Reid Hoffman says 'crazy' pay packages make sense for top AI talent

• Meta has been poaching top AI talent from its rivals with eye-watering signing bonuses.
• Reid Hoffman acknowledged that the AI talent race may appear crazy to the average American.
• But the LinkedIn cofounder said it makes economic sense for companies to hand out huge pay packages.

Former OpenAI board member and LinkedIn cofounder Reid Hoffman says it makes economic sense for tech companies to offer eye-watering signing bonuses to lure top AI talent to their ranks.

"The talent race to your average American looks crazy. The amount of money you're paying individuals in order to do this," Hoffman said in an interview with CNBC on the sidelines of the Sun Valley conference on Wednesday.

The hunt for top AI researchers has been heating up as companies like Meta seek to gain a foothold in the industry by poaching talent with pay packages to the tune of hundreds of millions of dollars.

Hoffman, however, said the exorbitant pay packages might make sense for a company if they believe the new hire's work could have immense impacts on industries.

"If you invent the thing that essentially, for example, in my own startup Manas, is trying to cure cancer, transforms industries, and if you think this individual is the one to do it, then it begins to get more economic rational," Hoffman told CNBC on Wednesday.

Last month, Meta said it made a $15 billion investment in data-labeling firm ScaleAI. The social media giant said ScaleAI's founder and CEO, Alexandr Wang, will be joining Meta as its Chief AI Officer as part of the deal.

Wang will also co-lead Meta Superintelligence Labs with Nat Friedman, the former CEO of GitHub. The rest of Wang's team comprises top researchers from OpenAI, Google, Anthropic.

Sam Altman, the CEO of OpenAI, had criticized Meta's poaching tactics in a podcast interview that aired last month. Altman said he found it "crazy" that Meta was offering his employees $100 million signing bonuses. He added that Meta's "strategy of a ton of upfront comp" is unlikely to "set up a great culture."

Altman isn't the only one who thinks Meta's recruitment efforts are flawed.

Helen Toner, a former OpenAI board member, said in an interview with Bloomberg last week that it won't be easy for Meta to retain their new AI hires.

Toner, who left OpenAI's board in November 2023, said Meta will face "attempts to poach them back to other companies starting on day one." Meta will need to show they are "moving fast enough" if they want their new hires to stay, she added.

Representatives for Hoffman did not respond to a request for comment from Business Insider.