This strikes me as being an exaggeration or something that has also gotten cheaper, perhaps by convention.
PEOs have solved the problem of most of the HR drudgery, for a mere $200/mo per FTE, if that.
Even the most extravagant startups I've seen don't spend more than $10k per employee on equipment, and that lasts more than a single year. Similarly, if a high-end engineer pulls $150k/yr, a 20% recruiter commission is only $30k.
Arguably, management overhead is a liability both in cost and productivity that a startup cannot afford.
Class A office space (also an extravagance for a startup) is, at most, $3 per square foot and a quick scan of craigslist suggests its easily available for $2 or less. 100 square feet per FTE, and you're just paying again what a PEO costs (a pittance compared to the salary).
That, plus $3k of benefits, plus employer-side taxes adds up to $210k for the first year and about $170k each additional, for a pretty senior employee. I'd expect that could be halved for someone junior.
PEOs have solved the problem of most of the HR drudgery, for a mere $200/mo per FTE, if that.
Even the most extravagant startups I've seen don't spend more than $10k per employee on equipment, and that lasts more than a single year. Similarly, if a high-end engineer pulls $150k/yr, a 20% recruiter commission is only $30k.
Arguably, management overhead is a liability both in cost and productivity that a startup cannot afford.
Class A office space (also an extravagance for a startup) is, at most, $3 per square foot and a quick scan of craigslist suggests its easily available for $2 or less. 100 square feet per FTE, and you're just paying again what a PEO costs (a pittance compared to the salary).
That, plus $3k of benefits, plus employer-side taxes adds up to $210k for the first year and about $170k each additional, for a pretty senior employee. I'd expect that could be halved for someone junior.