Foosball, Purple Squirrels, and Speed Dating: A summary of our roundtable discussions at Menlo Ventures on hiring in the startup world

Nov 14, 2013
This article is part of a series called Videos.

Screen Shot 2013-11-04 at 10.13.44 AMI recently participated in a great roundtable discussion (video at the bottom of this post) on recruiting for startups, sponsored by Menlo Ventures and moderated by Jim McCarthy. On the panel with me was Manuel Medina of GroupTalent, Jon Bischke of Entelo, and Todd Raphael of ERE.

Each of our companies is bringing something unique to help disrupt the recruiting space: Readyforce for its attention to linking college students with startups and technology companies, Entelo as a metric-based recruiting tool, and GroupTalent as a high-end job board for software developers. And of course, ERE as a medium to bridge recruiters with the trends and companies like ours.

As startups, we recognize that managing our precious resources of limited cash and employees’ time to find the elusive purple squirrels requires a serious game plan. Here are three of the top takeaways from our discussion that can help firm up your recruiting:

What Are You Really Selling?

As a startup you need to come to grips with the fact that for now, when it comes to hiring, you cannot compete on salary, benefits, or even brand, because, well — you don’t have one (yet). You are selling candidates on the vision and mission of what your startup has set out to accomplish. Your selling proposition is that as employees they will get to be in the trenches and help solve the challenges. That’s your edge. They will play a significant role in forging the company’s success. At a larger and more established company, as Jon Bischke stated, they will only be “working on a very small slice.” They will not get the growth that your startup can offer.

Furthermore, you can’t compete with Facebook and Google, so stop trying. If you are interviewing candidates who are also looking at those companies, you are interviewing the wrong people. Life at a startup is very different from a Facebook or a Google. You want employees who have “startup DNA” — i.e. can do great work and get s(*&^ done.

There are no IT departments or marketing teams — and new employees need to feel comfortable wearing many hats. Those who you onboard should get that and embrace it. As Todd pointed out, it’s not all about fun either. Startup life isn’t all “funky and foosball”; your value proposition is one that the right people will buy into and you should compete on that.

Try Before You Buy Goes Both Ways

One strategy for confirming a great technical hire before you pull the trigger is to “try before you buy” or to contract out a paid mini-project. We all agreed there is tremendous value for all parties to have a small project scoped out and for everyone to do a little speed dating. You get a sense of the quality of work and how the candidate might interact with the rest of the team. If you do employ this strategy, John Bischke of Entelo advises to always pay and to pay well for the work that is done. That way if either party walks away there should be no hard feelings.

In some situations, it can even be worth it to orchestrate conflict just to see how the candidate will respond.

External Recruiters and Startups

This point about external recruiters is summarized from looking at few different conversations that we had throughout the discussion. First of all, using a recruiter simply may not be in the startup budget. But if you do have the funding for it and employ a recruiter, John Bischke of Entelo had a bold suggestion for making it count: if you are a 20-person startup and using a recruiter, pay them more than the competition. If they charge a 20 percent placement fee, then pay them 25-30 percent.

As a startup you are competing with larger more stable companies that are looking for multiple hires over time. The big company is their stable meal ticket. She gets paid 20 percent regardless of who makes the hire and she’s more likely to give that stellar recruit to the company that’s got potentially multiple hires for her down the line. You want to be their first call when they’ve found a purple squirrel, so you need to sweeten the pot. If you are willing to pay the fee anyway, you might as well make sure you’re not getting the sloppy seconds.

Manuel Medina cautioned strongly against this, saying that the primary reason why recruiting fees are so high to begin with is because companies’ hiring processes are “totally indeterministic.” Larger companies in general make it hard to get candidates through. If your company has a clear and transparent recruiting process and can make a quick close, a recruiter will appreciate that and they will return time and time again to make their 20 percent. If you start adding in last-minute coding challenges or “just one more interview,” then the process has now derailed and you make it hard. Manuel’s advice: Just keep the process clear and transparent from the start and be ready to pull the trigger if you put the right person through the process.

Hearing different points of view on what makes for best practices in technical recruiting always breeds thought-provoking conversations. You can watch the panel (in its entirety) below if you’d like. Purple squirrels may be forever elusive, but it’s nice to share tactics among peers and get just a little bit more efficient in your recruiting process.

This article is part of a series called Videos.
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