It’s people, people!

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How do I know that emerging technology is still booming? It is incredibly difficult and competitive to recruit, hire and retain people with startup experience across Canada. Just look at the number of jobs posted on the StartupNorth Job postings:

The number one budget item for startups is headcount. For most companies, the people costs far exceed the costs associated with hosting, etc. I don’t know about you but we’re not designing our own servers or opening data centers near the Arctic to reduce the cost of computing and power consumption. It means that the people are the biggest cost for a startup as they grow.

This is different during the initial creation of many of the startups in the bootstrapping phase. We’ve seen a lot of startups get to Minimum Viable Product and start the process of finding a scaleable business model keeping their headcount costs low or close to zero. You might infer that the experience at YCombinator or TechStars or 500Startups is designed to give entrepreneurs the bare minimum of capital and put them in a focused, competitive environment with a deadline (Demo Day) to do the customer development and build the connections necessary for the next stage. Upon exit, many of these companies raise a significant amount of capital. Have you asked yourself why?

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It’s to hire the best people. And it turns out that hiring the best people is not something that can be easily solved with a job posting, or a tweet, or free iPad. Recruiting is Hard! And at startups, it can be difficult to step away from fund raising, product development and customer engagement to focus on the thing that can make or break your business. Ben Yoskovitz wrote a great summary post of his efforts to Recruit and Hire Top People for a Startup that every founder should read:

The war for talent across Canada is just beginning. During my time at VeloCity at UWaterloo, I was impressed at the number of US companies and startups that were actively recruiting on campus. And the established companies aren’t alone, we have seen an increase in the amount of US investments (looking at you GoInstant, Vidyard, TribeHR, Kik, Playerize, Enflick, Shopify, Hootsuite, A Thinking Ape, and others). This will undoubtedly lead to increasing salaries (see @byosko’s # 4 prediction for 2012 in Montreal). It doesn’t even take into consider the continuing recruiting efforts that companies like Rypple, Radian6, Dayforce. For startups, we are going to need to improve our culture and game to keep talent. And getting your startup to a point to raise enough money to pay competitive salaries is going to be the baseline to play in 2012.

If you are designer, marketer or developer and you are curious at who is hiring or if you want an introduction, drop me a note with a resume (david at davidcrow dot ca) and I’ll do my best to match you with companies I know are looking.

 

  • http://startupcfo.ca/ Mark MacLeod

    Hiring should be the top priority of every startup leader once you have figured out P/M fit. Few people spend enough time on it. 

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    David – Thanks for linking to all those posts. I’ve written so much about recruiting, let’s hope I can help deliver at GoInstant. Otherwise… :)

    Recruiting is a serious problem. One of the biggest for startups. I’ve rarely met a single CEO or executive team that puts the necessary effort into it. Salaries are on the rise, demand is on the rise … it’s going to get harder and harder in 2012, no question.

  • http://blog.bmannconsulting.com/ Boris Mann

    I spent 2011 involved in the culture / hiring loop at iQmetrix. We hired a LOT of high quality people and grew our Vancouver office from 25 to 80.

    So, as David pointed out, there are mid-size companies actively recruiting as well. This is a shared problem. Let’s work together on tackling great talent imports from around the world.

  • http://twitter.com/andrewsider Andrew Sider

    I second Ben and third David. Recruiting has been a top priority and time investment @UrbanOrca. A worth while and necessary investment though! One thing hasn’t changed in this hot market – the best candidate leads still come through referrals. You just can’t replace the networking hustle (e.g., attending startup events, talking to your network about their network).     

  • http://davidcrow.ca/ davidcrow

    The increasing salaries and increasing demand is greater than most startups realize. The boon of @invoia raising a new fund, the increased US VC presence and the draw of heading to Boston, NYC or Silicon Valley will make it harder for Canadian startups. And we really need to do the things you’ve already identified as the baseline to attract and retain the wicked talent that is here. 

  • Ian

    Great post David.

    Finding people is a challenge that is only gong to get more difficult in the next two years. 

    Perhaps an equal challenge is that third element of fit People / Start-up Fit. Matching candidates to the culture of a start-up is super important particularly the smaller the team. 

    Let the Talent Wars begin.

    BTW, I’ll be launching a Talent Brokerage service in Ottawa in February.

  • http://www.markevans.ca/ Mark Evans

    David: You’ve hit the nail on the head. With the startups with which I’m working, the biggest challenge is good salespeople to move product that has been developed. cheers, Mark

  • http://www.linkedin.com/in/scottjhoward ScottjHoward

    We are seeing the same challenge in the community, its a great signal of health. Most every shop Coral CEA is engaged with is on the hunt for great talent, especially on the tech side. I see the ability to attract talent as the second most important challenge to a startup, the first being attracting customers (paying ones;). Much conversation is dedicated to the need and challenges of attracting funding, more thought should be given to revenue and talent. 

    Advocates of the Canadian startup / tech scene often trumpet our abundance of talent (University educated people), but I think the talent available to startups is much shallower than we might want to believe. The vast majority of the need is for engineers (developers, etc), and most engineers I know are big fans of structure and certainty, not attributes associated with startups. The overall market may not lack for talent, but the combination of talent and the personality type to enter a startup inside the first 20 employees is somewhat rare. 

    Most recent grads are still attracted to the bigs (telcos, banks, F500s), though they are showing an attraction to startups in increasing numbers. Seasoned professionals, the ones with proven talent and more important experience; which will be critical in a scaling startup, are even less attracted to the startup market. Regular paychecks and benefits are really important to people with families and mortgages, no matter how great your startup that engineer with 5-10 years working at IBM needs to pay the bills and get little Johnny braces. T We need to figure out two things in parallel: better leveraging the talent in the market because there is not enough to go around and get the whole community to critical mass; and work to make working at startups less risky and more attractive to high end talent.   

    We are working on a couple of initiatives to address this significant risk in the market. We see a number of shops that have expertise on one side of the equation but not the other. Teams of less the 10 typically have a depth of domain knowledge in a market with the ability to execute business development OR a depth of technical talent and proven technology; the combination of both is rare. 

    Coral CEA is working to create partnership relationships between domain experts and tech experts so each can better leverage their core competence with out falling prey to the ‘recruiting gap’. Two favorite areas are financial services and health care, understanding the needs of the markets and having the relationships to successfully sell into them takes years, these markets are ripe for disruptive tech that change the ‘customer’ experience, the challenge is matching the tech to the right value proposition and right buyer. We are working to develop structures that make these partnership less risky from a time, execution, and capital perspective. 

    The second part is working to create partnerships with experts on HR. Hiring, retaining, and managing talent is hard work that takes expertise and a core area of risk for a company. A bad hire early in a company can be a disaster (time, money, effort are in short supply), in later stages having bad structure and processes to manage and retain your team can be equally destructive. The challenge Coral CEA is trying to address for the community is getting the community organinzed in a way that makes delivery of the expertise economical for all parties. Having your HR house in order is going to make your startup much less risky and therefore more attractive to the seasoned pro you are trying to lure away from the bigs. 

    Sorry for the long post, its been on my mind;). BTW we also have opps for Mobile, PHP, and Ruby devs. 
    Happy to chat more
    @HowieSJ:twitter 

  • http://davidcrow.ca/ davidcrow

    Hey @scottjhoward:disqus 

    Teaching people the startup culture can be a difficult thing. The idea of getting things done every day, making decisions that reflect uncertainty and customer/product/technology/maintainablility tradeoffs can be difficult for a lot folks. 

    Whether it’s better promotion of entrepreneurship and startups as a career path at post secondary institutions, or the attraction of employees out of the stability and predictability of F1000, big banks, government, etc. There is an opportunity to do better. Is it about press and media? Is it career day at schools? 

    Thoughts on how fill the gaps you identify?

  • http://davidcrow.ca/ davidcrow

    Really 55 people signed up to work with @bmann:disqus . More seriously, growing headcount 220% must have put tremendous pressure on corporate culture and infrastructure. I’m impressed. Would love if you might write on @startupnorth:twitter more about the culture challenges.

    Agreed, one option is @startupvisaca:twitter and the ability to bring new founders to Canada along with making it easier for startups to import talent. 

  • http://blog.bmannconsulting.com/ Boris Mann

    The entire company is something like 280 now, so that is growth at only one office. And yes, it has been lots of pressure on culture.

    I actually didn’t mean startupvisaca — I meant startups to midsize companies working together to fly the flag of “cool opportunities here!” in far away places. It’s really hard to make some noise outside of your local market, and REALLY hard in a foreign country.

  • http://www.linkedin.com/in/scottjhoward ScottjHoward

    As usual I think it’s a combination of education and outreach. But I think the key is with the community it self, i think we need to execute better on HR practices. I see having good counsel and best practice on the HR front as equally, if not more important than having expert guidance on the accounting and legal front. I am no fan boy of the HR department, but startups need to become more open to investing in the expertise HR pros can provide. Coral CEA is trying to help both sides of the equation come together; the HR pros that are used to bigger budgets and more stable environments and startups that are short on budget, time, and patients. There is potential for an interesting and lucrative specialization in the HR space and a chance for the community to get access to resources that will help attract, manage, and retain the talent needed for success. It’s going to take some collaborative work and some early adopters but I think we can get there.

  • http://philgo20.com/ philgo20

    Even as we’re building a referral-based recruiting tool, hiring is hard. We’ve passed on many people with very interesting skill set because we doubted they had the proper attitude and will to work in a startup.

    I spend at least 8 hours every week looking through stackoverflow, github, finding these profiles on Twitter and then looking at their oh-so-worthy “Similar to X” list. 

    I think many of us are still trapped into a “need-to-be-in-the-same-space” mentality. We have 2 persons working remote I’ve never met  that simply changed it all a few weeks ago. 

    David at 37 signals ad a post about this lately: http://37signals.com/svn/posts/3064-stop-whining-and-start-hiring-remote-workers

  • http://jsonge.hubpages.com/hub/realestateinvestmentmetairie metairie sale for homes

    yeah, having a startup is all fine and dandy until you realize that you need more than 3 people to keep it afloat–and that you will be having to engender trust to people you might not know that well. letting go is difficult but finding the right workers is even more difficult.

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