H1 2025 Newsletter

Welcome to the first installment of our biannual TalentEdge newsletter. We are often asked by clients and candidates what we are seeing in the market and this is an attempt to share what we observe.

Our worldview is admittedly very narrow and as a result, most of these observations will be simply subjective without broader data to support sweeping market trends. Context on who we are to help frame these observations:

• TalentEdge is a small team of recruiters, each with more than 10 years of recruiting experience across tech.

• Our clients typically range from seed through series F - most of our recent work has been with clients on the earlier end of that spectrum.

• We are typically domain agnostic but [unsurprisingly] almost all of our current clients are AI focused.

• Our expertise lies within engineering, product, design and GTM.

In everything we do, we can lean too far towards complete transparency and these observations are no different.

"Do the hard jobs first. The easy jobs will take care of themselves."

— Dale Carnegie

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Niche Roles vs Generalist Roles

The most important and most dramatic trend shift we have seen over the last few years is an aggressive move towards specificity. Historically, we hung our hat on delivering generalist engineers at scale, and this shift has prompted us to dramatically adjust our approach.

The way we define generalists

• Frontend, full stack, backend and infrastructure engineers

• Language agnostic

• Industry agnostic

We categorize niche roles as anything outside of these buckets - areas like firmware, LLM optimization, robotics infrastructure, etc

Note: OpenAI is referenced throughout as an example, but they could be swapped out for any of the major AI labs, or reflect what we’ve seen from the industry as a whole.

Market shifts

Tier 1 companies are no longer interested in “good” engineers — only the top 1% move the needle on the kinds of problems being tackled today. Everyone else is feeling the squeeze. The middle of the market, once buoyed by hypergrowth hiring sprees, is getting hollowed out.

• The technical problems being solved are much harder than they were when companies focused on building simple consumer apps could raise and scale.

• Companies can automate out all of the ‘good not great’ engineers which is creating the Barbell Demand Curve for Talent.

  • A hiring trend where companies concentrate their hiring at the two extremes: highly experienced (and expensive) senior talent, and low-cost, early-career or junior talent—while reducing or eliminating mid-level roles

• Investors are demanding more accountability for headcount decisions. This can clearly be seen in the public markets. Layoffs were once seen as a weakness and punished. They are now seen as a sign of efficiency and rewarded.

Compensation has exploded for tier 1 talent. We have seen the need to compete with insane offers to attract top generalist talent. To illustrate, let’s walk through an offer scenario and its respective exit potential to compare:

• We lost a candidate to an OpenAI offer that included $900k cash + equity vs 250k base + 1% of a seed funded startup.

  • OpenAI -

    • $900k cash

    • (to illustrate the point let’s assume equity is zero)

    • $3.6M over 4 years assuming strictly cash

  • Seed funded client -

    • $250k base

    • 1% of a company valued at $20M

      • $200k over 4 years at current valuation

    • $1.2M total comp over 4 years at current valuation

  • Exit scenario -

    • Let’s assume there is a 10% chance a seed funded company exits for $1B and a 50% dilution for seed funded employees to achieve that exit, the risk adjusted equity is valued at $500k.

    • If we assume this startup is truly elite and the employee thinks there is a 50% chance of a $1B exit, this would be a $2.5M valuation and this plus the base salary would still fall short of just the cash from OpenAI.

Sentiment shifts

Startups are not converting to favorable outcomes at nearly the same rate they were in the ZIRP environment. The numbers are no surprise -

• Large exits (500M+) → down > 80%

• Seed to series A graduation → down 50%

• Fundraising volume → down > 60%

• Strong engineers are less willing to take the plunge on a charismatic founders “selling the dream;” instead, candidates are showing greater demand for strong business fundamentals.

• In a tighter market with less exits, candidates are prioritizing viable business models and guaranteed compensation.

Expectations from startups have changed -

• Many of our clients are not shy about communicating their expectation of 50-60 hour working weeks on average. While they may need to work these hours to compete, they are simply losing a portion of the market. This makes it especially difficult for generalist hiring because there is not the same rationale to support this requirement.

  • When I ask chatgpt (most biased source possible I suppose) about working culture at OpenAI - “While some employees—especially senior researchers and leadership—may put in 60–70+ hour weeks, this is not the expectation across all roles.” and this makes sense, if you are in a position where it is needed then that is what you are signing up for but many generalists would rather go and contribute at a high level for a standard work schedule than have those senior leadership expectations thrust upon them.

TalentEdge Impact

Niche roles are where we can demonstrate significant value to the clients and candidates we represent -

• Candidate side - we can share specific impact, goals and expected outcomes within each role, that speak directly to their background and competencies.

  • Generalist roles can lead to “I can do that” conversations, whereas niche roles lead to “I am an expert in that” conversations.

• Client side - we are able to qualify and reject candidates at a rate that is orders of magnitude better than that of generalist roles

• Partners are active and engaged in searches because they have real business needs for the searches they’re running - there are no “nice to have” searches when it’s a need for an extremely niche profile.

• We can share specific data, impactful questions and meaningful trends from narrow candidate-sets allowing us to quickly iterate on the process and pipeline.

Outcomes

Ultimately, the measure of our success is conversion to hires and the trend is quite clear.

• At any given time, 60% of our roles are generalist but 76% of our 2025 hires have been niche.

  • Ranging from firmware engineers to search architects to deep space network infrastructure.

The entire funnel is significantly more efficient for niche roles -

• It varies, but on average we are seeing a 3x higher conversion on niche roles at each stage.

While overall volume hiring is down, intentional hiring is up -

• When clients have conviction they move fast and close - the “maybe” roles are gone but the must haves are getting filled.

The overall competition for talent is up on the candidate side as well -

• We're seeing engineers proactively level up, pursue deeper specializations and care more about where they spend their time.

Partnerships matter more than ever -

• In this highly competitive market, clients who value focused recruiting over speed and volume are having the greatest success. This looks like:

  • High quality conversations that yield better and stronger hires

  • Precise and motivated needs leading to more efficient pipelines and faster hires

  • Companies adjusting comp, hiring plans, processes, etc to adapt to a rapidly changing market

We are excited for what the rest of the year brings and are looking forward to helping our clients compete with the top firms. We would love to hear from you if you have any specific questions or need a partner to hire in such a competitive market.

• TE Team / info@talentedgestaffing.com