(FORTUNE Magazine) – Every few weeks, Pete Davis gets another job offer. Recruiters call or E-mail, they dangle stock options and pay raises. He tells them no--politely, but firmly. He's happy where he is, working as the senior systems and networking engineer for TIAC, an Internet service provider in Bedford, Massachusetts. But still the offers keep trickling in. Davis says he's probably had 15 in the three years since he joined the company, which isn't bad for someone who's all of 18.

This is what the race for talent in the infotech sector has come to. Computing talent is so scarce--and demand so high--that companies are hiring high schoolers, and other companies are trying to steal them away. Davis's case may be extreme, but it's not unusual. The boom in computing startups, combined with the relative youth of the industry and the get-rich-quick atmosphere created by tech initial public offerings, has created a race for talent that resembles nothing so much as the agrarian frenzy of the great Oklahoma land Grab.

This Great Computer Nerd Grab is being fueled by the incredible influx of cash into startup companies, in particular Internet-related software startups. William Marbach, the managing editor of Venture Finance, estimates that venture capital companies pumped a total of $581 million into Internet software startups in the year ended June 30, as against $105 million the preceding year. All these companies need talented software engineers, as well as equally talented executives to manage them. In a software company, talent is particularly important because the talent is the company. As Ann Winblad, of Hummer Winblad Venture Partners, puts it, "The P&E is just people. They have no factories, no inventories. The assets walk out of the door at night." Indeed, Winblad says, one of her chief criteria in deciding whether or not to fund a startup is "the ability to attract excellence. Without intellectual capital, you're nothing."

In order to attract that excellence, startups are now finding that it's not enough to offer an attractive salary package; most employees of major firms are, after all, doing pretty well where they are. Instead, the big lure to get someone to jump ship is stock options--the chance to get in on the ground floor of a red-hot IPO. Steve Brody, president of the Silicon Valley executive recruiting firm Brody & Associates, says that he no longer even discusses salary when he's sweet-talking an executive. "The question," he says, "is what do you have left to vest over the next 18 months, and what's your strike price?" Charles Conn, the CEO of CitySearch, a World Wide Web-based guide to cities, has built a 40-person tech staff in the past 18 months, all of whom, he notes wryly, "have been taken from someplace else," thanks to the bait of equity. "We couldn't survive or attract people without it."

With high demand and a scarce supply of talent, these are the gravy days for propellerheads. Brody says that he must spend a good deal of his time just figuring out what sort of message to leave on a potential recruit's voice mail, because he knows he's not the only recruiter that person is hearing from. Companies with financial troubles, or those that have already gone public and had their stock boom, are especially vulnerable to recruiters. "If there's any indication that a company might be having a downturn, such as with Silicon Graphics, you'll find as many recruiters in the parking lot as employees," says Winblad. Recruiters list Apple Computer, Bay Networks, and Novell as other companies that have been picked over. At least one popular target is fighting back: In November, Lotus took the highly unusual step of filing suit against a former executive who left them for Radnet, an Internet startup. The employee, Lotus charged, had violated their noncompete clause by recruiting a fellow Lotusite to his new venture.

But lawsuits alone won't temper the giddiness in Silicon Valley--there's too much money in the air for companies' pursuit of talent and talent's pursuit of money to stop anytime soon. "It's a chance at the big score, it's the dream of the red Ferrari in your garage," says Dick Shaffer, principal of Technology Partners. "If you're willing to work absurd hours, jeopardize the funds you've set aside for your children's education, and probably ruin your marriage, you could get very rich. You probably won't, but there's the possibility of getting rich. Now is a very good time to be a Ferrari dealer in Silicon Valley."

--Tim Carvell