Hiring is harder than ever for basically every startup. The rush of investment into tech companies in recent years has created more demand for skilled workers than humans can currently meet.
But you can still get the talent you need if you get the details right. Especially if you know how to take advantage of the new trends in distributed work.
From a compelling vision, to global compensation plans, to custom “offer decks” for key candidates, top tech recruiters shared what they’re doing to help companies land the people they need at TechCrunch Disrupt this year. Here’s a closer look at what I heard from the panelists, who included: Jaime Bott, talent partner at Sequoia, Tawni Nazario-Cranz, operating partner at Signalfire, and Doris Tong, founder and CEO of EQ Talent Group.
They also talked about how they work with startups from early to later-stage funding and provided fresh stats on what they’re seeing in their portfolios. Which is where we’ll begin.
The state of distributed recruiting
Only part of the startup world is taking the plunge into fully distributed work, from what the panelists are seeing.
But all startups are having to think about hiring by Zoom instead of the traditional in-person interview marathons that defined recruiting in previous years. And most companies are going to be offering distributed-work options long term.
In a recent survey of Sequoia portfolio startups, “roughly 60% are going to be a hybrid model” of in-office and distributed, said Jaime Bott, “roughly 20% will be fully remote and roughly 20% are planning on having everyone back to the office five days a week.”
This last group is “having a harder time recruiting, because people are really looking for more flexibility now,” she noted.
Doris Tong of EQ Talent Group, meanwhile, sees half her companies going fully distributed while 33% are hybrid and the remainder in-person. And of the in-person, some are hardware and robotics companies where staffers need to be in the same room to do the job.
“I would say it’s more of a third, a third, a third,” said Tawni Cranz about Signalfire’s portfolio breakdown. “For me, the headline has been that ‘hybrid’ is here to stay.’”
The challenge, panelists said, is that there aren’t enough senior people to hire overall in the world. Demand from startups has grown too fast.
“I do think that it opens up more opportunities from the funnel aspect,” Tong said about the move to distributed. “But I think that challenges with hiring for startups will always be hard, right, with the FAANGs out there and all that competition that we have to face.”
The further you get from tech hubs, the more you have to explain what a startup even is.
“Then you also have challenges where they don’t really know the startups,” she explained about potential candidates. “And if they’re even further away than Silicon Valley, it’s more about selling the story: ‘What’s our vision? What are we trying to do and change? What products are we changing and disrupting?’ etc.”
Sequoia’s technical recruiting efforts for seed and Series A companies generally avoid FAANG types entirely. “That’s a very different profile of the types of people that would be even open to having those sorts of conversations,” Bott said. “So we don’t typically go after the FAANG folks. We know from a cost perspective, they’re just out of bounds. And they’re generally really hard to attract.”
Distributed work “hasn’t changed the fact that there’s an overall shortage of talent,” Cranz emphasized. “We still need more engineers, we still need more product folks. I don’t think that geo changes that.”
Hot tips for getting distributed recruiting right
The panelists also shared some of their best practices for landing candidates in any situation.
First, be prepared to spend wherever you look. “More and more, we’re coming across candidates who are in a location that you would think is not as expensive as the Bay Area,” Tong described. “But their pay is location agnostic.”
Founders can’t just look at surveys or market data to figure out pay, she said, they might have to adapt to what the candidates expect.
As always, startups have to sell the big vision to make up for the other uncertainties of the path. “I would say the minute that I’m negotiating and it comes down to just compensation,” Cranz said, “I feel like we may have missed the boat from the beginning.
“It goes back to all the good practices that you’re doing when you’re seeking the best talent for your company,” she detailed. ”Which is being really clear on your mission and your vision, understanding what your value proposition and what the experience is that you want to have for your employees, having a really clear understanding and being able to articulate the scope and what people really get by joining your company and being honest with yourself about what that really looks like now versus what you’re aspiring it to be.”
Another key is explaining how equity works. “As you get out of the Bay Area, people understand equity less and less,” Bott said. She advises startups to “explain all the equity jargon and even pull in significant others, spouses or partners to explain what equity means to them as well.”
This sort of personal touch can make all the difference. “One of our early-stage companies has started making an offer deck,” she added. “Whenever they make an offer to a candidate, the offer deck is specific to the person and it talks about all the nuts and bolts of like, ‘here’s what your offer is, this is what it could look like over time.’ But they also talk about why this person would be so great for the company and why they’re really excited for them to join the team … It’s very cool if someone makes you your own special offer deck.
The panelists went on to discuss tips for addressing the perceived instability of startups, techniques for hiring senior executives and unique approaches of their recruiting teams.
They stressed that founders should focus on who they really need rather than fancy titles.
“Instead of hiring the SVP, or the VP or the C suite person,” Cranz described, “I’ve hired the amazing director that is really responsible” for a company’s success. Someone with “a lot of gumption and who wants to make their mark, to come in and to help with the early building” of a startup.
The changing nature of recruiting itself
Startup recruiters are themselves in high demand. For Tong, that means she’s consulting with companies through later and later stages — they ask her for more and more help, even if they are also trying to hire recruiters in-house. But it doesn’t go on forever for firms like EQ. She describes a point where companies “graduate” to hiring their own human-resources executives, who can oversee a wider range of needs, like compensation, relocation and visas.
Bott and Cranz work at top venture firms with teams of people who support startups for many years. They’re part of the evolution of the VC industry toward permanent full-service operations for portfolio companies, somewhat comparable to modern private equity funds.
“For us, it’s very much about meeting our founders where they are,” Cranz described. This starts with an early assessment of where the founder is in the process of recruiting. “Everything from the story that they tell, the proposition that they offer, their own experience in recruiting and understanding their actual leadership team’s capability.”
From there, Signalfire works with companies on “what are they seeking to build, and on what time horizon and what’s the right sequence of the build. Then from there, you can get into the platforms, the systems and how they’re going to equip themselves and begin to align on the right time to build in-house recruiting, how you might use our Beacon talent [internal software] in our recruiting resources, when are the right times and who are the great people to use for outsourced recruitment resources? Those are all early conversations that we have with companies, regardless of the stage that we come on in an investment.”
Sequoia, in a sign of the times, announced that it is becoming one big, open-ended fund to provide liquidity and much more to its investments — even long after they go public (TechCrunch coverage here).
Half of Sequoia’s recruiting team is focused on specific early-stage needs, Bott said. “When we invest in a seed or Series A company, they unlock six months of dedicated access to a senior tech recruiter and a tech sourcer, who are both teaching the founder how to recruit effectively — everything from ‘does the website feel inclusive?’ to whether they know how to interview and are paying market comp? And then the second part of the offering is actually filling their engineering pipeline with relevant candidates. And we can do that in any market across the U.S. So it doesn’t matter where they’re located. If they’re fully distributed, we can help. And as the company grows and scales, we also have a team of executive recruiters that are functionally focused. Any company at any stage can tap into those folks to get support as they grow and scale their teams and as they cycle through — because every company will cycle through a set of executives at least a few times before they have some sort of liquidity event.”
For Signalfire, Cranz described the relationship changing but not ending. “I don’t think we think of it as graduating, right?” she concluded. “We want to be partners along the journey for the full journey … I’m not trying to get [founders] to stop partnering but instead to increase and maybe change the topics if you will.”
[Editor’s note: Some quotes above have been lightly edited for brevity and clarity.]