Ok, I'll admit it, we've had unpaid interns. When we first started out (i.e. when we were based out of my living room, and were funded by my line of credit+cre

Ok, I'll admit it, we've had unpaid interns. When we first started out (i.e. when we were based out of my living room, and were funded by my line of credit+credit cards) we couldn't afford to buy the fancy kind of ramen noodles, let alone pay anyone salaries. So we posted a job for an unpaid internship and were able to get three students to work with us for 4 months. The students were all freshmen and barely had enough knowledge beyond the "hello world" level. Over the course of the internship they were exposed to several languages (Python, Objective-C, C, C#) as well as frameworks and libraries (Django, OpenGL, Unity3D... bunch of others.) We pushed them hard, but not in a "work harder or we'll beat you" kind of way, rather in a "we're all working towards a common goal, and you'll get paid when we get revenue" kind of way. By the end of the term they all had several serious projects they were able to showcase (a couple of iPhone apps, web work, a browser plugin...) and experience with proper programming practices as taught to them by top notch engineers. And by the end we were actually able to scrounge together about $2k apiece to give them as a thank-you for their work. The following year when these guys had finished their 3rd semester and were looking for their next internship they all got between 22-25 interviews - with Google, Microsoft, Apple, Qualcomm, RIM etc. And all of them got highly prestigious internships that normally only go to senior students in their last semester. We still use those guys as references for when we hire interns because they have nothing but great things to say about their experience with us. Today we're funded and we have revenue, so we're able to pay our interns somewhat more reasonable rates ($18-25/hr.) Anyway, my point is that not all unpaid internships are created equal and in many cases it ends up being in the interests of both the company and the student.