor said. That is because billions of dollars in school cutbacks are already factored in.

The predicted $25.4-billion deficit is the equivalent of about 29% of this year’s general fund budget. Erasing the gap will require a combination of severe cuts and more in tax collections over several years, the report said.

“They have to consider everything,” Taylor said of lawmakers and the governor-elect.

Brown, on a post-election vacation, was unavailable for comment. He is scheduled to return to Sacramento next week. One of his campaign pledges was that he would not raise taxes without voters’ approval.

Republicans immediately vowed to block any tax hikes, and Democrats pledged to protect core programs and jobs and to use the shortfall as a reason to restructure government. Senate minority leader Bob Dutton (R-Rancho Cucamonga) called for an emergency legislative session to immediately address the projected deficit.

Schwarzenegger signed the latest spending plan in modern history last month, 100 days into the fiscal year. The analyst’s report Wednesday estimated that $6 billion, or roughly a third, of the deficit-cutting that the governor and legislative leaders said they achieved will never materialize.

Prisons spending will outpace what was budgeted only a month ago by $965 million, and overly rosy assumptions of a helping hand from Washington will prove too optimistic by $3.5 billion, according to the report.

Any future aid from the nation’s capital, where Republicans decisively seized control of the House of Representatives last week on promises to curb federal spending, is also unlikely.

“Good luck,” Rep. Howard P. “Buck” McKeon (R-Santa Clarita) said Wednesday. “We’re going to be trying to reduce spending here, not increase spending.”

Taylor sought to lower expectations that a robust economic recovery would pave the way for California’s return to solvency. His report reduces tax receipt estimates for the current year, citing a “sluggishly” improving economy.

Tax collections in California — a center of the mortgage boom and bust — won’t return to their peak levels of 2007-08 until 2015-16, the report forecasts.

“It’s not just budget, it’s also the economy,” said Assembly Budget Committee Chairman Bob Blumenfield (D-Woodland Hills).

Taylor projected a $22.4-billion deficit in fiscal 2012-13. That ebbs only slightly to $19.4 billion by fiscal 2015-16. Even those bleak figures could prove optimistic: They assume no cost-of-living adjustments and that California will win all pending lawsuits against the state.

Voters widened the deficits last week by approving two measures that constrain legislators’ ability to assess fees on businesses and to take funds from local governments. Combined, the measures unravel $800 million in savings this year and up to $1 billion annually in the future, the report said.

But Californians also voted to allow the Legislature, which Democrats control, to pass budgets with a simple majority rather than a two-thirds vote. That could eliminate the need for GOP approval, which has often stalled the budget process. But a two-thirds vote is still required to raise taxes, which necessitates some Republican support.

shane.goldmacher@latimes.com

Times staff writer Richard Simon in Washington, D.C., contributed to this report.

Estimated state budget deficit reaches $25.4 billion

After a survey of U.S. troops and their families, a Pentagon study group has concluded that the military can lift the ban on gays serving openly in uniform with only minimal and isolated incidents of risk to current war efforts, the Washington Post reported Wednesday.

The newspaper quoted two people familiar with a draft of the study, which is to be completed for Defense Secretary Robert Gates by Dec. 1., but with an uncertain public release date.

More than 70% of respondents to a survey sent to active-duty and reserve troops over the summer said the effect of repealing the military’s “don’t ask, don’t tell” policy on gays and lesbians in uniform would be positive, mixed or nonexistent, the sources told the newspaper.

The newspaper said the survey results have led the report’s authors to conclude that objections to openly gay colleagues would drop once troops were able to live and serve alongside them.

The long, detailed and nuanced report will almost certainly be used by opponents and supporters of repeal legislation to bolster their positions in what is likely to be a heated and partisan congressional debate. And it is expected to reveal challenges the services could face in overturning the long-held policy, including overcoming fierce opposition in some parts of the force — primarily in the Army and Marine Corps — even if they represent a minority.

The Marine Corps commandant, Gen. James Amos, last week said that with forces fighting in Afghanistan and still deployed in Iraq, now was the wrong time to lift the ban.

“This is not a social thing. This is combat effectiveness,” Amos said.

That brought a mild rebuke from Joint Chiefs of Staff Chairman Mike Mullen, who said he was surprised that Amos had spoken publicly. He said the heads of the military services had committed to “look at the data and then make our recommendations privately.”

The Post said Gates, Mullen and uniformed and civilian leaders of the four military branches received copies of the draft report late last week.

The document totaled about 370 pages and is divided into two sections, the newspaper said. The first section explores whether repealing “don’t ask, don’t tell” would harm unit readiness or morale. The second part of the report presents a plan for ending enforcement of the ban. It is not meant to serve as the military’s official instruction manual on the issue but could be used if military leaders agreed, one of the sources told the newspaper.

Among other questions, the survey asked whether having an openly gay person in a unit would have an effect in an intense combat situation. Although a majority of respondents signaled no strong objections, a significant minority is opposed to serving alongside openly gay troops. About 40% of the Marine Corps is concerned about lifting the ban, according to one of the people familiar with the report, the Post said.

Pentagon spokeswoman Cynthia Smith said that of the 400,000 surveys sent randomly to troops, 115,052 responded. An additional 150,000 surveys were sent to spouses with 44,266 completed. Defense officials have said they were pleased with the response rate and believed it was enough to get an accurate sampling of the force.

President Obama has vowed to end the policy. A Democratic proposal to repeal the 1993 law already has passed the House as part of a broader defense policy bill that includes such popular provisions as a pay raise for the troops. But that same legislation sank in the Senate under Republican objections just weeks before the Nov. 2 elections.

Senate Majority Leader Harry Reid (D-Nev.) has promised another vote by year’s end, although the political dynamics in this lame-duck session haven’t changed much. Gates has asked Congress to act before January, but Senate Democrats still hold a shaky majority and they are unlikely to give in to Republican demands for a protracted debate.

A Republican gay rights group, the Log Cabin Republicans, has challenged the constitutionality of the policy in court. The Obama administration on Wednesday urged the Supreme Court to keep the “don’t ask, don’t tell” policy in place while a federal appeals court considers the issue.

The administration filed court papers in defense of an appeals court order that allowed “don’t ask, don’t tell” to go back into effect after a federal judge declared it unconstitutional and barred its enforcement. The U.S. 9th Circuit Court of Appeals in San Francisco is reviewing the administration’s appeal.

The Log Cabin Republicans asked the Supreme Court to step into the case to reverse the appeals court decision that has allowed “don’t ask, don’t tell” to remain in effect despite the order by U.S. District Judge Virginia Phillips.

Among several recommendations, the Pentagon report urges an end to the military ban on sodomy between consenting adults, regardless of what Congress or the federal courts might do about “don’t ask, don’t tell,” the source told the Post.

The report also concludes that gay troops should not be put into a special class for equal employment or discrimination purposes, that person said. The recommendation is based on feedback the study group obtained from gay troops and same-sex partners who said they do not want a special classification, according to the source.

The report recommends few, if any, changes to policy covering military housing and benefits because the military must abide by the federal Defense of Marriage Act, which does not recognize same-sex marriage.
Pentagon draft study shows low risk to ending ‘don’t ask’ policy

In a sharp setback, the United States and South Korea failed to reach agreement on an elusive free-trade deal but will continue pressing for an accord in the weeks ahead, President Obama said Thursday.

Obama had hoped to announce a deal on the long-stalled pact while in South Korea for meetings of the Group of 20 economic powers, but instead he will return home empty-handed.

“We have asked our teams to work tirelessly in the coming days and weeks to get this completed,” Obama said at a joint news conference with South Korean President Lee Myung-bak.

“We don’t want months to pass before we get this done,” Obama said. “We want this to be done in a matter of weeks.”

Prospects for reaching a deal seemed unlikely before Obama’s meeting and subsequent appearance with his South Korean counterpart.

At issue is a pact to slash tariffs and other barriers to trade, one that was signed in 2007 when previous administrations were in power. It remains unratified by lawmakers in both countries, and trade between the nations has slipped. The U.S. wants the deal to address a trade imbalance and beef access to South Korea’s market before submitting it to Congress.

Earlier in the day in a speech marking America’s Veterans Day, Obama condemned North Korea for continuing on “a path of confrontation and provocation” that he says deepens its isolation from the world and worsens the poverty of its people.

Obama said the reclusive communist nation must show a “seriousness of purpose” before the U.S. will restart six-party talks aimed at curbing the country’s drive to become a nuclear power.

He saluted the bravery of U.S. troops who defended South Korea during its war with North Korea.

Speaking at an Army garrison in a country where the U.S. keeps more than 28,000 troops, Obama said North Korea knows the path to prosperity and suggested its leaders take it.

“Because the Korean War ended where it began geographically, some used the phrase ‘Die for a Tie’ to describe the sacrifice of those who fought here,” Obama said. “But as we look around at this thriving democracy and its grateful, hopeful citizens, one thing is clear: This was no tie. This was victory.

“This was a victory then, and it is a victory today,” he said.

In the Veterans Day address, Obama said that, some 60 years after the war, the Korean peninsula provides the world’s clearest contrast between a society that is open and one that is closed, between a dynamic, growing nation like South Korea and a North Korea “that would rather starve its people than change.”

“It’s a contrast that’s so stark you can see it from space, as the brilliant lights of Seoul give way to utter darkness in the North,” he said, describing the difference as a direct result of the road taken by the reclusive, communist North.

Obama said the U.S. “will never waver” in its commitment to South Korea’s security and that North Korea’s continued pursuit of nuclear weapons will only lead to more isolation and less security. He urged Pyongyang to take another path, a road that he said will offer its people growing opportunity instead of crushing poverty.

The commander in chief spoke inside a packed gymnasium, addressing a uniformed audience of service members from the different branches of the U.S. military. They surrounded him from all sides and many snapped photos as he spoke.

Obama condemned North Korea, saying its circumstances were not “an accident of history” but a direct result of the country choosing “a path of confrontation and provocation.” That path, Obama said, includes its relentless pursuit of nuclear weapons and the deadly sinking earlier this year of a South Korean warship.

“In the wake of this aggression, Pyongyang should not be mistaken: The United States will never waver in our commitment to the security of the Republic of Korea. We will not waver,” he said. “The alliance between our two nations has never been stronger, and along the with the rest of the world, we have made it clear that North Korea’s continued pursuit of nuclear weapons will only lead to more isolation and less security.”

Obama said North Korea has another path available to it.

“If they choose to fulfill their international obligations and commitments to the international community, they will have the chance to offer their people lives of growing opportunity instead of crushing poverty — a future of greater security and greater respect; a future that includes the prosperity and opportunity available to citizens on this end of the Korean peninsula,” he said.

After the speech, Obama laid a wreath at a war memorial.
U.S. fails to reach free-trade deal with South Korea

For former insiders at some of the several hundred banks that collapsed during the financial crisis and in its aftermath, a day of reckoning has arrived.

The Federal Deposit Insurance Corp. has told dozens of former bank officers and directors that it has drawn up lawsuits accusing them of misdeeds such as fraud and breach of fiduciary duty. The federal agency is seeking damages to help offset losses in the nation’s deposit insurance fund.

It’s time, the FDIC warns these officials, to sit down and work out settlements — or head to court to decide the matters there.

The letters being sent by the agency are “very detailed,” said Jeffrey A. Tisdale, a Los Angeles lawyer for former officials of five banks targeted by the agency.

“I mean eight to 10 single-spaced pages of purported misdeeds,” he said.

The showdowns follow FDIC probes that typically take well over a year.

“We’re only doing this after careful investigation. We don’t bring suit every time a bank fails,” said Richard Osterman, the FDIC’s acting general counsel.

The FDIC board has authorized suits seeking to recover more than $2 billion from more than 80 former bank officials, up from about 50 a month ago, Osterman said. The number could multiply as the agency works through its investigative backlog.

The agency could end up suing or settling with former insiders of about one-quarter of the more than 300 banks that have failed since the start of 2008, officials say.

“This is only the first wave,” Tisdale said. “I’ve got my next five-year professional plan laid out pretty well.”

Although the FDIC says it will try to settle the cases, officials expect to file a significant number of suits. Criminal charges could result in a few cases.

“We are investigating [criminal] bank fraud and related cases in many different parts of the country, including in California,” said Fred Gibson, deputy inspector general at the agency.

So far only two civil suits have been filed. The first, filed in July, accuses four executives of Pasadena’s defunct IndyMac Bank of negligence in granting construction and development loans that the suit says were unlikely to be repaid. The defendants are contesting the suit, which seeks $300 million in damages.

Last week, the FDIC sued 11 former insiders at defunct Heritage Community Bank in Glenwood, Ill. Calling the case “regrettable and wrong,” defense lawyers said in a statement that their clients, in failing to foresee the economic meltdown, were no different from Wall Street and the FDIC itself.

Tisdale concurs that the FDIC is going after people for failing to accurately predict the future.

“The economy is the real culprit here,” he said. “There was no way to plan for real estate values dropping 30% to 50% throughout California, Nevada and Arizona.”

But Darren Robbins, a San Diego lawyer who specializes in filing investment fraud suits, says the FDIC has plenty to work with just by looking at what banks said about their assets toward the end of the boom.

“It’s our belief that in places like Illinois, Georgia, California and Arizona there was an inordinate amount of game-playing with financial statements in ‘07 and ‘08,” said Robbins, whose firm has fraud suits pending against several casualties of the bust, including PFF Bancorp, the former parent company of Pomona’s PFF Bank & Trust, which failed in November 2008.

In targeting the former officials, the FDIC typically also has its eyes on insurance companies that would be on the hook for damages stemming from alleged misconduct by the bankers. In many cases, the FDIC formally gave notice of possible litigation months ago, just before the expiration of the relevant insurance policies, to ensure that the coverage would apply.

Some policies covering directors and officers don’t apply to actions by the FDIC. In such cases, the agency is going after bank officials only if they have sufficient assets to justify the expense and risk of litigation, Osterman said.

The FDIC’s litigation strategy borrows from a playbook the agency used after the savings and loan meltdown of about two decades ago. From 1986 through 1996 the FDIC recovered $5.1 billion from former insiders at failed banks and savings and loans, Osterman said. That’s a small fraction of the eventual cost of the S&L crisis.

scott.reckard@latimes.com
FDIC prepares to crack down on officials of failed banks

Google Inc.’s decision to give all of its 23,300 employees a 10% pay raise next year — and a $1,000 bonus to boot — is just the latest volley in what has become a full-fledged war for top Silicon Valley talent.

With engineers in short supply, technology companies are competing for employees who can write the software programs needed for new products and services. And they’re increasingly stealing them from one another.

Google is particularly vulnerable. The Internet search giant, long known for aggressively recruiting the smartest in the business, is under siege from Facebook Inc. and other competitors that are trying to lure them away.

A few weeks ago, Lars Rasmussen, the brainy co-founder of Google Maps and a six-year Google veteran, bolted for Facebook, joining more than 200 former Google employees who now work at the world’s most popular social networking service.

Facebook tapped its most persuasive pitchman to close the deal. Founder and Chief Executive Mark Zuckerberg personally wooed Rasmussen to move halfway around the world from his Google office in Sydney, Australia, to Facebook’s headquarters in Palo Alto.

Facebook could be “a once-in-a-decade type of company,” the Danish-born computer science engineer said in explaining his decision.

That kind of talk rankles Google executives, who think they run the hottest company in Silicon Valley.

With 2,000 employees, Facebook is a much smaller operation than Google. Even so, 1 in 5 employees can list “Google” somewhere on their resumes, including Chief Operating Officer Sheryl Sandberg and Executive Chef Josef Desimone, who prepares fresh meals for Facebook employees.

Facebook says its recruiters don’t target Google; they seek out top candidates wherever they work.

“For us, it’s just important to find the best talent,” said Thomas Arnold, Facebook’s director of recruiting, who himself hails from Google. “If it comes from Google, that’s great. If it comes from Hewlett Packard, that’s great. If it comes from a start-up you have never heard of, that’s great. If it’s a kid sitting in a basement in small town somewhere who has created something neat on the Web, that’s even better.”

The flight to Facebook is not a subject Google would discuss, though it did throw out a few counterpunches: Google’s attrition, it said, remains below the industry standard. It hires more people every 10 days than Facebook has recruited in all from Google. And when Google makes a counteroffer to its employees, 70% decide to stay at Google rather than leave for Facebook, the company said.

“Google is an attraction and training ground for incredible talent,” recruiter Paul Daversa said. “The question is: Can Google fill up on talent as fast as it’s losing it?”

The skirmish for talent is driving up compensation and prompting a flood of offers and counteroffers. In one case, Google countered an offer from Facebook to a software developer with a promise of a 15% bump to his $150,000 salary, a quadrupling of stock benefits and a $500,000 cash bonus to stay a year, according to people familiar with the situation. He still took off for Facebook.

Google is hardly alone as it tries to make itself as sticky as flypaper to prospective recruits and employees alike.

Despite California’s unemployment rate of 12.4%, tech job listings are up 62% year over year in Silicon Valley, which has shown 11 straight months of growth, according to technology and engineering career website Dice.com. On any given day, companies are trying to fill 4,600 jobs on Dice.com, up from 2,800 open positions last year.

That reflects the strength of Silicon Valley’s major tech companies, chiefly Google, Apple Inc. and Facebook. Google dominates Internet advertising, Apple rolls out one must-have gadget after another, and Facebook has taken flight with more than 500 million users.

Along with these companies, there are newcomers such as Zynga Gaming Network Inc., a San Francisco company that makes wildly popular social games on Facebook and elsewhere. Zynga added 800 of its 1,200 employees in the last year alone.

With strong demand for their products and services, Silicon Valley companies have plenty of money to shower on signing bonuses and retention incentives.

“We believe this trend will only accelerate in the next 18 months,” Patrick Pichette, Google’s chief financial officer, said on a call to discuss the company’s strong third-quarter results. “We strongly believe that the difference between the winners and the losers in our industry will be to a large extent determined by who can continue to attract and retain the very best people.”

Venture capitalist Marc Andreessen, whose firm helps the companies it invests in recruit engineers and other key employees, says the supercharged recruiting market is the “single hardest challenge in Silicon Valley.”

“A good engineer can easily have 10 job offers,” Andreessen said.

All the top companies are poaching from the same pool: sought-after workers with a prized mix of engineering chops, ingenuity and initiative.

They raid one another’s ranks, mine colleges and universities for promising prospects and jump at unusual opportunities to nab engineers. As soon as news broke this week that Ask.com was laying off 130 people, job offers started popping up on Twitter.

In September, Feross Aboukhadijeh, a computer science major at Stanford University, bet his roommate that in one hour he could create software that would search YouTube in real time. He lost the bet (it took him three hours) but YouTube Instant racked up 1 million users in 10 days, netting Aboukhadijeh a job offer from YouTube co-founder Chad Hurley. Aboukhadijeh, already an intern at Facebook, decided to take the job at YouTube while he continues his studies at Stanford.

As the behemoths duke it out, some fleet-footed start-ups are giving everyone a run for their money in the recruiting department.

Facebook is competing with companies started by its own employees such as Asana, Path and Quora. These spinoffs are snapping up their share of the brightest engineers by appealing to their entrepreneurial instincts.

“There is definitely stepped-up and accelerated pace and urgency around courting the name talent and the high-quality talent,” Daversa said. “He who courts best is going to win. You have to embrace a candidate with a big bear hug. If you blink, he’s gone.”

jessica.guynn@latimes.com
War heats up for top Silicon Valley talent