$3000 stipend for an entire summer? That's well below minimum wage in San Francisco, and less than a fifth of what the large tech companies pay for (technical) internships. If they're trying to "compete with large companies like Google, Microsoft or even Facebook for talent," this hardly seems like the way to do it.
Do I just misunderstand the article? Do the companies themselves make up the rest? Or is this "competing for talent" claim mostly posturing?
The goal is to try to make this cost-neutral for the students participating in TEC.
When we talked to students who were considering taking an internship at a startup versus a big company, the big issue in many cases was that most startups weren't offering cash compensation. The problem being that even if students really want to try working at a startup, it is really expensive to live in the Bay Area - even for 8 weeks.
So the goal was not to compete with big companies directly on cash compensation (which most startups would never do even for a full-time hire), but rather enable anyone who wants to have experience working with a small team - the opportunity to be able to afford to do so.
Good lord, do people still not know enough to pay their interns?
Unpaid internships at American startups almost certainly violate federal labor laws, since one of the criteria for exemption from the Fair Labor Standards Act is that the company get 'no immediate advantage from the activities of the trainees'. Aside from the 'compliance with bureaucratic legalese' issue, unpaid internships are exploitation, plain and simple.
Maybe the market is different for non-technical internships. I have no particular insight into that. But for a top CS or engineering student, I seriously doubt this would be an enticing offer.
Addendum: I'm really not trying to needlessly antagonize you, but I think your point about cash compensation isn't very sound, because it neglects the equity a full-time employee would receive to offset the below-market salary.
It's a different sales pitch than big companies though - our pitch is we'll cover your living expense and give you the chance to work with a small team and see if a startup is the right fit for you.
Instead of equity - many of the TEC participants get to own an entire product or initiative. Ali Shah out of NYU came on board and over the summer designed and built the entire VodPod iPad App. Andrew Boni at BC was a core part of the team that helped design and push code to the GigaOM site redesign.
At an internship for a major tech company, you're pushing some live code, but its for a small part of a major property. Much like joining a startup early, you get to own major parts of product and get to understand how your work fits into the broader company building process.
P.S. Doesn't feel antagonistic at all - I'm just trying to shine a light on how we think about the situation internally. We know we don't pay participants as much as Google, Apple, etc - but we think it actually helps attract the right type applicants to the program.
We settled this over tacos and beer. True Ventures is not trying to compete with the likes of Facebook for top technical talent. That seems to be a misleading spin added by the authors of the article at TechCrunch.
True Ventures is instead trying to find people for whom the value of a summer spent working and learning at a start-up and building relationships within the firm is greater than the $12k+ pay delta. I agree that this can hold true for certain individuals, especially people looking to found their own companies in the very near future. I imagine there are many struggling start-up founders who would be willing (not that anyone would offer this deal) to pay $12k for the sort of access a TEC participant has.
Unlike what the TechCrunch article implies, this does not do much to solve the recruitment problems faced by many start-ups, nor is it intended to do so.
Do I just misunderstand the article? Do the companies themselves make up the rest? Or is this "competing for talent" claim mostly posturing?