Many Prefer Role of Investor to Employee -- But Study Hints at New Kind of Digital Divide, Between ‘Old’ and ‘New’ Economy Workers

IRVINE, Calif. (May 1, 2000) – As if anticipating the market’s sudden ambivalence about the dot-com economy, a new nationwide survey reveals that many American workers are skittish about the prospect of sacrificing a high salary for the opportunity to work for a pre-IPO startup -- and finds that most would prefer to experience an initial public offering as an investor rather than as an employee.  

At the same time, this general wariness is anything but uniform – and suggests a different kind of split within the workforce, between those employed by companies in the “old economy” and those working for high-growth, high-technology “new economy” organizations.  If you’re young, urban, degreed and reasonably well paid, you’re marginally more likely to give a startup a shot.

The just-released BridgeGate Report, conducted in late February by Market Facts, Inc. of Chicago for technology recruiter BridgeGate LLC, surveyed nearly 700 working Americans, seeking to gauge the level of interest in joining companies on the verge of an IPO.  The image of the “dot-com millionaire” – and the coveted ability to simply get into an IPO on the ground floor – has fueled a get-rich-quick mentality that appears to slow dramatically at the hiring manager’s door.  

With offices in Irvine BridgeGate builds management teams for high-growth companies.  Survey data was collected five weeks before the April 14 stock market correction.

The BridgeGate survey shows that employees generally believe that while investing in a high-flier is one thing, working for one is quite another.  Although both full- and part-time workers do express some interest in being part of such a company, an overwhelming percentage is unwilling to accept the low salaries associated with pre-IPO companies.   

Indeed, nearly 43 percent of workers said flat-out that they would not be interested in working for such a company.  While more than half of all respondents expressed qualified interest in working for a pre-IPO company, caution remains their guiding light.  Some 44 percent said they would be interested only on condition of receiving a competitive salary, while only six percent would take less in salary for the opportunity.  Five percent would be interested only if they could cash out quickly.

Overall, young, urban, better-paid workers with some college education were the most likely to be willing to sacrifice salary to work for a start-up.  At the other end of the compensation spectrum, workers in the lowest income bracket (less than $25,000 annually) proved to be among the most willing to play the odds of hitting it big with an IPO: fully twice as many were open to accepting a lower salary than those in the $50K-$75K bracket.

Of those who responded negatively, 24 percent reported they would not be interested in signing on with a pre-IPO firm under any circumstances, while nearly 19 percent said they would invest in such a company but not work for one.

“There seems to be a different kind of ‘Digital Divide’ emerging – ‘old economy’ workers versus ‘new economy’ workers,” said Dudley Brown, managing partner, BridgeGate LLC, Southern California’s largest technology search firm.  “The ‘new economy’ attracts mostly young, urban, educated professionals who are already testing their earning power.  Employees in more traditional organizations exhibit the greatest aversion to joining the pre-IPO bandwagon.

“These findings clearly demonstrate that Americans understand the difference between their roles as investors and as employees, and many are reluctant to gamble with their careers,” Brown said.  “That’s not to say that it wouldn’t be wise to work for a company on the verge of going public.  On the contrary, it can be a tremendously rewarding experience.  But the mystique of the pre-IPO firm bumps up hard against the reality that many companies don’t make it.  Employees realize that a great many other factors make up a positive work environment – good benefits, training, flexible hours, a nurturing environment in which they are given the opportunity to thrive – and these can come from any kind of employer. 

“Ultimately, people should want to work for companies that see beyond the IPO, companies that understand they are not in business just to go public,” Brown continued.  “Any company that emphasizes an IPO over bringing exciting new products and services to market isn’t destined for long-term survival.  Accordingly, employees need to be vigilant, and take at least as much care in choosing their workplaces as their investments.”

A demographic breakdown of survey respondents provides further clues about employee attitudes toward working for companies about to go public:

· In the most dramatic evidence of this new Digital Divide, workers with household incomes above $75K+ are more than three times as likely to take less in salary for the chance to work for such a company than those in the $50K-75K bracket; meanwhile, workers making less than $25K were more than twice as likely as those in the $50K-75K category to accept a lower salary

· Similarly, workers with some college education or a degree are more likely to sign up with a pre-IPO startup than those with high school education or less and those with some post-graduate education or a post-graduate degree (58, 51 and just under 52 percent respectively)

· The genders differ: men are nearly three times as likely to be willing to take less in salary to work for such a company (nearly 9 percent, against 3 percent for women), while significantly more women would not be interested in working for such a company under any circumstances (30 percent vs. just under 19 percent)

· Age is a factor:  More than 58 percent of workers over the age of 55 are not interested in working for such a company, while nearly that same percentage of workers in the 18-24 age group said they would be open to it.

· Geography likewise figures into the mix: employees in the Northeast are twice as likely as those in the West, and nearly three times as likely as those in the Midwest, to be willing to take a lower salary to work for an IPO candidate (11, 5 and nearly 4 percent, respectively)

· Surprisingly, workers with a child in the household were more likely to accept a lower salary than childless workers (just over 7 percent vs. nearly 5 percent), but overall, a higher percentage of people without children said they would be interested in working for a company on the verge of an IPO (almost 58 percent vs. just over 51 percent for those without children).

The BridgeGate survey of 672 working Americans was conducted February 25-27, 2000 by Market Facts, Inc. TeleNation.  The margin of error is +/- approximately 4 percent.  For a copy of the survey results, please call 818/719-9292. 

With offices in Irvine, Calif. and Los Angeles, BridgeGate LLC specializes in executive search within the information technology and Internet sectors.  BridgeGate’s ability to target and attract superior performers has made the firm an active partner in developing and growing successful organizations for more than 30 years.  Today, BridgeGate is the largest technology recruiter in Southern California.

Unique among search firms, BridgeGate’s mandate is to build teams, addressing a full range of disciplines, from operations to sales/marketing to consulting.  By supporting multiple specialties within a single engagement, the firm has embraced a “complete recruitment solution” philosophy for clients.  With an unwavering commitment to the 3 R’s -- research, relationships and results – BridgeGate has made a strategic difference for such companies as Buy.com, Stamps.com, E.phiphany and PeopleSupport.com.

For more information, contact:
BridgeGate LLC
949.553.9200