Startup hiring

A friend from university recently wrote a blog post about working at a start-up as a non-tech person. Initially I had a violently negative reaction to what he wrote because he embodies the ‘no-conviction, chasing the trend’ type of behaviour that I hate (Peter Thiel’s classic example are MBAs). However, upon reflection I think I am probably wrong and that someone like him could probably add a lot of value to a start-up. Outside of the co-founders and the first few hires (<5-10 people) I’m not sure that passion for the particular business/product is actually that important, especially if it’s substituted with a general passion for an area of technology/business etc. Employee number 11 onwards are unlikely to be key decision makers around product or company direction and as consultancy and investment banking shows there are lots of really smart and driven people who don’t need to be passionate about something to work really hard at it. I think the problem then becomes how do you make start-up hiring that works for both sides?

PROBLEMS WITH CURRENT START-UP HIRING

For the employee

Joining a start-up rather than an established company probably means you are going to get paid less to work at a less prestigious company but may be worth it for some people for

  1. small team dynamics
  2. greater responsibility/opportunities to learn
  3. passionate about technology/business area
  4. the (admittedly small) chance to become fabulously wealthy.

For the start-up

Hiring is one of the main problems start-ups face for a number of reasons

  1. Limited number of quality people want to join risky start-up.
  2. Hiring is very time consuming
  3. Competitive salaries are expensive

SOLUTION – START-UP GRADUATE SCHEME

My solution to the hiring problem (particularly of non-specialist business or programming hires) for start-ups is to have an Entrepreneur First type programme but for founders rather than early hires. Graduates interested in working for start-ups would apply to our ‘Start-up graduate scheme’ just like they would for an investment banking job but rather than different divisions there would be different ‘competencies’ e.g. front-end developer, back end developer, sales/business, accounting etc. Of course these would be fairly loose given that in start-ups everyone is expected to muck in. The graduates when then be rotated every six months across four different start-ups which would allow both the start-ups and employees to find a fit that works for them with the  approach them as longer term hires. For the two year period though, technically the graduates would be employees of the ‘Start-up graduate scheme’ not any given specific start-up. Finally, in addition to saying that they completed the 2 year ‘Start-up graduate scheme programme’ – a sort of practical MBA graduates could also over that time study for professional qualifications, take classes (maybe the graduate scheme could have 1 day a week of basic business, accounting, programming classes) and get high quality references from where they have worked.

There are a number of advantages of this scheme.

For employees

  1. Get a prestigious qualification/signalling in addition to real world business experience. If the ‘Start-up graduate scheme’ is prestigious enough even if the 4 start-ups you join all fail (and no one ever hears of them) you still have good signalling.
  2. No one (including VCs) know how to ‘pick the winners’ of which start-ups will be a massive success, so the idea that early stage employees can do any better is of course ridiculous. If wages (including stock options) were tied to the portfolio of companies that the Start-up graduate scheme works with this would allow employees (even those not working for a specific start-up) to, despite only being able to work for one company at a time, diversify across a portfolio of start-ups. Of course if you are worried about incentives you could have a 50% start-ups you’ve worked at, 50% portfolio company returns etc.
  3. You can learn from different companies and cultures and the problems they face. I suspect after six months the learning curve (as most start-up tasks are mundane) slows down anyway.
  4. Better way to build up relationships in a technology/business area through both the ‘Start-up scheme’ and the people you meet at the different companies

For the start-ups

  1. Outsource the hiring process
  2. Although, there would be a learning curve for each new batch of employees every six months a lot of the tasks would be relatively simple and would still be a net time save (given less hiring time).
  3. A lot of employees skills are transferable e.g. sales, programming, accounting etc.
  4. With chance at prestigious qualification/CV builder can get higher quality people working at your start-up, earlier on and probably at a discounted price.