Alex Zajaczkowski was just months into her role at Toast, a restaurant point-of-sale software company, when she was let go during COVID-19 layoffs. Toast, last valued at $5 billion, cut 50% of its staff through layoffs and furloughs.
Zajaczkowski said she started applying for jobs within a week.
“I think I got on the boat a little bit quicker than others because I wanted that security a little bit faster,” she said. She and former Toast colleagues formed a Slack to communicate about layoffs, their job searches and what lay ahead. Toast created an opt-in spreadsheet for recruiters that listed laid-off employees.
The sheet brought Zajaczkowski to Stavvy, an online mortgage startup also based in Boston, for an interview. Today, a majority of Stavvy’s team are ex-Toasters, including Zajaczkowski.
“I think one of the benefits of recruiting from an organization that is sort of an iconic Boston company, is that you know what the hiring practices are,” Ligris said. “There’s been a level of vetting that has occurred.”
Stavvy’s onboarding of former Toast employees suggests that the layoffs which rocked startups in March could be an opportunity for smaller startups to scoop up star talent that already has chemistry. While acqui-hiring is not a new concept, it has new weight in an environment reeling from mass layoffs and a shift to remote-first work.
Stavvy co-founders Kosta Ligris and Josh Feinblum, though, say hiring a pod of employees can backfire without proper diligence.
Acqui-hiring has the potential to create culture clashes, Ligris noted.
“Perhaps my biggest concern was, for doubling our company size pretty much overnight, was that everybody’s coming from this traumatic experience,” Ligris said. “Is it going to be something that’s a distraction? Is it going to be something that slows the rest of the team down? We didn’t see any of that. It was almost an immediate acceleration, which was pretty cool.”
In Stavvy’s case, the founders didn’t hire a specific team coming out of Toast who pitched themselves as a pod. Instead, they talked to Toast executives and got a number of referrals for good engineers open for hire. The hiring approach ultimately helped Stavvy bring in a group of former Toasters who didn’t know each other — which, according to the co-founders, was key for why the acqui-hire made sense.
“By bringing in people from Toast that didn’t know each other, we were able to avoid almost like all social cliques that would form,” Feinblum said. “I couldn’t emphasize it enough; if you’re going to have a 20-person company, you don’t want to be dealing with the notion of the fact that operationally you’re dealing with two companies.”
The other facet that founders should consider when acquiring new talent is to consider skill overlaps between the old company and the new employer. While obvious, this factor directly informs which employees are up for grabs after a massive slew of layoffs.
Stavvy looked at other startup layoffs as opportunities, but ultimately landed with former Toasters because of the company’s similar focus. Because Toast worked in restaurant management payments, and Stavvy is in real estate transactions, the skills overlap and domain expertise helped seal the deal.
“I hope it’s a model that other cities around the country and around the world can take note of,” Ligris said. “There was almost a pride of working at these tech companies and making sure people that have lost jobs were able to find new jobs quickly.”
Vinayak Ranade, founder and CEO of Drafted, said the idea of hiring pods, or acqui-hiring, sounds better in concept. Drafted, a referral network, created its own layoffs network to give employers and employees resources.
“The likelihood of an employer needing that exact set of people is low, and even if they did, as an employer it’s unclear whether that’s good for team chemistry,” Ranade said. “From a culture standpoint, it’s easier to hire than acquire.”
The model doesn’t work for all, however.
In March, travel startup Freebird struggled with coronavirus-related cuts. Sam Zimmerman, the CTO of Freebird, stepped down from the company as well and took a board seat. Looking for his next work, Zimmerman plucked three of his former Freebird colleagues to form a hiring pod.
Zimmerman said the pod made sense because the four of them had spent three years working together, making them “in turn [a] more valuable team.” The pod sent out interest emails to companies all over the world and attached a dossier of information, including a team overview.
The dossier included each person’s background, skills, previous position, relevant links (such as published papers and talks), strengths (such as velocity and code quality) and accomplishments. Zimmerman gave his e-mail address as the main point of contact.
“People broadly were interested, but there was a lot of questions about how to most fairly do an ‘interview,’ ” he said. “We pushed for a small short-term consulting contract and most seemed amenable as a way to vet us.” In time, Zimmerman said prospects offered his hiring pod several offers.
Ultimately, though, the pod approach did not sit well with the team.
“A combination of it being March 2020 [with] high uncertainty and two [members] of [the] pod wanting to find jobs soon — and us being remote — made it rather tricky,” he said.