Hiring playbook for early-stage startups/MSME founders
Covid, venture capital inflow, and hiring
Hiring has never been more difficult for early-stage startups than now. In this blog, we will discuss how remote work accelerated by Covid and massive venture capital inflow has made hiring extremely difficult for bootstrapped startups and MSMEs.
Remote world and surging talent cost
As Covid has enabled (accelerated) remote work; talent knows no geographical boundaries anymore. The best talents can sit with a laptop in Ara (Bihar) or Bikaner (Rajasthan) and earn compensation at San Francisco and Bay Area levels.
A senior software engineer earning 45 lakh per year in Bengaluru in a well-funded startup is still 2x less than their counterparts in most of the US and 3x-5x less than SF or NYC.
The remote world has made the Indian talent pool accessible to global companies within the comfort of their home. This has created a huge talent crunch for Indian startups at all levels.
Startup analysts have observed that exposure of the local talent pool to the global workforce has made Indian startups announce ESOP buyback much earlier in order to retain the best talent.
VC inflow and bidding war
With venture capital funding touching $10 billion in 2020; there is an ongoing bidding war for talent in the market.
When Deepak Abbot, Founder of Indiagold, shared his struggle to hire and retain talent; it instantly became a talk of the town on Twitter with many founders relating with Deepak's pain.
This insane bidding war is making it very difficult for startups (across all levels) to hire and retain talent, but the ones that are most hit are the bootstrapped ones and MSMEs.
How can bootstrapped startups and MSMEs hire in these really tough times?
You don't have to pay more than others to win the game. Change the rules, instead! I am sharing a playbook. Don't worry!
1. Hire freshers
In the book, Let's build a company: A startup story minus the bullshit, Harpreet Grover and Vibhore Goyal share their playbook on how to hire when you are bootstrapping and are devoid of external capital.
“We figured out that the right kind of people for an early-stage startup with little to no funding are people with at least one drawback. Generally, the drawback is either ‘weak spoken English’ or graduation from a ‘no-name’ college. These are the people ignored by big companies because they are biased towards certain colleges and pedigree. They want polished candidates.”
“This leaves a large pool of freshers who can be employed and trained by startups. Many of these folks are naturally hungry to achieve. They want to succeed in life as much as you want to build your own company."
Zoho & Thyrocare's tryst with freshers
Are you worried about what can freshers achieve? Will it be the right hiring strategy or not?
Zoho & Thyrocare have proved that a multi-million company can be built successfully with a team of freshers.
Dr Velumni, who was born to a landless farmer and spent his entire childhood in poverty. has built a Rs 7,200 crore+ business by hiring more than 95 percent freshers in his team.
An article published in Quartz India mentions that Zoho, a SaaS company led by Sridhar Vembu and valued at over $1 billion, has built its multi-million dollar empire by training and employing a team of fresh graduates.
2. Go remote. Hire from small cities around India.
Most bootstrap/MSMEs founders restrict their hiring to candidates from major tech hubs - Bengaluru, Gurugram, Hyderabad, etc.
If you are a tech company, what is stopping you to go remote? Freshers who come from smaller cities are more likely to stick with loyalty and marry into your vision faster due to cultural influence.
Do you know that 70 percent out of 6M+ freshers on Internshala fresher jobs are from smaller cities and towns?
3. Stop treating HR as an expense. Focus on upskilling.
As a founder, focus heavily on employee engagement. You should build a moat bigger than salary and do a small investment to upskill freshers. Reward the loyal and committed ones (as much as you can)!
Do you know? The average fresher retention period is 2.8+ years, which is 60 percent higher than folks with two to five years of experience, and hence upskilling makes so much sense.
To sum up, Deepak Abbot rightly mentions that hiring and retention have to among the top KPIs for founders.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)