(FORTUNE Magazine) – The newest power brokers in Silicon Valley are not the people you'd expect. Forget about entrepreneurs and their ideas (they're plentiful) or investment bankers (they'll fund anything). Instead, the hysteria over the much hyped talent shortage has created kingmakers in the Rolodex set. "There's no shortage of capital or necessary ideas, but it's incredibly difficult to find the people to execute," says Steve Foster, an associate at Crosspoint Venture Partners in Woodside, Calif.

In other words, it's a great time to be a headhunter. With companies starved for experienced managers and engineers, the people who can deliver the upper levels of talent--vice presidents and CEOs--are getting new respect. Job searches have taken on a decidedly Hollywood feel, as marginally qualified applicants find themselves courted with the ardor usually reserved for the geek equivalents of Will Smith or Leonardo DiCaprio. And Silicon Valley recruiters are morphing into top Hollywood agents, shopping clients around and commanding large fees or stock. Some, like former recruiter Tim Haley, use their newfound cachet to turn themselves into directors by joining a venture capital firm.

The Valley has been short of talent for a decade or more, but there's evidence the problem is getting more desperate and far-reaching than ever. According to top headhunters, there are currently about 500 vacant high-tech CEO positions, including many in nascent startups. A survey by consulting firm A.T. Kearney and Joint Venture: Silicon Valley Network, a nonprofit in San Jose, suggests that empty posts like these cost area companies $3 billion to $4 billion annually; that's the opportunity cost of having the position go unfilled, as well as the expenses and lost productivity associated with hiring, training, and recruiting. The dilemma confronts everyone from startups ("We're having trouble finding everything," despairs Mark Stone, president of 46-employee Narus, in Redwood City, Calif.) to the largest Valley employers ("It's worse than it has ever been," says Bruce Hatz, who's been recruiting for Hewlett-Packard for 12 years). And stratospheric housing prices have made it more difficult than ever to move to the area (see "Mortgage Shmortgage; I'll Pay Cash" in the fortune.com archive).

In this kind of overheated market, people brokers aren't content to just take their cut and walk away. They are finding new ways to capitalize on their stature. The most high-profile example is Dave Beirne, a former star headhunter for Ramsey/Beirne Associates who placed Jim Barksdale at Netscape before jumping to Benchmark Capital two years ago. Says Kathryn Gould, one of the first to move from an executive search firm to a venture capital outfit a decade ago: "In the old days being a recruiter wasn't such a respected profession because this was such an engineering culture. Now having the attention of a first-rate recruiter is as critical to making a company successful as good technology is. That's a big change over the last ten years."

Recruiters are leveraging this new influence to ensure that they themselves are better paid. Basic recruiting fees have shot up, say headhunters, who estimate that companies now pay up to $150,000 per search, on average, up from $50,000 ten years ago. And it's not just plain-vanilla fees anymore. Recruiters are brokering more sophisticated financial arrangements. Tony Scott, managing director of the global technology practice at A.T. Kearney Executive Search, says he often takes 25% to 50% of his fee in equity. With deals like these, a recruiting firm can end up owning a 1% stake or more in a startup after conducting a few searches for it. One of the most well-known recruiters in the Valley, Jeff Christian, who as head of Christian & Timbers wields influence in the Valley all the way from Cleveland, sits on the boards of two companies and is a limited partner in the side funds of a couple of venture capital firms--making him a pseudo-VC. Though Christian recognizes that he's not known as a financial guru, he says that a bulging Rolodex is becoming as important as financial savvy. "Being able to tap into a prime stable of great leaders has incredible value if it can be done seamlessly and quickly, without any risk," he says. "That's a very powerful and valuable asset to a young company."

How far will it go? Some see recruiters morphing into career managers. As an executive bounds from job to job, the headhunter gets a cut at each stop. More likely, however, you'll see the lines blur between VCs and headhunters, as well as alliances or even mergers between their firms. Venture catalysts, like garage.com and Artemis Ventures, act as hybrid VC, headhunting, and management-consulting firms, aiding startups in almost every area imaginable (see "No Funding for Your Startup? Try a Venture Catalyst" in the fortune.com archive). Christian says his firm is in discussions with three to four venture companies to form a "significant strategic relationship," which would allow him to staff startups from their inception. In addition, he's considering hiring a seasoned venture capitalist to run a venture fund for his firm. "There will definitely be closer and more formal ties between the venture and the search communities," he says.

As well, expect more headhunters to leave their firms for venture capital outfits, where they'll not only help staff a startup but also have a greater imprint on its foundation. Says Tim Haley, 45, who left his search firm Haley Associates a year and a half ago to join IVP in Menlo Park: "My background is probably more relevant to the interworkings of a VC firm today than it was five years ago. Actually, it's become integral to it rather than adjunct."

Ironically, it's this trend that may bring on one of the most serious staffing problems of all. Forget all those open CEO posts: "If we have a talent shortage, it's in the search business," says Gould. Hey, anyone know a good search firm to staff some of these places?

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