I'll make you an offer you cannot refuse – The Game of Startup Hiring
Tuesday August 04, 2015,
10 min Read
"Every good technology company needs great people. The best companies invest time, money, and sweat equity in becoming world-class recruiting machines. But how far should you take your quest to build the world's greatest team?" - Ben Horowitz in The Hard Thing about Hard Things
What is your take on the below hiring strategy:
We recently heard an entrepreneur say that they're making hiring for the company easy. How so? Well, they would look at whoever the competitor was picking at campuses, figure out the offer the freshers were being given, and make a better offer. Essentially, their competitor was doing all of the hard work of choosing the right candidate, while they reaped the benefits.
From counter offers to bidding wars, startups today are looking at several aggressive hiring strategies and techniques. Is poaching really a part of the game of startup hiring? If yes, are there any rules to the game or is winter fast approaching?
According to reports, the industry today seems to be witnessing movement of several employees from established organisations into startups. While, this bodes great news for the startup ecosystem, this could very well mean a new season of 'Startup Hiring Games.'
Earlier this year, Zomato had told Yourstory that the company was looking to fill 1,200 open positions, and Practo said they are looking to hire 1,000 employees by the end of this year. But then there is the looming question of poaching. In a recent conversation with YourStory Deepinder Goyal, founder of Zomato, told us
"I poach people. I am shameless about it. If someone wants to leave his or her company it's not my problem. If you want to call people at Zomato, please go ahead and call."
And the game begins…
Seedfund Co-founder and accomplished investor/mentor Sanjay Anandaram believes that this is the inevitable truth of today's startup ecosystem. With the rate at which, startups are growing today; there is an increasing need to hire talent. Teams need to be built and market shares need to be captured, and this means more people –freshers and skilled talent alike - need to be hired.
Practo Founder Shashank ND explains, "We are always on the lookout for the best talent to create the right team to build great products. We are open to getting local talent if it is available. If it requires an acquisition, we do that. Our singular focus is to get the best talent here at Practo".
In the recent years, Silicon Valley is finding different ways to hire talent. One interesting example would be Bigcommerce. This e-commerce website has its offices in Australia and Austin. The company was trying to poach talent for the new San Francisco office. In March last year, it set up shop near the Google and Facebook shuttle bus stops, and was looking to hire talent.
But that isn't the interesting bit. What was interesting was how they went about it: they served poached-egg sandwiches to the employees waiting to be take their bus to work, dropping a not-so-subtle hint about their intentions.
While Indian startups may not be using poached egg sandwiches, they are serving their own version of bullish hiring tactics. Case in point would be the time when Yahoo announced it was firing its employees. It became a hiring frenzy on Twitter.
Startups started posting tweets on how Yahoo employees could apply for work with them. The tweets went from Zomato, Pricebaba and other companies. Startups are growing at a phenomenal pace, so it is no surprise they are changing and adapting themselves to hire the best talent in the ecosystem.
Growing talent wars
With all this mutual interest in working for startups from talent as well as entrepreneurs who wish to hire them, it is quite ironic that the market seems to be going through a talent crunch. Reports say that 45 percent of Asia Pacific employers have had difficulty filling job vacancies due to lack of talent. Close to 67 per cent Indian startups reported difficulty in filling job vacancies versus a global average of 34 per cent.
"This crunch is present because the rate at which organisations are growing is much higher than the rate at which people are choosing to work with startups," says Shashank.
Nevertheless, startups are hiring talent and are in the constant lookout for fresh talent. Kevin Freitas, Head of People Relations InMobi explains the referral system:
"We have a referral system in place, which in incentivised. The minute there's an opening at InMobi, we first keep it for our internal teams, before it reaches the market. Since we want the people who have a certain amount of passion and create disruptions, we try to rely on our referral systems".
In most cases, Hiree Founder Manjunath says, organisations look for specific kind of skills and talent. With the present talent crunch, the best place to look for talent could be at other organisations. "There is a need and great demand in the industry today for niche skills and hardcore talent," he says.
All a part of business?
Getting that specific skilled talent isn't easy, as the choice becomes less. It, therefore, seems easy to hire from organisations that are known to have such talent already. But it just isn't the question of hiring from other organisations. There seems to be a deadly dance around the whole process of making and getting offers.
Manjunath says it is a game of bids as offers can be negotiated and there are ways to get people in. "There are different aspects to the offer and it is all about getting the right sweetener in place," he adds.
Anuj Roy, an HR consultant, believes that the employee is the one who benefits the most from these bidding wars. Citing an example, he says that he knows of a particular employee who had received close to a 100 per cent hike.
Startup heads have different ways to go about hiring. Gaurav Munjal, Founder and CEO of Flatchat says if his company is hiring from a friend's organisation, he ensures to step in and take care of it himself. "I have a chat with the entrepreneur and let him or her know that an employee is looking to shift," he says.
Rajiv Srivasta, Founder and CEO of Urban Ladder, says that poaching is a big no for his company. Citing a chapter from Ben Horowitz's book, The Hard Thing About Hard Things, he says,
"We're all, competitors including, part of the same ecosystem. Poaching from any organisation has huge ramifications on your relationships, which may have taken years to establish," he adds.
Is it always about the money?
Money, according to Anuj and Manjunath, isn't the only factor that attracts an individual to take up an offer. Gaurav agrees. "There's always someone who has more money. It can't be the only factor that motivates people to shift. There are several factors at play, while hiring people," he says. But with deeper pockets, given the amount of funding pumped into startups, money has become a clear negotiator.
In many cases, organisations end up hiring more than they actually require. This isn’t a great trend, Gaurav believes. "I believe it's more challenging and interesting to work in small teams and create larger impacts," he says.
Rajiv says that there always is someone with deeper pockets. "We know we can't match many organisations with regards to money. We believe that if someone is joining us for the salary the game is lost before it started. We want people to join us because of the challenge we give and because they believe in our vision," says Rajiv.
The game of funding
Four to five years back, the amount of funding that went into the market was very little as compared to today. Now, Anuj says, for startups that have raised their Series A, USD 100 million has replaced the earlier USD 20 million. This means that organisational structures change and one needs to start hiring. "Funding makes available the money needed to actually make these hires," he adds.
Funding has made companies change their company structure significantly. But the kind of talent needed is a different beast to tackle all together. According to Sanjay, whilst hiring, a company should look for a person with passion, desire to learn and one who is not afraid of failure. "You need someone who's willing to roll up their sleeves and get down to doing actual work, especially when the chips are down," he says.
He adds that finding readymade talent with the right skills and attitude isn't easy, so it may help to hire raw candidates and help them develop those skills with time.
However, today many are in a hurry to hire. Sanjay adds that with the increased amount of funding and the pressure to perform forces the entrepreneur to think about building the best team and a big company within the shortest time possible. They now have the money and the bandwidth to hire those people. "In many cases it becomes like the dialogue from Godfather: ‘I'll make them an offer they can't refuse’," he adds.
Balancing culture with growth
Nevertheless, while growth and expansion is important, Shashank says, "It's imperative that organisations maintain a balance between culture and expansion, because when you have a good culture, people want to be a part of it”.
Kevin reiterates the referral system, because it also gives a company a pitch on how the individual is."Talent creation, we believe, is more sustainable than just talent acquisition," says Kevin.
However, in cases where startups share common investors, startups avoid hiring from them.
While the war to get the right talent is on, and while bidding gigs might be the norm, the fact remains that if an employee is looking to changehe or she will shift. Shashank believes that the secret to low attrition is growth and as long as the company is growing, the people are happy and it also means people feel more responsible, and that they are learning more.
He adds that faster growth also makes way for more opportunities and more areas for his company employees to work within and build great products.
"It's important that people align to the vision and that's what we look at Practo. If an employee wants to leave your organisation, it isn't the fault of the other organisations but yours. You need to look within your culture and see what you need to build to get people to stay," adds Shashank.
Kevin agrees that the onus is on the company to create a nurturing work environment. "We know what teams and what kind of people are being approached, and if an employee wants to shift, that's their personal choice. But the fact remains that if you give your employees the right environment and challenges that help them grow, they will stay back," he notes.
He says that in many cases employees want to shift because they need a change, so there are several in-house role shifts that can be made at InMobi. Even today Urban Ladder’s Founders Rajiv and Ashish are closely associated with the hiring process. He adds that this is important because the culture and vision of the organisation should be in tune with what the employee looks at.
Sanjay notes that since most founders and CEOs of startups today are youngsters who are hiring for the first time, they learn as they go. His advice to entrepreneurs is:
Hire for culture and the right attitude. A feature is not a product. A product is not a company and a company is not an organisation. Organisations are built on culture, like a Google or Apple.
With inputs from Shradha Sharma