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Europe is losing talent to the US
Employees are moving out of Europe, why Open AI salary averages $1 million a year, and more...
SearchVentures
December 04, 2024
Employees are moving out of Europe
European startups are losing a significant amount talent to the US as employees are more likely to prefer working in American startups.
What's driving this trend?
This Week’s Trends
European employees are moving to the US
OpenAI salaries average $900k a year
List of all European VC funds in 2024 and more
Read Time 4 minutes
The Startup Trend
Net negative flow of talent
European startups are losing talent to the US as the net flow of employees from the US to Europe has remained negative despite the recovery from 2022.
> Employees working in tech are moving to the US the most as large-scale American firms like OpenAI, dictate majority of the tech talent flows.
> The loss of talent is also linked to the massive tech layoffs seen around the world in 2022, where visas may have been lost along with jobs.
💡 By experience level, the net flow of junior talent from the US to Europe has steadily increased, while senior talent has experienced a steep decline.
Startup Feature
The average salary at OpenAI is $900k
In 2015, OpenAI engineers earned $100,000 to $150,000 annually—competitive but unremarkable by Silicon Valley standards. Today, OpenAI pays an average salary of $900,000 for its coders & developers. A shift that highlights the rising competition of startups in a race to secure top talent from larger firms.
Why the Pay Shift?
This shift in compensation has allowed OpenAI to attract some of the best minds in the industry. Over the past 18 months, the startup has poached more than 85 engineers from Google, Meta and Microsoft. With over 1,500 employees, OpenAI’s workforce includes leaders in machine learning, robotics, and natural language processing.
“We focus on hiring the most talented individuals at OpenAI, and we reward them based on the value that they create.”
These employees are drawn not only by the pay but by the opportunity to work on high-impact projects like ChatGPT. With large corporate firms being able to provide NBA like compensation packages for its top developers, OpenAI has needed to compete in order to lock-in the top talent. Last year OpenAI reportedly spent $1.4 billion dollars on salaries across its 1,500 employees.
The average $900,000 compensation combines several components. OpenAI engineers earn base salaries between $300,000 and $350,000. The rest comes from Profit Participation Units (PPUs), a form of startup equity unique to OpenAI’s capped-profit model. As opposed to vested equity share commonly used for startups, PPU’s have started to catch on in the startup world. These PPUs vest over four years and link employee rewards to the future profits of their work, retaining and rewarding talent.
“A level 9 engineer which is considered to be our top talent will take home an average of $2.6 million per year.”
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The CEO making less than his employees
While OpenAI’s engineers earn an average of $900,000 annually, CEO Sam Altman draws a reported salary of just $76,000—a figure that starkly contrasts with the massive pay packages of their developers. The reason for this is that Altman’s modest salary is tied to OpenAI’s capped-profit model, which prioritizes reinvesting resources into research and development rather than rewarding executives.
“As of now, I don't have any equity in OpenAI. I just take the minimum salary for health insurance.”
Despite his low salary, Altman's net worth is estimated at around $2 billion. This substantial wealth primarily stems from his extensive personal investments in various tech startups, including early investments in Reddit, Pinterest, and Instacart. It is also rumored that he will receive a 7% stake in OpenAI once the for-profit restructuring from its previous non-profit status has been approved by regulators, granting him over $10 billion dollars in equity.
OpenAI’s approach to compensation reflects a broader trend across tech startups in the United States. Offering high salaries and profit-sharing packages has become a necessity for startups to stay competitive in new tech segments that are reliant on innovation and talent that can remain competitive to larger tech conglomerates.
However, OpenAI's compensation practices have faced scrutiny. Critics argue that offering engineers salaries nearing $1 million annually places a high barrier on talent for other startups and will contribute to escalating salary inflation in the tech industry.
“The FTC is closely monitoring the AI industry's hiring practices to ensure they do not stifle competition or lead to monopolistic behavior.”
It is likely that the trend for increased salaries across startups will also be experience in European startup hubs needing to retain the talent currently opting for larger compensation packages in the US.
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Cheers,
Odin Lund & Hari Mohandas
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