Startups struggle to hire experienced Technology and Business professionals. So, what to do about it?

Startups are like kids: they tend to grow up fast and need the right nurturing and caring. As Startups grow, they need to be sustained: initially as a small-business and subsequently with greater controls and checks-and-balance that operationalize larger business ventures. Helping startups graduate into smaller and larger businesses requires experienced hands that can complement the entrepreneurial skills that founders bring.

One of the most successful examples of startup bringing in experienced hands is that of Google: Back in 2001 when it was growing from a startup to a leading search engine and online advert business, founders Larry Page and Sergey Brin interviewed Schmidt under the guidance of venture capitalists John Doerr and Michael Moritz. Google offered Eric Schmidt a salary of $250,000 and granted him 14,331,703 shares of Class B common stock at $0.30 per share and 426,892 shares of Series C preferred stock at purchase price of $2.34.

Role of experienced Technology and Business executives at startups

The google example shows how an experienced CEO can guide, steer and shape the course of a startup as it matures. In this case, the CEO had a personal rapport with the co-founders Larry Page and Sergey Brin, which helped tremendously. An external CEO, especially one who shares the founders’ vision, can certainly shape the course of a startup. Likewise, other experienced executives hired by startups can help shape specific functional areas. A few key areas where experienced executives can provide insights include:

IT development and sustenance – Startups may be focused on developing a Minimum viable product (MVP) that it can take to the market. MVP, by definition, will have minimal capabilities that can entice users and clients. The founders and developers may be inclined to continue to add to the capabilities of the MVP. However, as the startup begins acquiring clients and grow, there should be an equal focus on sustaining the product-base while adding new capabilities.  Experienced technologists with operational IT background may recognize this as a classic “innovate versus sustain” challenge.

Maturing into a business processes – At a nascent stage, a startup may have a few employees recruited personally by founders, who share the same zeal, passion for the idea. At such early stages, it is easy to define a shared culture generally involving some element of “work hard, play hard.”  Most of the other corporate function activities including finance, accounting, marketing, sales and legal are shared between the founders and early-stage employees. A startup experiencing business growth may outgrow this model and will require specialists who can guide and shape specific functional areas. Specialists with functional knowledge and expertise will also be required to define and shape business processes that will have to continue to mature as the business grows. For example, the legal issues faced by a startup operating in a local market will be very different when it goes global.

Challenge of hiring business veterans

Many startups aspiring to take a page out of Google’s playbook are trying to lure experienced business and technology executives. However, this is proving to be a hard sell in a market where the tech startup ecosystem is undergoing growing pains.  The challenge for startups is multi-fold:

• Experience in a startup is losing its allure – Technology professionals get to work on a variety of technologies and engage in strategic decisions. Such experiences are not easy to come by at large organizations where one might get pigeonholed into technical or functional silos. Even a few years ago, a stint at a hot startup was highly valued by professionals seeking to enhance their credentials. Given the current economic climate, such experiences are losing their allure.
• Experienced and seasoned talent generally choose security above fat pay – Experienced professionals, and those with 10 or more years in the industry may have other personal and family commitments – like mortgage to pay, and younger kids for whom they may be planning college and tuition. These professionals may prefer job-security above unpredictable riches that a startup can bring
• When times are good, everyone wants to jump – A thriving startup ecosystem attracts a wide cross-section of professionals, and a cooling market has the opposite effect. Many large startups like Snapdeal and Flipkart are experiencing executive churn and some are beginning to handout pink slips. Experienced professionals, not surprisingly, are beginning to get cold feet.

A recent Economic times article looks at some of the issues (ref: Veterans not Keen to Jump Ship to Fight for Startups)

“What were the hottest CXO jobs until a few months ago are now increasingly getting the cold shoulder from potential employees, as startups, notably in the showpiece ecommerce segment, wade into an uncertain environment. Funds have become hard to come by for homegrown companies and valuations have shrunk, even as the competitive intensity in the markets they operate in refused to ebb with deep-pocketed foreign rivals continuing to bankroll their Indian operations. Layoffs and management upheavals have become fairly common.

Top executive search firms such as Transearch, Longhouse Consulting, RGF Executive Search and Antal International said they were finding it tough to convince candidates to sign up for CXO roles in ecommerce companies and other startups. In recent months they have recorded up to a 50% increase in offer rejections. Even when a candidate is ready to join, it is taking longer to close the process.”

The silver lining

We are continuing to see an unprecedented adoption of technologies fueled by demand from consumers and enterprises. Startups and Entrepreneurs continue to dream-up and visualize unique startup ideas based on aggregating existing technologies and innovating new solutions.  Some of the trends like Internet of Things (IoT), virtual reality (VR), self-driving cars – may be disruptive to our current order, and might indeed usher seismic innovation and changes. However, some of the innovations are just aggregation of existing technologies and techniques that will nevertheless bring in efficiencies and better ways of working.

Some mid-career professionals in the corporate world still dream of being entrepreneurs and want to be a part of a venture trying to solve pressing problems with innovative techniques. They continue to seek opportunities to work on some of the hottest technologies and may be willing to take some risk in the form of job security or a smaller pay-cut in return for equity. (ref Top 25 Digital Startup ideas and technologies for 2017).

Startups need to be creative in identifying and engaging such professionals, and entice them to come on-board. This may seem like yet another challenge for startup founders; but who said they are not up for challenges?!