During the Internet bubble in the late 1990s, the demand for engineers was so strong that the valuation of early stage startups was based on the number of engineers they had on staff.
In an example of history repeating itself, the New York Times article For Buyers of Web Start-Ups, Quest to Corral Young Talent covers the growing trend of larger tech companies "buying start-ups to get their founders and engineers — and then jettisoning their products."
The going rate, BTW, is $500k to $1,000,000 per engineer.
***Update: I wrote this post yesterday and this morning LinkedIn's stock price doubled from yesterday's already impressive IPO debut. Another sign it's 1999 again.***
To be fair, the current boom in Silicon Valley is much more grounded in economic reality than during the first Internet bubble. But this can't be a good sign.