
How to Hire When Everyone Wants to Found Their Own Startup - coloneltcb
http://techcrunch.com/2014/12/02/the-talent-dilution-cycle/
======
vinceguidry
There's a way through this mess.

First, focus on people that want to be hired. There's lots of people out there
who tried to roll their own and realized it's a lot harder than it looks.
Plenty just want to focus on the fun tech stuff and leave client
communications, marketing, and all the other small-business drudge work for
others.

Second, be willing to build people up. Promote from within and let people grow
into the role they want to have. Fuck a foosball table, I want room to grow.
Convey this clearly in the interview. Leave off the X number of years in
technology Y nonsense, and, if you're feeling particularly froggy, the demand
for a four-year degree. Nothing about having one makes you any better at
technology work, it's function is purely signaling. You can get a much better
feel for who someone is just by listening to them talk about their pet
projects or what inspires them or what they want to do.

Third, drop the pretentious bullshit. It's a seller's market for talent,
you're courting them, do what you have to to minimize HR's influence on the
process. Be responsive, don't ask stupid questions, do whiteboard exercises,
all that tech interview bullshit that just skews the signal-to-noise ratio
rather than increases it. You can get away with that shit if you're Facebook,
but even there it's a dick move and it doesn't really help.

~~~
amirmc
> _...be willing to build people up. Promote from within and let people grow
> into the role they want to have..._

I think this is one of the missing pieces in modern companies. Very few places
_really_ want to train you up and all the procedures and processes either
expect that (1) your school/course should have taught you or (2) you should
have already taught yourself.

~~~
sliverstorm
We certainly don't help the problem. I have a few friends who switch jobs
every 9 months or so, which almost certainly makes companies wary of investing
years of training.

~~~
wuliwong
For myself, the desire to change jobs comes from the observation that the
companies trying to poach me away are offering more money than my current
salary even considering the foreseeable future of raises. I happen to like the
people I'm working with, so I continue to stick around but at some point those
numbers are going to get too far apart and I'll make a move. In my current
company (very large), the prospect of raises and promotions are slow, small
and far in-between. Maybe I'm in a weird place, but that's been my experience
thus far.

------
eloisant
How about: give them a little bit more equity than just scraps?

Everyone want to found their company because they know it's the only way for
them to be rewarded if the company is successful.

Right now it's more like: "the company got bought, the founder is a
millionnaire, you get some pocket money and the awesome opportunity to be a
cog in Google Adwords!"

~~~
applecore
Anyone who's founded a startup knows just how much risk is involved, and how
significantly it's de-risked by the time they're hiring employee #1, #10, or
#100.

Basically, 50% of an idea is worth less than 0.05% of a startup with traction.

~~~
dasil003
There's something weird about the structure of your comment. How much traction
do you assume a startup has when they hire #1?

Personally I think startups are too stingy with equity, 2% is considered
generous, but this is not enough to compensate for the risk for employees
1-10, which is part of the reason the savvy ones want to be a founder rather
than employee. I think the stinginess persists partly because of ignorance of
the average prospective employee on stock option plans, so they're not getting
the level of pushback they will about salaries. But more importantly from the
granting side, it's very hard for founders to tell if a prospective employee
has the all-out intelligence, hustle and tenacity to be a part of the critical
core group that literally builds a money-making machine from scratch. It's
true that hiring is a huge risk, but this is what the vesting schedule is for.
Companies need to bet bigger on individuals, because the risk profile does not
decline as precipitously as the equity grants, there's a discontinuity there
that is keeping savvy employees out. If you are selecting only for people who
can afford to work for free then you're leaving talent on the table.

------
georgemcbay
How about "realize there is a whole big world outside of the Bay Area"?

I have no interest in founding my own company. I'm a software developer and a
pretty good one. I want to continue to develop software (it is what I truly
love to do), not manage a business.

I also have zero interest is moving to the Bay Area. Been there, done that
(prior to the first dot com implosion), nice place to visit but won't ever
live there again. I get pings fairly regularly from friends and/or ex-
coworkers asking me if I'd like to work in the Bay Area (remote not an
option). The answer is and always will be "no, not unless you open up an
office in San Diego (or allow remote work, without expecting me to constantly
be travelling to the Bay Area)".

Surely there are more than enough people like me in places that aren't the Bay
Area to hire to start successful businesses -- San Diego, Austin, Portland,
Boston, etc, these places exist and have tech talent!

~~~
beachstartup
we're based in santa monica and have or have had full time remote employees in
all the areas you mentioned. portland is my favorite.

in fact, when interviewing, we kind of look at bay area residency as a contra-
indication. it's at least 25% more expensive to hire someone there.

so, if you flip that assertion on its head - for the same price, we can hire
someone 25% better, that lives in austin, or portland, or whatever. _and, in
fact_ \- our salary then becomes significantly _above market_ for the area,
and we get exceptional talent.

if you extend this philosophy to hiring more experienced (i.e. 'older')
people, you get a triple-threat: above market salary, smart/good people,
maturity/experience.

------
zedpm
>Recruit Outside Of Central Casting

Good idea, start by being open to remote developers. I'm not going to relocate
to SF, regardless of salary, equity, or how exciting the project is. I've
worked remotely successfully for the better part of a decade, so I know it
works. Slack, HipChat, Skype, etc. make the lack of physical presence nearly
irrelevant.

~~~
amirmc
Companies that can figure out _how_ to create and manage a distributed team
will have disproportionate advantages if the product is successful and they
suddenly need to scale. Open-source projects are a good example of this.

------
apalmer
Seems to me that only those who are in the start up culture echo chamber could
hold this view.

Its just not realistic that the vast majority of talents people are not
joining your start up because they have their own start up. The numbers do not
make sense.

Also the graphic that shows the paypal talent diaspora also is off, early
employees who make a couple million in a start up are not going to want to
WORK for a salary cause they have a couple million. They may want to join as
founders if you can sell them the dream I guess.

~~~
harryh
_early employees who make a couple million in a start up are not going to want
to WORK for a salary cause they have a couple million_

This is empirically false.

------
Animats
Note that the suggested approaches do not include "offer them equity" or "pay
lots of money".

Most startups fail.

~~~
notduncansmith
Even equity isn't especially compelling. Unless I'm a founding team member, I
will always take higher pay in lieu of equity. After being with a company for
a year or two and having a solid idea of where it's going, I'd probably
consider it, but until that point equity is worthless to me.

~~~
ConfuciusSay
Also, even with the best equity agreement, you can still get royally screwed
when it comes down to the wire.

~~~
ryanobjc
Alas, employee equity holders are last on the list of winners.

------
hiou
The problem is that everyone is trying to hire the best, partly because they
know how good that looks when fundraising, partly because that's how you win
in winner take all tournament type economies.

This ends up similar to NFL Quarterbacks. Even the worst quarterback in the
NFL is exceptional, but everyone wants the best one because it's hard to win a
Super Bowl with the worst quarterback in the NFL.

So it's not that talent is hard to find. There are 1,000s of of people that
are very good quarterbacks. It's that the best talent is hard to find. And
this is because there can only be a couple of bests at anything.

~~~
derefr
People also try to hire the best because the value of a team in an acquihire
scenario is basically the sum of their "ranking scores"—if you're the #1 most-
wanted developer in the whole talent pool, the acquirer will pay exponentially
more than they will for the #2 most-wanted, and so forth.

If you want to succeed as a startup, recruit by setting a bar and hiring
anyone who passes it, not by comparing people to other people. "Good in an
absolute sense" is much more useful knowledge than "better than X."

~~~
wuliwong
Where are these rankings kept? I honestly never had a clue that there were
rankings for developers. I've never once seen that or heard it talked about.

~~~
derefr
I didn't mean that there are literal rankings; to be the "#1 most-wanted"
developer is just to be more well-known and sought-after (and thus to have
higher social status and clout in the industry) than the "#2 most-wanted."

Google collects highly-ranked developers (e.g. Rob Pike)—for no other reason
than their high rank—and calls them Fellows. Heroku hired Ruby's creator Matz,
and let him continue working on Ruby itself in an open-source fashion, just to
say they had him. It's like collecting baseball cards, basically.

------
pnathan
As I get more senior, I get less tolerant of exploitive cultures.

You hire me by giving great benefits[1], an office next to transit in a city I
want to live in, good salary, a nice office for me alone, and hands-off
management who will support me, along with a commitment to free software.

Generally those axes are how I rank companies, the scaling parameters vary
depending on my life situation at the time.

I also want to note that lots of Bay Area companies seem to have a thing for
recruiting from top 10 schools. Get over themselves, go out to the
Mid-/Mountain West and scour those students. There are good students outside
of the top 10.

[1] A compelling benefit would be fully funding a PhD in the US for a fully
furloughed duration. No one ever has that as a benefit afaik. I'd like to see
it offered.

Note, Foosball is not a benefit. Nor is having a video game station. Nor is
gourmet food, happy hours, or senior devs with 3 years of experience (that's
an anti benefit).

------
frostmatthew
The _everyone_ in the title is clear hyperbole, but obviously one meant to
convey _most_ or maybe even _very nearly all_. That's probably a belief held
by TechCrunch writers and Startup School attendees but most likely far from
realistic.

My previous job was at a small nonprofit and we worked in a large co-working
space that had _hundreds_ of startups[1]. Many of the people I had
conversations with (or overheard) in the kitchen/common-areas were _heavy_
into the startup-scene (serial-founders or engineers who would _only_ work at
startups). I'm now at a large tech company and not one of my co-workers has
ever expressed interest in founding a startup (or even working for one). This
is probably because startups tend to attract people who want to work for a
startup and larger companies tend to attract those that would rather not.

If startups feel they are having a harder problem filling vacancies than large
companies maybe that's a sign that talent pool is larger and they should ask
what they can do to appeal more to that crowd, instead of what they could do
to get potential founders to work for them instead of founding their own.

[1]
[http://en.wikipedia.org/wiki/Cambridge_Innovation_Center](http://en.wikipedia.org/wiki/Cambridge_Innovation_Center)

------
fencepost
Some other folks have hinted around this, but I think the best way to look at
this is by rephrasing the title:

"How to Hire When Everyone Who Wants to Work for a Startup Wants Their Own"

By that I don't really mean "work for a startup" so much as "work in the
stereotype of startup culture." If you're starting with a very small team and
trying to build with no profitability while you try to attract a major buyer,
then yeah you're going to have to work within that culture of young people
willing to take on the attendant risks.

If you're trying to build a viable business that happens to be a startup,
perhaps you need to look beyond that initial group - because if you're only
looking at 20-somethings with Macbook Airs working in coffeeshops, you're
going to get a disproportionate number of people who want not just a startup
but their own startup.

------
choppaface
You can't put lipstick on a pig.

What's largely missing in the article is a notion that you want to find
candidates who are _mutually good matches_ for your company. Your position
should have enough opportunity and value to the specific candidate to not
require much sales effort. Selling harder up front just sets your management
up for a big commitment on top of everything else. Good engineers with
multiple offers will bounce inside of a month when they join and see all the
sophistry you fed them.

Put that salesman energy into 1. differentiating your opportunity or better 2.
developing your current team and hierarchy to actually support the competitive
talent you seek. Be /less/ greedy for hires. A mindset focused on talent is
poisonous in the long term: [http://www.newyorker.com/magazine/2002/07/22/the-
talent-myth](http://www.newyorker.com/magazine/2002/07/22/the-talent-myth)

The suggestions in this article are somewhat reasonable, but the article does
much more to whitewash and promote the Paypal mafia (and especially Keith as a
new VC) as competent. The recommendations for creating 'mentorship' and
'founder culture' have value, but that often translates into just fixing
obvious management problems. To start, don't let your management burn too much
money on recruiting.

~~~
c23gooey
Sorry to nitpick, but I think you're getting your metaphors mixed:

You can put lipstick on a pig, but its still a pig
[http://en.wikipedia.org/wiki/Lipstick_on_a_pig](http://en.wikipedia.org/wiki/Lipstick_on_a_pig)

You cant polish a turd
[http://en.wiktionary.org/wiki/you_can%27t_polish_a_turd](http://en.wiktionary.org/wiki/you_can%27t_polish_a_turd)

~~~
choppaface
lol

------
jasonkostempski
I could imagine the biggest fear of a "founder type" might be a company they
work for attempting to claim ownership of his or her work at some point. I
don't know if there's a good common solution to concerns like that. If there
is, it might be good to advertise that those concerns would be addressed right
up front.

------
bsder
Um, everybody wanting to start a startup is a simple signal that salaries are
too low.

Better to be employee single digit at a startup and get bought out by Google
3-5 years from now than to work for Google for those 3-5 years.

~~~
nrmitchi
You start by mentioning everyone wanting to start a startup, then switch to
saying how it's better to be an early employee at a start up.

Being the founder of a start up acquired by Google in 3-5 years may be better
than working there for those years, however that is not necessarily the case
for being an employee at one. Other comments in this thread point to equity in
startups often being too low, so I wont repeat the same stuff.

~~~
bsder
The parent article is "How To Hire When Everyone Wants To Found Their Own
Startup". Not be an employee of a startup, _FOUND_ their own startup.

And, while equity distribution still stinks, it's _still_ better to be part of
a startup doing something interesting than being a drone at Google. Generally,
your salary is probably comparable (being more than 80% from the going rate
will be an issue), you're doing something important if not interesting, and
there is upside.

------
JSeymourATL
> Recruit Outside Of Central Casting--

This is a big idea, worthy of more discussion. Where/How do you find a hidden
talent? For example, there's a founder I know, who has been unusually
successful finding & training up former Theater/Drama majors. He says they're
creative, quick learners, and appreciative the chance to start a new career.

------
michaelochurch
"Everyone good wants to be a founder" is ludicrous.

1\. Most people don't have the connections to become founders without an
incredible amount of work (that could be better spent in, say, finance where
the long hours bring 20-40% annual pay increases). For every one person who
has the connections to deliver Sequoia on an idea, there are 9,999 equally
talented people who don't. If you can't find one of those other 9,999, then
you're without hope.

2\. The problem is that non-founder equity is generally quite pathetic. If the
founders each get 20% and the first engineer gets 1%, then you're never going
to see a "founder-quality" first engineer. It simply won't happen.

To a large extent, hiring in the Valley is about exploiting the Winner's Curse
regarding the unknown value of the equity. As it were, the more talented and
seasoned people tend to assign it a low value (perhaps 0.25x price-at-
valuation, meaning it'd take $160k of equity on a 4-year-schedule to offset a
$10k salary drop) while the clueless and young ones who haven't made their
(business and technical) mistakes yet tend to overvalue it (sometimes 1+...
which makes no sense because why would one pay a higher price than the VCs are
paying?)

Talented people would gladly take non-founder positions if the terms (equity,
autonomy, introduction into the investor class) weren't so terrible. It's not
like being a founder in the VC-funded world is great; it's that everything
else is worse.

~~~
wuliwong
I'm one of those non-connected people working non-stop nights and weekends on
"startups". Switching to an industry that actually pays out according to the
amount of work I would put in is interesting. I either haven't considered it
or never really thought that type of industry existed (outside of something
like sales).

Also, I 100% agree. Employee equity is so small it's kind of insulting. The
only time I took equity was b/c I was able to work with some semi-"famous"
founders and hoped to at least to grow my network. I did grow it a little, and
I might be able to tap into it at some point but the equity returned me
exactly zilch.

------
squozzer
If you are a founder, you are a genius. If you are a genius, you can spot
talent instantly or can otherwise overcome obstacles. Either way you don't
need tips from TC, do you? If you need TC to tell you how to hire, then you're
not really a genius and should just walk into the nearest bonfire or otherwise
stop breathing my air.

