Here's One Way To Compete For Talent: Unlimited Vacation Days

Greece Mykonos Beach

Social networking company Tagged is trying to double its workforce from 50 to 100 this year, but the company is stuck in the middle of a huge talent war in Silicon Valley.

Perks like unlimited food and snacks are already commonplace, and not everybody can afford to build fancy new headquarters. What’s a small lean company supposed to do?

How about offering unlimited vacation time?

As CEO Greg Tseng explains, Tagged isn’t concerned about “inputs” — it doesn’t care when people show up to work, what they wear, or how they get their work done. It’s only concerned with “outputs” — the amount and quality of work they produce. As a result, it can offer unlimited sick days and vacation time. But if you don’t produce, you will be managed out.

Tseng doesn’t blame the talent crunch on well-funded public companies like Google or late-stage giants like Facebook and Zynga. Rather, he blames a “bubble” in angel and seed funding, which has created an explosion of tiny startups who can get money with nothing more than a good demo.

“It is so easy to start a company these days,” says Tseng, who started Tagged in 2004. “It’s not just that hardware is cheaper, but you have all these things like Y Combinator. All these people want to become angels.”

So instead of graduating from college and taking a job straight from college, smart engineers are applying for seed money and getting it. Tseng says Tagged has lost about half a dozen people who went to start their own company or joined tiny two- or three-person startups.

“Every engineer wants to be the next Mark Zuckerberg,” admits Tseng — he’s an entrepreneur himself. But he thinks the current bubble can’t possibly last.

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